Martin Wolf Asks: "Where Is Everybody?": The Paul Wolfowitz Case
links for 2007-05-10

Paul Steiger Sat on What?!?!

The business news scoop of the year, and Wall Street Journal managing editor Paul Steiger sat on it for a week:

CJR Daily: Steiger sat on what?!: Dean Starkman: Well, we can stop wondering whether The Wall Street Journal would allow Rupert Murdoch to screw up its editorial judgment. That already happened. This morning, The New York Times published a story saying that Paul Steiger, the Journal’s managing editor (and my old boss), along with three other top editors at the paper, sat on news of News Corp’s blockbuster bid for the Journal’s parent, Dow Jones & Co., for at least a week. The stunner, by Andrew Ross Sorkin and Richard Perez Pena, is a case study in how news judgment is blurred when your own organization is at the center of the story. It's also a preview of the journalistic disaster that would result from a successful Murdoch bid.

The story said that a few days after submitting a formal, written offer for Dow Jones to the company’s board on April 17, Murdoch, News Corp.’s chairman and CEO, wrote Steiger an e-mail marked “Personal and Confidential,” telling him of the bid and promising, ironically given the circumstances, to uphold the Journal’s editorial integrity. Somehow, according to the story, the news gets to Dan Hertzberg, the longtime deputy M.E. and a great financial reporter in his day, Nikhil Deogun, who recently took over the head of the Money & Investing section, and Marcus Brauchli, a top editor and Steiger’s successor who takes over next week. Welcome aboard, Marcus!

Murdoch handed Steiger a multi-horned dilemma:

  1. his is the biggest business story of the year, and this is the Wall Street Journal. The paper should pursue the story. Must this even be said?
  2. Deal stories are at the heart—the core—of the WSJ’s beat. A News Corp. bid for DJ is the biggest deal story in a deal-studded year. And Steiger, his deputy, his successor, and the man in charge of your mergers-and-acquisitions coverage, are sitting on it. Tick, tock. (I don’t think deal stories should be as important as they are, but the WSJ itself—Steiger—made these rules, not me.)
  3. This is valuable information. The bid, as it turned out, added $1.5 billion to DJ’s market capitalization. My 344 shares are now worth $6,500 more than before the bid. That’s real money, and that’s why Congress passed all sorts of laws, and the Securities and Exchange Commission issues all sorts of rules about who should do what with the information.

And of course, the SEC and the New York attorney general are both probing an unusual spike in DJ options before the formal announcement of May 1. Someone bought 280,000 on April 25, eight days after Murdoch’s letter. The point is, information bouncing around like this leads to all sorts of stories. You should not be in them. But here we have Steiger issuing statements through a spokesperson denying that he spoke to anyone on the business side. And Hertzberg, Brauchli, and Deogun are declining to comment to The New York Times.... According to The Times, quoting Dow Jones sources, Steiger felt bound by the "'confidential' nature" of the email....

If Plato-—the ideal editor-—got that e-mail, he calls Murdoch on the phone, confirms that he sent it, expresses regret that Murdoch mistakenly believed it was “personal,” assigns fifteen reporters and a helicopter to the story, beats that juggernaught CNBC and the rest of the world, sets the e-mail in type and runs it, including the “Dear Paul,” and the “All best, Rupert.”

Listen, I’m not saying any of this is easy, or that I know what I would do. But by its nature, this kind of tangled set of facts creates an unending set of hall-of-mirrors questions. For instance, how does The New York Times keep that story off page one, especially in favor of “An Irish Taste for Real Estate in Manhattan”? Does this mean we have to ask whether that odd decision was a question of courtesy between top news organizations? Or was that Irish real estate story that good? (My interest in Irish-preference-in-real-estate stories being limited, I didn’t read it.)

The point is, Who needs this? I certainly don’t. I’m just saying, Murdoch did the WSJ no favors—none—with his note to Steiger. At a minimum, the note calls into question Murdoch’s understanding of journalism and journalists, if not the man’s common sense. Editors and business-side executives have different roles. This was not a close call. What kind of potential owner puts an editor in such a position? And, once that information does arrive in an editor's lap, the Audit does not believe that the best response is wait until CNBC, the “Money Honey” channel and your joint-venture partner (never mind; how many insider snarls can we untangle in one post?), beats you to the story.

Me? I think we have just seen a game of cat-and-mouse. Rupert Murdoch was toying with Paul Steiger. If Paul Steiger does print the email, well then--you cannot buy that kind of deal-splash publicity, and the pressure on the Bancroft family builds. If Paul Steiger sits on the email, that tells Rupert Murdoch something about how much pushback against editorial interference he will get from the uppermost echelons of the Wall Street Journal. And the answer appears to be: none at all.

Me? I think Murdoch would rather that Paul Steiger acted as a suck-up to his future boss rather than a journalist. The publicity splash from the Wall Street Journal breaking the story of its own likely sale by having its managing editor cross the wishes of its future owner would not have been $6 billion, but it would have been priceless.

Me? I think Rupert Murdoch is disappointed. You don't send that email in advance unless you are playing cat-and-mouse with the recipient.