Dow Jones Dilemma   

Is it a good idea for corporate America to own the Wall Street Journal?

For a journalist, nothing is more satisfying than knowing that your newspaper is absolutely independent, free from pressures from advertisers, religions, unions, business, politicians, governments and ideologies.

Not many journalists enjoy such satisfaction completely, but that small group includes those who have worked for the Wall Street Journal and other properties owned by Dow Jones. There is one reason for this--the remarkable Bancroft family, whose forebears took control of Dow Jones in 1902 and whose succeeding generations were fiercely protective of the company's journalistic independence. Indeed, that independence extends to the family itself, which has never attempted to influence the company's journalism or selection of editors.

I have personal experience of this from my work as a journalist in the late l960s for the National Observer, a weekly that Dow Jones published from 1962 to 1977. It is hard to describe exactly how it felt to work for a newspaper, and a company, that had absolutely no sacred cows--a first in my career--but believe me, it was exhilarating.

An oft-told anecdote concerned a lengthy investigative piece in the Wall Street Journal that infuriated General Motors, a major Journal advertiser, whose executives demanded a meeting with the newspaper's advertising director. When the executives threatened to cancel General Motors' advertising contract, the Journal man reached into his desk drawer, pulled out a document and said, "You mean this contract?" and tore it in half.

General Motors eventually resumed its advertising, apparently recognizing that it was bad business not to advertise in the nation's preeminent business newspaper. Make no mistake, the Journal had earned its stature with fearless, high-quality, independent journalism.

So it was no surprise that the major issue that arose within the Bancroft family when Rupert Murdoch and his News Corp. made an unsolicited offer to buy Dow Jones was the continued journalistic independence of the Wall Street Journal and the company's other publications. What was surprising was that a significant number of the Bancrofts no longer were absolutely opposed to selling out.

How this came about is an old story in the history of family-controlled newspaper businesses. As succeeding generations come along, family cohesiveness tends to dilute, and often breaks down altogether. What has been remarkable about the Bancrofts is how long the family has managed to hold together in protecting its control of Dow Jones through ownership of super-voting shares. These shares, just 24 percent of total shares, control 64 percent of share votes. In the first tally of family votes on the Murdoch bid, 52 percent voted no. Clearly, the family resolve had weakened.

Contributing to the weakened resolve no doubt was the announcement, soon after the Murdoch bid, that Reuters and Thomson planned to merge, creating a more formidable competitor for the Dow Jones Newswires. Nor has the company's languishing financial performance helped.

The Journal especially has suffered in recent years, first from the loss of huge amounts of technology advertising when the dotcom bubble burst and since then from the increasing migration of business-to-business advertising from the Journal to the Internet. The Journal sought to alleviate these losses by introducing more consumer-friendly journalism in an effort to broaden its advertising base, but progress has been slow.

There are 32 adult Bancroft family members with significant voting power, with 24 of those in the youngest generation. Most of the votes in favor of not outright rejecting the Murdoch bid apparently were among the young. As the weeks wore on, some of the no votes wavered, to the point where the family asked Dow Jones' board (on which the family has three members) to engage in discussions with News Corp.

Murdoch has long had a reputation for meddling with the news coverage of his properties, the better to advance his conservative views and business interests, notably in China, where the Journal's unblinking news coverage and critical editorial commentary have won Pulitzer Prizes.

Murdoch offered to establish an independent committee that would ensure the Journal's independence, like the one created when he acquired the Times of London--to mixed reviews.

Looming over all the questions about the fate of Dow Jones is this central one: Should the company that more than any other is charged with covering corporate America be owned by corporate America? Among other companies mentioned as possible suitors for Dow Jones during this saga were General Electric, Microsoft, Bloomberg L.P.--corporate titans all. Would any of them really be any better than News Corp.?

Well, perhaps. Only News Corp.'s Fox News Channel has turned "fair and balanced" into a news business wisecrack. But any owner other than the Bancrofts inevitably would raise questions about the independence of Dow Jones' journalism.

It might be subtle, more on the order of what is not covered or commented upon than on what is, but the inherent conflict of interest is real, burying the long-cherished absolute independence of the Wall Street Journal.