Rupert Murdoch is about to buy the Wall Street Journal. This is a big deal. But I think that almost everybody is thinking about what this means in the wrong way.
To understand what Rupert Murdoch's forthcoming purchase of the Wall Street Journal means, you need to start with the fact that there is a good Wall Street Journal and a bad Wall Street Journal. The good Wall Street Journal is the news pages as built up by Norman Pearlstine, with past and present stars like Al Hunt, Davie Wessel, Alan Murray, Ron Suskind, Walt Mossberg, Greg Ip, and a galaxy of others: the finest, smartest, hardest-working, and most professional group of star news reporters in the world. The bad Wall Street Journal is the editorial page of ethics-free right-wing--no, not right-wing, Republican wingnut--partisan hacks. As Ken Auletta put it in an excellent New Yorker article a couple of years ago, describing the bad Wall Street Journal:
Annals of Communications: Family Business: The New Yorker: the opinion page... Robert Bartley.... From 1972 to 2002... ran the editorial page... as if Bartley owned and operated his own private newspaper... a non-stop campaign on behalf of supply-side economics, a return to the gold standard... and prosecuting the Cold War.... The predominantly Democratic Bancroft family... would have preferred “a less acerbic editorial voice.... There is a lot that I think is beyond the pale.”... [T]he editorial page... omitted facts that contradicted its assertions.... crossed a line in advancing its ideology...
Henry Kissinger once famously said of a statement that "it had the added advantage of being true." For the bad Wall Street Journal of the editorial page--at least when I have dealt with them--truth is simply irrelevant: to show them person-to-person that they are factually wrong makes no impact at all. Few like the bad Wall Street Journal, not even those who usually find it useful. Here's one view:
On the Wall Street Journal Editorial Page: ...smug rich-guy arrogance... blithe indifference to actual human nature... "arrogant elites"... out in the open, brazen and unashamed... dubious factual assertions... mischaracterize... our views... hostile and insulting... [we need] to correct the record because [of] you and... [your] friends...
That's the perspective from National Review.
The contempt for the bad Wall Street Journal is returned. Here's Auletta from the New Yorker again, quoting Bartley on Norman Pearlstine, the head of the good Wall Street Journal:
When I asked Robert Bartley, the Journal’s former editorial-page editor, to describe Pearlstine’s legacy, Bartley... carved up his former colleague.... “[C]irculation was down. Advertising was down.... [R]eporters won prizes for writing books beating up on our subscribers and advertisers.... Norm’s a very creative guy--the three-section newspaper was his.... I don’t think he’s good at sustained effort”...
Bartley's criticism of Pearlstine's Wall Street Journal, in a nutshell, is that Pearlstine had forgotten what he was paid to do: Pearlstine thought he was paid to report the news and inform the subscribers, but in Bartley's view that was wrong--what Pearlstine was paid to do was to deliver eyeballs to advertisers by printing stuff that made subscribers and advertisers feel good and righteous.
Dr. Jekyll, meet Mr. Hyde.
Some Journal insiders--even some on the news side--say that this Jekyll-and-Hyde relationship is all to the advantage of the good Dr. Jekyll. Nobody serious believes the editorial page, they say; it serves as a comics page for the older and more-wingnutty subscribers, a source of daily comfort food for those who still denounce, "that Communist, Franklin Roosevelt," and who have always thought that the depth and duration of the Great Depression were the fault of the New Deal--that if the free-marekt tidal wave of falling wages and massive bankruptcies had been allowed to purge the economy for 1933 and 1934, by 1935 and 1936 all would have been well. But, this faction says, the editorial page delivers up perhaps half a million extra subscribers a year, and that money flow pays for the finest news-reporting operation in the world.
Other Journal insiders say that it is the bad Mr. Hyde that is sucking the blood of Dr. Jekyll. Nobody would pay attention to the wingnuts of the editorial page, they say, were it not for the fact that they come at the back of a very, very good newspaper. 50,000 people a month read the American Spectator, where Bartley's crew belongs. 1,000,000 people a day at least glance at the Wall Street Journal editorial page. The reporters in the news division are thus in a morally ambiguous position as journalists: the stories they write inform the public, and the public they attract then turns to page A16--and is there misinformed.
We outsiders speculate and argue about which of these perspectives is closer to the truth. We do not know. But we do know that this is the shape of the organization that Murdoch wants to capture.
Now Rupert Murdoch of the News Corporation has pulled a chair up to this poker table, and wants to buy the Wall Street Journal. Figure that he can sell off other parts of Dow Jones, Inc. for enough money that the long-term net investment by News Corp. will be on the order of $2 billion. Why might Murdoch want to spend so much money to do such a thing?
One possibility is that Rupert Murdoch likes to keep what he has and that he has sons: the thirty-something Lachlan and James (and a daughter, Elizabeth). His sons will already be rich beyond the wildest dreams of avarice. Giving his sons roles at News Corp. has proven difficult: he still wants to run the show, and people whom Murdoch has hired and had long-term relationships with want to go around them if they don't like what his sons are doing. But there is nobody at the Journal with strong personal ties to Murchoch. If Murdoch buys the Wall Street Journal and spins it off, then at least one of his sons can become an independent global power broker in his own right without Murdoch having to loosen the reins at News Corp. It's like a medieval German emperor creating his son Duke of Swabia: it's a real job, an important job, a very powerful job, and a job that keeps the son occupied without forcing the father to begin the surrender of his own power before he is ready. That might be what is going on. But if it is Murdoch is playing his cards very close to his vest.
A second possibility is that Rupert Murdoch thinks that in the age of new-media convergence the Wall Street Journal has the brand and the authority and the staff to make it an excellent launching pad, worth a $2 billion bet. Can Murdoch synergize the Journal's brand on TV and via new media in a way to further boost his fortune? Perhaps. Many fortunes will be made in financial news when the technological shift that has replaced the Mergenthaler and wood pulp with the microchip and the fiber-optic cable finally shakes itself out. Why, Murdoch may be asking himself, should the biggest fortune be made by Michael Bloomberg and not by him? That might be what is going on. But if it were, and if Murdoch had a real chance at the synergies, there would be other bidders by now.
A third possibility--by far the most likely, IMHO--is that Rupert Murdoch is one of the boys who just wanna have fun. It would be more fun shaping the opinions of the world through both News Corp.'s current properties and the world's preeminent global financial newspaper than through just News Corp.'s current properties alone--plus it would be more fun receiving the bowing and scraping that the world's powerful would engage in to placate the owner of News Corp. plus the Wall Street Journal than just the bowing and scraping that accrues to the owner of News Corp. alone. That is probably what is going on.
Which of these three possibilities is truest has implications for what is likely to happen to a Journal under Murdoch ownership, and whether the Murdoch purchase is a good thing.
If the first possibility is true--if the best analogy to what is going on is that this is the equivalent of a medieval German emperor creating a son Duke of Swabia--then it is surely good news for the world. A relatively young, energetic proprietor with deep knowledge of the news business--and Murdoch's children fit that bill--would in all likelihood be as good a steward of the excellent social asset that is the Wall Street Journal's news section. And it can't be bad for the editorial pages. Whatever happens to them has to be an improvement.
If the second possibility is true--that Murdoch wants to keep the Journal's strengths as he uses the brand as a new-media synergy launching pad--then the Murdoch purchase is probably good news for the world. Murdoch will then leave the news pages--the Journal's major strength--intact. And although Murdoch is as right-wing as Bartley and company, there is a key difference: Murdoch can be bought, or at least rented. A Journal editorial page run by Murdoch might well wind up supporting a Tony Blair or a Hillary Rodham Clinton: it would be wignutty when that was in Murdoch's interest; sane right-wing when that was in Murdoch's interest; centrist when that was in Murdoch's interest. A Journal editorial page run by the current regime would be wingnutty 24/7, as it is today. Neither would be a source of news or information--both would bear a completely random relationship to the truth--but the Murdoch version would be less destructive.
But by far the most likely is the third possibility. And if the third possibility is true, then Murdoch's purchase is probably bad news. It is true that the Wall Street Journal's editorial page will improve, as its positions are aligned less with winguttery and more with the interests of whoever has rented Murdoch for that particular afternoon. But the news pages will deteriorate. Murdoch will tell China's State Council and other political interests with whom he seeks to deal that the situation is delicate, that he cannot interfere openly with the news process, that it will take time, and so forth, but that if they make it worth his while he will do what he can do--and in the long run if they give him rope they will not be disappointed. Murdoch will tell his employees on the Journal news desks that he is under enormous pressure, that he understands the importance and delicacy of the situation, that it will take time, and so forth, but that they need to be patient and give him rope and they will not be disappointed. In reality, Murdoch will use the rope they give him to hang one or both of these groups--but which we will not discover for a while: Murdoch is a professional at this, after all.
So: as the Murdoch acquisition of the Journal moves forward, watch carefully. If Murdoch's children wind up being the effective proprietors of an organization run separately from News Corp., be happy. If Murdoch spends his time and energy leveraging the brand in new media space, reshaping things into the editorial pages to please his political contacts, and leaving the news pages alone to run themselves, then be happy.
But if Murdoch starts running the Journal the way he runs his other properties, be alarmed. Be very alarmed.
http://economistsview.typepad.com/economistsview/2007/06/paul-krugman-th.html
June 29, 2007
Paul Krugman: The Murdoch Factor
Edited by Mark Thoma
Paul Krugman wonders why anyone would think it is O.K. for Rupert Murdoch to gain control of the Wall Street Journal:
NY Times: In October 2003, the nonpartisan Program on International Policy Attitudes published a study titled "Misperceptions, the media and the Iraq war." It found that 60 percent of Americans believed at least one of the following: clear evidence had been found of links between Iraq and Al Qaeda; W.M.D. had been found in Iraq; world public opinion favored the U.S. going to war with Iraq.
The prevalence of these misperceptions, however, depended crucially on where people got their news. Only 23 percent of those who got their information mainly from PBS or NPR believed any of these untrue things, but the number was 80 percent among those relying primarily on Fox News. In particular, two-thirds of Fox devotees believed that the U.S. had "found clear evidence in Iraq that Saddam Hussein was working closely with the Al Qaeda terrorist organization."
So, does anyone think it's O.K. if Rupert Murdoch's News Corporation, which owns Fox News, buys The Wall Street Journal? ...
Mr. Murdoch ... is an opportunist who exploits a rule-free media environment — one created, in part, by conservative political power — by slanting news coverage to favor whoever he thinks will serve his business interests.
In the United States, that strategy has mainly meant blatant bias in favor of the Bush administration and the Republican Party — but last year Mr. Murdoch covered his bases by hosting a fund-raiser for Hillary Clinton's Senate re-election campaign. ...
Now, Mr. Murdoch's people rarely make flatly false claims. Instead, they usually convey misinformation through innuendo. During the early months of the Iraq occupation, for example, Fox gave breathless coverage to each report of possible W.M.D.'s, with little or no coverage of the subsequent discovery that it was a false alarm. No wonder, then, that many Fox viewers got the impression that W.M.D.'s had been found.
When all else fails, Mr. Murdoch's news organizations simply stop covering inconvenient subjects. ...[T]he Project for Excellence in Journalism found that in the first quarter of 2007 daytime programs on Fox News devoted only 6 percent of their time to the Iraq war, compared with 18 percent at MSNBC and 20 percent at CNN. ...
Defenders of Mr. Murdoch... say that we should judge him not by Fox News but by his stewardship of the venerable Times of London, which he acquired in 1981. Indeed, the political bias of The Times is much less blatant than that of Fox News. But a number of former Times employees have said that there was pressure to slant coverage...
In any case, do we want to see one of America's two serious national newspapers in the hands of a man who has done so much to mislead so many? ...
There doesn't seem to be any legal obstacle to the News Corporation's bid for The Journal: F.C.C. rules on media ownership are mainly designed to prevent monopoly in local markets, not to safeguard precious national informational assets. Still, public pressure could help avert a Murdoch takeover. Maybe Congress should hold hearings.
If Mr. Murdoch does acquire The Journal, it will be a dark day for America's news media — and American democracy. If there were any justice in the world, Mr. Murdoch, who did more than anyone in the news business to mislead this country into an unjustified, disastrous war, would be a discredited outcast. Instead, he's expanding his empire.
Posted by: anne | June 28, 2007 at 09:42 PM
http://www.juancole.com/2007/06/save-small-political-magazines-i-just.html
June 28, 2007
Save Small Political Magazines
By David Corn
' Postal regulators have accepted a scheme designed in part by lobbyists for the Time Warner media conglomerate. In short, mailing costs for mega-magazines like Time Warner's own Time, People and Sports Illustrated will go up only slightly or decrease. But smaller publications like The Nation will be hit by an enormous rate increase of half a million dollars a year.
For The Nation, $500,000 a year is a lot of money. Believe me, I know. I’ve been working at the magazine for over 20 years. The pay ain’t great. But there are few media outlets that allow their writers and reporters the freedom to go beyond the headlines and take on the powers that be—to ask inconvenient questions and pursue uncomfortable truths.
But starting July 15, 2007, The Nation will face this whopping postal rate hike. Not to be melodramatic, but this rate increase is a threat to democratic discourse. Why should magazines that can afford high-powered lobbyists receive preferential treatment? This rise in mailing costs will make it harder for the magazine to deliver the investigative reporting and independent-minded journalism upon which you depend. (Take my word; I see the editors and publishing people in our New York office freaking out about this postal rate hike and discussing possible cutbacks.)
The magazine is fighting this corporate-driven, unfair and anti-democratic increase as best it can. It has joined forces with conservative publications in an attempt to beat back the rigged rate structure. (Imagine Katrina vanden Heuvel and Rich Lowry, the editor of National Review, working together!) But even if we “win”—which, I’m told, is a long shot—The Nation will still face hundreds of thousands of dollars in additional postage. '
You can help here. *
By Juan Cole
This is the print-world equivalent of the Corporations' plan to destroy net neutrality. It is probably a stalking horse. If they get rid of the little magazines, they will then get rid of us, and theirs will be the only voices that can be heard.
* https://ssl.thenation.com/associates/support_postal.mhtml?o=p2
Posted by: anne | June 28, 2007 at 09:54 PM
prof, in the midst of your otherwise very thoughtful analysis is one big mistake: the notion that the wall street journal editorial page can't get worse.
don't you read your own work? just as with the bush administration, there is no bottom to what the wsj editorial page can achieve....
Posted by: howard | June 28, 2007 at 10:28 PM
"The good Wall Street Journal is the news pages as built up by Norman Pearlstine, with past and present stars like Al Hunt, Davie Wessel, Charles Murray, Ron Suskind, Walt Mossberg, Greg Ip, and a galaxy of others: the finest, smartest, hardest-working, and most professional group of star news reporters in the world."
Mental train wreck moment. _The_ Charles Murray?
[No! No! Alan Murray! Alan!]
Of Losing Ground and Bell Curve Fame? I'm not a reader of the WSJ, but if they're one and the same, my respect for the news operation just went down substantially.
And if they're not the same person, you should point that out, Brad.
Posted by: andres | June 28, 2007 at 10:34 PM
I have to agree with howard, Brad. The WSJ op-ed page _can_ get much worse than it is now. As bad as it is now, it doesn't have people like Lou Dobbs, Pat Buchanan, Anne Coulter, and yes, Charles "Bell Curve" Murray writing for it on a semi-regular basis. Unless Murdoch's contract with Dow Jones is supremely watertight in protecting the WSJ's autonomy, you might eventually see such writers in the op-ed page more regularly. It sounds extreme to think of the WSJ op-ed page going from a supply-side corporate apologist rag to a fascist rag, but that has started to happen with the Republican party also.
Posted by: andres | June 28, 2007 at 10:44 PM
This seems a self-correcting problem. Fox's audience is rednecks. WSJ's audience is the ruling class. Our ruling class being what it is, they like to read about how they are superior to the rest of us on the opinion page. However they need precise information to make decisions and if Murdoch screws that, they will just turn to the other information sources.
Posted by: banana | June 28, 2007 at 11:15 PM
Murdoch will destroy the WSJ, by doing what he always does, selling the news coverage to whoever it is in his interest to suck up to.
All right. Big deal.
The wing-nut readership will remain. The readership who cares about reality and actually needs serious, no-BS information will go somewhere else.
It's just a good opportunity for an other publisher to get creative and rake in a great stable of first-class general news and business journalists.
Wouldn't it be funny if a Soros or a Buffett decided snatch the moment and capitalize on the (legitimate) anxiety of WSJ journalists to organize a mass defection? What would it take to recreate the WSJ from scratch, minus the crazies? A few hundred millions dollars? A billion dollar? That's not much money to those guys.
What is more annoying is the possibility that this serious reporting could very well take place behind high walls, something on the model of Stratfor. You can see the same dynamic in Washington, albeit on a smaller scale. Wankers read the Politico. People who matter pay a lot of money and read the Nelson report.
Posted by: Fifi | June 28, 2007 at 11:17 PM
andres, i was mentally asleep or i'd have already corrected the prof: he meant "alan" murray, not "charles" murray.
Posted by: howard | June 28, 2007 at 11:34 PM
Please, please, please, show some semblance of understanding what the Supreme Court has done in turning against the ideal of an integrated America after we struggled so hard for so long to gain the ideal. Please.
Posted by: anne | June 29, 2007 at 12:33 AM
I am fairly young but I was brought up to understand what "separate and equal" meant and how the Supreme Court understood and changed the concept to separation being inherently unequal. Surely "you" understand.
Posted by: anne | June 29, 2007 at 12:42 AM
If you want a template for what might happen to the WSJ, it's probably best to look at a big "quality" paper that Murdoch took over: The Times.
Results:
1) Expect more cross-promotion, both in terms of marketing, but also smear building with his other media properties.
2) The opinion page will pander to the prejudices of readers to the right of centre. (No change there then, perhaps.)
3) Editorial decisions about the news section will all be vetted by Murdoch. If the editor pisses off Murdoch's friends, then the editor will be sacked.
If one of his sons is put in charge? A lot depends on which son it is. The one in charge of Sky TV is at least progressive on the global warming front (which would be amazing to see thrust into the WSJ editorial.) But the other is pretty much a "mini-Rupert" and would likely play the power game just as much and in a way, more ruthlessly within the American scene because he would be trying to build up his influence...
Posted by: Meh | June 29, 2007 at 03:27 AM
Of course the other thing is that we will see a huge push by Murdoch to undercut the FT and try and drive it out of business. I'll be sad to see the pink paper go, but it is inevitable. At least maybe it'll force the upper class to think about media consolidation for a change.
Posted by: Meh | June 29, 2007 at 03:35 AM
How other media outlets would react to such an acquisition -- what they would do to stay viable -- is an important and underrated aspect of the whole story...
Posted by: Tyler Cowen | June 29, 2007 at 04:38 AM
How other media outlets would react to such an acquisition -- what they would do to stay viable -- is an important and underrated aspect of the whole story...
Posted by: Tyler Cowen | June 29, 2007 at 04:41 AM
The people pushing the 'need for good information' theory need to remember that Murdoch has a history of providing bad information, and has prospered because of it.
It's analogous to assuming that the Bush administration won't f*ck something up, because the elites need good government.
Posted by: Barry | June 29, 2007 at 07:08 AM
I have over 35 years experience of being in Rupert's target audience -- first in Australia, subsequently in the UK and the USA. My theory as to why he wants to buy the WSJ is that Rupert is one of the wing-nut true-believers, well to the right of Genghis Khan. Watch him push the news journalism to the right, to match the current wacko editorial slant, as he has done with every newspaper he has every owned.
Posted by: Peter | June 29, 2007 at 07:19 AM
It is the reference to the "The Duke of Swabia" which would identify this as a Brad DeLong posting if the author's name had been withheld.
[Herzog zu Schwaebisch?]
Posted by: otto | June 29, 2007 at 08:24 AM
The press. A question to ask now to the Republican senators that are trying to swim to shore is "have you had discussions with all the estates in the White House and when have you had them?" then in the reporting note whether that coincides with our newest turn in the war, "We're exclusively targeting al Qaida."
Posted by: christofay | June 29, 2007 at 09:15 AM
I, for one, will not wait to find out. I will not have my news hanitized or read what's important picked by Bill O'Liar. I will cancel as soon as Murdock gains control and just depend on the FT alone.
Posted by: me | June 29, 2007 at 10:10 AM
Lawmakers Sell Out Americans!
When I ran against Congressman Tom Price I pointed out how Price was selling out American jobs and wages in exchange for campaign donations by co-sponsoring a bill (H.R. 3938) to increase the annual cap on all employment-based visas (not just technically-oriented H1Bs) by over 115% (from 120,000 to 260,000).
Please watch this training video by a law firm that teaches companies how to disqualify American workers and instead hire low-wage immigrants.
http://controlcongress.com/uncategorized/lawmakers-sell-out-americans
LD-According to the According to the Bureau of Labor Statistics, between 2000 and 2005, the United States’ employment for computer workers grew by about 332,000.
During the same time period, the United States imported about 330,000 H1-B workers for computer occupations.
The situation for engineers was even worse, with 95,000 H1-B visas issued in the same period for engineering, yet according to the Department of Labor, engineering jobs shrank by almost 124,000 jobs.
Posted by: John Konop | June 29, 2007 at 01:11 PM
It would be "Herzog von Schwaben". Swabia is a real place and regional identity; Einstein was Swabian since he was born in Ulm. But most of Swabia is in the Land of Baden-Württemberg.
Posted by: James Wimberley | June 29, 2007 at 03:20 PM
I voted for John and it absolutely amazed me the few votes he got against a horrible congressperson, Price.
If you hate Mexicans you will get elected in Georgia. Chip Rogers sponsors all kinds of hate legislation at the state senate level and garners almost 90% of the vote.
Posted by: me | July 01, 2007 at 07:44 AM