Bancroft Family Members Express Regrets at Selling Wall Street
Journal to Murdoch
by Richard Tofel
This story was co-published with The Guardian.
A number of key members of the family which controlled The Wall Street Journal say they would not have agreed to sell the prestigious daily to Rupert Murdoch if they had been aware of News International’s conduct in the phone-hacking scandal at the time of the deal.
Lisa Steele, another family member on the Board, said that “it would have been harder, if not impossible,” to have accepted Murdoch’s bid had the facts been known. “It’s complicated,” Steele said, and “there were so many factors” in weighing a sale. But she said “the ethics are clear to me — what’s been revealed, from what I’ve read in the Journal, is terrible; it may even be criminal.”
Elisabeth Goth, a Bancroft family member not on the Board who had long advocated change at Dow Jones, expressed similar sentiments. Asked if she would have favored a sale to Murdoch in 2007 knowing what she does today, she said, “my answer is no.”
The comments by family members in interviews with ProPublica came as the crisis engulfing Murdoch’s News Corporation threatened to spread to the U.S. with two senators calling for an investigation into whether the company broke U.S. laws over the phone hacking scandal.
Asked for his reaction to a report in the Guardian that Les Hinton, Murdoch’s appointee as Dow Jones CEO and Journal publisher, may have testified untruthfully to a parliamentary committee, Christopher Bancroft replied that if the report proves accurate, Hinton “probably ought be moved aside, but that’s not my business anymore.”
News Corporation’s deal to buy the Journal was sealed in August 2007, six months after the royal editor of the News of the World, Clive Goodman, was jailed for using a private detective to access voicemails left for members of the royal household.
But News International insisted that hacking was a problem confined to a single “rogue reporter” at the paper. It was not until July 2009 that the Guardian revealed the practice was more widespread and that Murdoch had secretly paid out more than £1m to settle cases brought by other hacking victims.
The Wall Street Journal is the top-selling daily newspaper in the United States and a brand with global prominence. Founded in 1889, it long dominated American business publishing, becoming the country’s first national newspaper. It routinely ranked in surveys as America’s most trusted print publication.
The Bancroft family owned Dow Jones since 1902 and controlled it as a publicly traded company since 1963. Murdoch’s bid was economically attractive. He offered $60 a share, a 67 percent premium, $2.25 billion over the market price the day his offer was announced, at a time when newspaper share prices had been flagging for more than two years. Within 14 months after the deal closed, in early 2009, News Corp. had to write down the value of its $5.6 billion purchase by $2.8 billion.
The sale was contentious. Family members questioned Murdoch’s journalistic practices and insisted on appointment of an independent panel to help safeguard the paper’s ethics. And there was plenty of negative press in the U.S. about Murdoch at the time of the deal in 2007, although nothing to compare with the recent revelations.
Michael Elefante, a partner at Boston law firm Hemenway & Barnes, longtime counsel to the family, trustee of numerous trusts and also then a member of the Dow Jones Board, did not return messages seeking comment. The fourth family representative on the Dow Jones Board, Leslie Hill, consistently opposed the Murdoch bid, and resigned from the Board in protest just before the deal was completed. (Hill has been a donor to ProPublica.)
Not all members of the Bancroft family believe the revelations would have changed the outcome. Bill Cox III, long allied with Goth within the family in seeking alternatives to management by Dow Jones, said in an interview that he “probably would have thought twice about it but probably would have sold.”
Cox said he is “happy about the price we got” for Dow Jones. “I’m pretty happy being out of the newspaper business altogether.” Asked if he would have accepted a lower price from another bidder given the phone hacking, he said, “I think $60 was the right price.”
Cox did say, however, that he had been following the story closely in the Australian media during a trip there and that he is very concerned about what he has learned recently about the Journal’s new owners.
“Reading all this makes me sick to my stomach,” he said. In a subsequent email, he went even further: Rupert Murdoch, he wrote, “thinks he is completely above the law as he always has.” Cox added, “We did a deal with the devil and it really saddens me [that] the editorial of this quasi public trust that has been on the vanguard of world journalism for years is not in good hands. That I am really struggling with.”
Disclosure note: The author of this story was a longtime Dow Jones executive, before leaving the company in 2004, and wrote a book about former Wall Street Journal editor and Dow Jones CEO Barney Kilgore, which was published in 2009.