Englishman in New York

I don’t know how much coverage Rupert Murdoch’s bid for Dow Jones, the owner of the Wall Street Journal, is getting in the UK. But over here, it’s big news.

The question seems to be not if, but when Dow Jones’ owners, the Bancroft family, will cave to Murdoch’s $60 a share offer. (Though it should be pointed out that a Bloomberg news article today suggests that Murdoch may be losing patience.)

At the weekend, Joe Nocera wrote a fascinating analysis of Murdoch’s takeover bid, arguing that the Bancrofts would be fools not to sell considering Dow Jones’ lackluster performance in recent years.

Nocera blames that poor performance on the Bancrofts and on two Dow Jones chief executives, Warren Phillips and Peter Kann, both former journalists who ran the company from 1975 through 2006. Here are a few choice excerpts, but it’s worth reading in full:

I HAVE a theory as to why Dow Jones management has been so inept over the years. It is a company that has long prided itself on being run by journalists. That was also part of preserving the integrity of The Wall Street Journal. Journalists, after all, would be less likely to damage the paper or cater to advertisers. But journalists tend to be terrible businessmen; they lack the risk-taking mindset that marks a good chief executive. Making the kind of big, bold bets that C.E.O.’s have to make all the time in industries undergoing wrenching change, like the newspaper business, just does not play to their strengths, which are observing, critiquing and finding out things.

[…]The one thing Mr. Phillips and Mr. Kann were good at — indeed, great at — was placating the Bancroft family. They did so, in part, by paying an enormous dividend — more than the company could really afford. But they also did so by telling the family, again and again, what a great thing they were doing in protecting the independence of The Wall Street Journal. Indeed, it was Mr. Phillips who came up with the idea of two classes of stock, which would allow the family to sell some shares and still retain control. An inept chief executive couldn’t hope for a better deal. No matter what move Mr. Phillips made, neither the family nor the trustees were ever going to question him. It just wasn’t their style.

[…]To the Bancroft family, Rupert Murdoch has always been the devil — the epitome of the meddling down-market mogul who would wreck the paper if given half a chance. Or at least that’s what they’ve been taught to believe all these years by Mr. Phillips and Mr. Kann. And no matter how many promises Mr. Murdoch makes, their opinion is not likely to change. If they do wind up selling to him, they will do so holding their noses. There was a time, not so many years ago, when they could have sold to Bloomberg or the Washington Post Company or possibly even The New York Times Company. But Mr. Kann wouldn’t pursue those deals, and now those buyers are on record as saying they are no longer interested. It’s Rupert or nothing.

Even now, Mr. Kann and Mr. Phillips are trying to persuade the family, one last time, that it’s all about The Journal’s independence — and not their own incompetence or the family’s unwillingness to act as a true steward over its asset. Last week, Mr. Kann, who did not respond to my phone call, was quoted in The Wall Street Journal as saying how much he admired the family “for taking the position of maintaining Dow Jones as an independent public company.”

On Thursday, I did get Mr. Phillips on the phone. “If they are as determined in their support of The Journal’s independence as they have been in the past, then I think the paper is in good hands,” he said.

Would that it were so. But it’s not. “We had to destroy the village in order to save it,” was the famous phrase that came out of the Vietnam War. With the path they’ve been on, the Bancroft family seems intent on destroying Dow Jones in order to save it.

You can read the full article here.

Meanwhile, BusinessWeek media columnist Jon Fine and Vanity Fair columnist Michael Wolff discuss Murdoch’s bid and what it could mean for the New York Times over at Mediabistro.