Incredible as it may seem, Rupert Murdoch is poised, at 76, to pull off the deal of his life. It’s not the biggest deal he’s ever done – though at $5bn (£2.5bn)-plus its size is not to be sneezed at. Nor is it MySpace, with the flashy attraction of its “Road to Damascus” conversion to new media.
In fact, comparatively, Dow Jones with its jewel in the crown the Wall Street Journal verge on the dull – and certainly make a virtue of austere tradition. But think of the prestige this acquisition would confer on the Murdoch empire, with its tabloid and radically pro-business flavour. Indeed, Wall Street Journalists already have, and they don’t like what they see ahead.
Credibility over editorial integrity – not money – was always the main hurdle to this deal; News Corp already has $7bn (£3.5bn) cash on its balance sheet and recently put some of its Fox TV stations up for sale into the bargain; no other serious bidder has shown his hand. Now that Murdoch has persuaded the Bancroft family – which owns the principal voting shares in Dow Jones – of the efficacy of a seven-member supervisory board, the spotlight must move on to what else he has in mind.
One thing he has been pretty explicit about is building a global business television channel, under the Fox aegis. This would directly challenge CNBC, with which WSJ already has a tightly-knit content arrangement. Unravelling this – and dealing with all the regulatory issues – would certainly not be child’s play. But the magnitude of the threat can be seen in Pearson’s desperate attempts to forge a last-minute anti-Murdoch alliance with CNBC’s owner, GE.
For potentially, it is the Financial Times, owned by Pearson, which stands to lose most if Murdoch wins (Noises Off, May 4). News Corp can bring not only investment, but a feel for global media which US-centric brands such as WSJ and CNBC substantially lack (despite their worldwide reach).
The FT will be mindful of something else. Whereas media comprises virtually everything Murdoch does, it is a small part of Pearson’s thinking these days. To be sure, the FT is a great trophy brand with resurgent circulation and profits, but it also accounts for less than 6% of group revenues and, at last reckoning, about 2% of group profits. What if a triumphant Murdoch were to turn the heat up in the FT’s heartland of Europe? Would Pearson, with its focus on the US-education sector, really stand up and fight? Would it have any success in forging a defensive alliance in a media world drastically narrowed by consolidation? Or, most likely, would it eventually be forced to sell the FT – and if so, to whom?
The FT has one strong card, however – the hope that Murdoch overplays his hand. His undertaking not to subordinate WSJ editorial integrity to his – or News Corp’s – narrower business interests may just about have overcome the Bancrofts’ reservations, but there are plenty of others who remain unconvinced. As often remarked, it is not so much the fear of direct intervention as the suspicion of journalistic self-censorship which will have a chilling effect on this audience, for whom brand integrity is so important. And, as the China business showed, that suspicion may be very difficult to dispel.
Stuart Smith, Editor