UK: Former owners of WSJ would have resisted Murdoch's bid...had they known

The Guardian

Former Wall St Journal owners: 'We wouldn't have sold if we had known'

Bancroft family members, who controlled Dow Jones & Company, say they would have resisted Murdoch bid in 2007
By Richard Tofel, ProPublica

A number of key members of the family that 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.

"If I had known what I know now, I would have pushed harder against" the Murdoch bid, said Christopher Bancroft, a member of the family that controlled Dow Jones & Company, publishers of the Wall Street Journal.

Bancroft said the breadth of allegations now on the public record "would have been more problematic for me. I probably would have held out.'' He had sole voting control of a trust that represented 13% of Dow Jones shares in 2007 and served on the Dow Jones board.

Lisa Steele, another family member on the board, said "it would have been harder, if not impossible'' to have accepted Murdoch's bid had the facts been known. "It's complicated," she added, 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 Chelberg, a Bancroft family member not on the board who had long advocated change at Dow Jones, expressed similar sentiments. Asked if she would have favoured a sale to Murdoch in 2007 knowing what she now does, she said: "My answer is no."

The comments in interviews with the non-profit news organisation ProPublica came as the crisis engulfing Murdoch's News Corporation threatened to spread to the US. Two senators called for an investigation into whether the company broke US 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 proved accurate, Hinton "probably ought to be moved aside, but that's not my business any more''.

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. 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 from 1902 and controlled it as a publicly traded company from 1963. Murdoch's bid was attractive. He offered $60 a share, a 67% premium, $2.25bn above the market price the day his offer was announced, at a time when newspaper share prices had been flagging for more than two years. Moreover, 14 months after the deal closed, in early 2009, News Corp had to write down the value of its $5.6bn purchase by $2.8bn.

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. There was negative press in the US about Murdoch at the time of the deal in 2007, although nothing to compare with the recent revelations.

Michael Elefante, a partner at the 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 Chelberg 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".

He was "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 he had been following the story closely in the Australian media during a trip there and that he was very concerned about what he had 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."The Bancroft family continues to keep an eye on the Journal and Dow Jones. 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.''

Disclosure note: the author of this story was a long-time 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.

http://www.guardian.co.uk/media/2011/jul/13/wall-st-journal-murdoch-bancroft