Monday, June 4, 2007

Why the Wall Street Journal Deserves Murdoch


Today's meeting between the larger-than-life news mogul Rupert Murdoch and the Bancroft family, coupon-clipping owners of Dow Jones, has gripped the little world of journalists. "The rotten old bastard intends to charm them all with his lies," warned Slate media critic Jack Shafer. The idea that Murdoch might get his mitts on the Wall Street Journal has folks scandalized, as though Larry Flynt were buying the New York City Ballet.

What's missing from this picture is the true villain.

If Murdoch wins Dow Jones, it won't be because he's evil. It will be the result of decades of mismanagement of one of the world's great sources of news and analysis. All the Journal's Pulitzer Prizes can't mask the fact that, while demand for high-quality financial and political news exploded, the value of America's leading business newspaper first sank, then stagnated.

Wall Street's judgment on Dow Jones ownership is pitiless. Investors in Murdoch's News Corporation hardly batted an eye when the old man bid $60 a share for a company that has been south of $40 a share for years. That enormous premium is the financial community's rough measure of the value of new management.

The litany of Dow Jones stumbles and fumbles is well-known. As the hands-off Bancrofts watched from a distance, the company failed to move nimbly into the digital age. A single able entrepreneur, Michael Bloomberg, captured the desktop financial analysis business as Dow Jones dawdled. Meanwhile, a newspaper with huge circulation (over two million) and a relatively small staff (half the size of the Los Angeles Times) for some reason lagged the industry in profitability.

We journalists have a way of making heroes out of poor managers, as long as they lavishly publish our peerless prose. I've been guilty of it myself. I owe my early career to the largesse of Otis Chandler's Times-Mirror Co. and Alvah Chapman's Knight-Ridder. Believe me, those were swell times. And I watched some great journalism being done—but upstairs those companies were failing to defend their market positions and misunderstanding the future.

Neither of those companies exists any longer, and that great journalism is threatened because of it.

In the weeks since Murdoch made his bid for Dow Jones, a number of writers have asserted that the Journal lags precisely because it is so good—that excellence is expensive and high-quality journalism cannot turn a good profit in a competitive era. There are at least two problems with this argument.

First, it's dangerous. If journalists don't have faith in the value of our product, why should anyone else? The craft of Franklin, Pulitzer and Graham is too vital to be reduced to a charity case.

Second, it's wrong. Operations as diverse as the New Yorker magazine, the newspaper USA Today and Bloomberg's news service have all managed (through various ups and downs in a turbulent business) to strengthen their journalism while improving their financial performance.

It isn't easy. The way forward may not be entirely clear. But discipline and vision are what good management is all about, and in the long run we'd be better off to embrace these qualities than to pin our futures on amiable incompetence.

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