MSN Money Homepage MSN Money Investing SEARCH Advanced Search QUOTES & RESEARCH Symbol(s) Name Mutual Funds | ETFs MORE FROM TODAY'S JOURNAL $ Subscription may be required | Subscribe Now PEOPLE WHO READ THIS... Also read these stories:   What's This?  WHAT'S NEWS • Feuds Dog Democrats, Stall Congress • Bill Clinton May Curb Ties to Burkle • Euronet Makes Bid for MoneyGram • Fund to Bail Out SIVs Loses Steam • Republicans' Debate Unlikely to Sort Out Field MORE  WHAT'S POPULAR 1. Led Zeppelin's Rocking Return 2. Central Banks Try to Free Up Credit 3. Commentary: The Roots of the Mortgage Crisis 4. Banks Offer Even Tougher Forecast 5. Stocks' Wild Ride Ends in Gains MORE What's This? | Get Listed ADVERTISERS LINKS

CALLING THE SHOTS
In Murdoch's Career,
A Hand on the News

As Rupert Murdoch advances in his bid to buy The Wall Street Journal and its parent, Dow Jones & Co., a central issue is whether he will preserve the independence of its news operations -- and keep his own views and commercial interests from coloring what appears in the paper's news pages.

Since his $5 billion offer became public last month, some members of the Bancroft family, which controls Dow Jones, have expressed skepticism about his promise to preserve the paper's independence. Another big shareholder, James Ottaway Jr., declared that Mr. Murdoch has long "expressed his personal, political and business biases through his newspapers and television stations." Even as the family shifted last week from opposing the bid and met with Mr. Murdoch yesterday to discuss his offer, it began talking about ways to set up a mechanism for safeguarding the paper's editorial independence. (See related story.)

A detailed examination of Mr. Murdoch's half-century career as a journalist and businessman shows that his newspapers and other media outlets have made coverage decisions that advanced the interests of his sprawling media conglomerate, News Corp. In the process, Mr. Murdoch has blurred a line that exists at many other U.S. media companies between business and news sides -- a line intended to keep the business and political interests of owners from influencing the presentation of news.

Mr. Murdoch's focus on News Corp.'s bottom line has often allowed market considerations to influence editorial moves, and different markets have led to starkly different approaches. In the U.S., Fox News has thrived by tilting to the right, filling a niche left open by its network and cable rivals. In Italy, a 24-hour television news channel launched by Mr. Murdoch in 2003 has positioned itself as a relatively reliable and objective source of news -- in contrast to the political bias of Italy's more-established channels.

At all newspapers, owners have a say in broad editorial direction. Mr. Murdoch has a long history of being unusually aggressive, reflecting his roots as an old-fashioned press baron. From his earliest days, like some other newspaper proprietors of the last century, he ran his companies with his hands directly on the daily product, peppering reporters and editors with suggestions and criticisms.

MORE

 

• On the Record: WSJ interview with Murdoch

• Murdoch Calls Dow Jones Meeting 'Constructive'

• Complete Coverage: A Deal for Dow Jones?

In an interview in his New York office on Friday, the Australian-born magnate spoke openly about his hands-on style. "When a paper starts to go bad and go down the drain, the buck stops with me," he said. Shareholders "never ring the editor, they ring me," he said, adding that has "once or twice" led to "very unhappy but necessary decisions" to replace editors.

He said that if he buys the Journal, "I'd love to wander around....I think people quite like it if I show interest in their work." He added: "I can't put $5 billion of my shareholders' money and not be able to run the business."

But he said he has no plans to interfere with the news operation, including stories about News Corp. "I'd complain like hell if they were incorrect," he said. "You'd have to run what you like."

Several current News Corp. editors, including Robert Thomson of the Times in London and John Witherow of the Sunday Times, say Mr. Murdoch has never tried to influence coverage or interfere in their running of the newspapers. As Mr. Murdoch's empire has grown, the 76-year-old proprietor says he has less time to devote to talking to his editors.

"The frustration of my life has been as the company has grown bigger and we've taken opportunities, I've had less time to pay any detailed attention to" his newspapers, he said.

Over the years, Mr. Murdoch and his lieutenants have raised hackles for their involvement in the company's news operations. Former top editors at two of his London papers, for example, say he ignored an independent board set up to protect them from his interference, and got involved directly in firings in the 1980s. In Australia, the former editor of one of his top papers complains that a News Corp. executive pushed him for critical coverage of pilots in a strike that was hurting a News Corp. airline investment. In China, former employees say Mr. Murdoch's representatives occasionally pushed reporters to do more upbeat stories, at a time when News Corp. was seeking government help to expand its reach there. The reporters there didn't listen and kept up their often critical coverage.

Just last month, News Corp.'s Daily Telegraph, Sydney's largest newspaper, devoted more than half its front page to News Corp.'s own plan to lower carbon emissions. An accompanying editorial proclaimed that Mr. Murdoch "has never set a standard more worthy of following."

Shown a copy of the Daily Telegraph stories, Mr. Murdoch laughed, and said, "I don't know anything about that. And we sure didn't do that in the [New York] Post, which I'm closest to." Asked if the Sydney paper's coverage that day was in effect promoting News Corp., he replied, "Absolutely. Shouldn't be. That's bad."

Appetite for Risk

Mr. Murdoch's vision and appetite for risk have created a global media empire unlike any other, starting with a single Australian newspaper he inherited from his father in 1952. Today, it includes more than 100 papers in Australia, Britain, the U.S., Fiji and Papua New Guinea; Twentieth Century Fox Film; the Fox TV network; HarperCollins Publishers and the popular MySpace Internet site. In the four quarters ended March 31, encompassing parts of two fiscal years for the company, New York-based News Corp. reported a total of $28 billion in revenue and $3.38 billion in net income.

But Mr. Murdoch, the son of a prominent Australian journalist, still views himself as a newsman. "I've been a newspaper person since I was a baby practically, and I just love newspapers," he says.

Even before he owned any media properties, he had strong views about how papers should be run. Shortly before starting his studies at Oxford University in 1950, he traveled to Britain to work as an intern at the Birmingham Gazette. At the end of his stint, he wrote to the head of the paper's owner, Westminster Press. He denounced the Gazette's reserved editor, Charles Fenby, as incompetent and urged that he be fired, says the late editor's son, Jonathan Fenby. Mr. Fenby kept his job and laughed off the episode, recalls his son, who also became an editor.

"I should never have wrote that letter," Mr. Murdoch says, laughing. "It was correct, mind you, what I wrote. I won't take it back."

At the start of his career, in the 1960s and 1970s, he was a fixture in his Australian newsrooms, offering both welcome and unwelcome advice to his reporters, pushing story angles, discussing political coverage and passing along tips. Such behavior wasn't deemed particularly unusual. Richard Farmer, a political correspondent who once worked for two of Mr. Murdoch's papers, says he could be a "bully" when pushing for a story, but was also known to back off when journalists pushed back.

Occasionally, he penned stories for his papers. In 1976, he wrote what he says was a "terrific scoop" for the Australian, News Corp.'s national paper, about an Iraqi loan scandal involving a former Australian prime minister, Gough Whitlam. His story carried the byline "a special correspondent," without his name. Mr. Murdoch says that among his sources was another politician who later became prime minister. The story sparked an uproar among Mr. Whitlam's supporters, who arranged a boycott of the paper that cost it thousands of readers. The lost circulation "took a long time to get back," Mr. Murdoch says.

Mr. Murdoch acquired his first American papers in 1973: the morning San Antonio Express and afternoon News. The morning paper boosted its coverage of local politics and government, while the afternoon paper veered into sensationalism. Lurid advertising boards expanded street sales: "Midget Robs Undertaker at Midnight," "Aliens Fought Over Urine in Desert Battle," and "Vampire Killer Stalks City." Mr. Murdoch later toned down the gore. Faltering before Mr. Murdoch acquired them, the two papers overtook a dominant local rival. They later merged.

In 1976, he bought the New York Post, a liberal-leaning tabloid in Manhattan that mixed crime reporting with coverage of more serious issues. He made the paper more sensational, and its editorials conservative.

'More Pizzazz'

"In the beginning, when he first took over, he was there like almost every day," says Michael J. Berlin, a reporter at the Post from 1966 to 1988. "He would go out to the composing room, his sleeves rolled up...trying to get more pizzazz into the paper." Roger Wood, then the paper's editor, says that whenever he went on vacation, Mr. Murdoch "would edit the paper."

New York's feisty tabloids, the Post and the Daily News, have a long tradition of bashing one another. Under Mr. Murdoch, the Post frequently disparaged the Daily News and wrote about the finances of its owner, Mortimer Zuckerman, calling him "Suck-Up Zuck" in one prominent headline.

In 1996, the Post ran a two-page spread about Fox News's opening of its Manhattan studio, with photos of Mr. Murdoch, New York Mayor Rudolph Giuliani, Fox News Chairman Roger Ailes and other celebrities. One story began: "Politicians, celebrities and journalists gathered under one festive tent last night to toast Sixth Avenue's newest -- and newsiest -- showcase: the Fox News Channel."

Mr. Murdoch said on Friday: "We're all in it together. We're a pretty close company. They didn't do it to say, let's suck up to Murdoch....They'd like to see it succeed, probably."

That same year, the Post took aim at Ted Turner when Time Warner Inc. declined to carry News Corp.'s Fox News Channel on its New York cable systems. Mr. Turner had just sold Turner Broadcasting, the owner of Fox's rival, Cable News Network, to Time Warner. "Is Ted Turner nuts? You decide," read the Post's front-page headline on Oct. 21, 1996. The accompanying article discussed Mr. Turner's role in Time Warner's decision. The headline wasn't Mr. Murdoch's idea, according to then-editor Ken Chandler.

"Well, we were in a war," says Mr. Murdoch of the coverage. He says he approved of using the Post to go after Mr. Turner, but hastens to add: "You're talking about the daily New York Post in the same breath as The Wall Street Journal. They're not the same."

A few years after he had planted his flag in New York, Mr. Murdoch moved to pursue a more sober brand of journalism in London, where he already owned a pair of racy papers. His 1981 bid to buy the Times and Sunday Times raised some of the same concerns about preserving editorial independence and integrity that have come up in connection with his bid for The Wall Street Journal.

In London, Mr. Murdoch agreed to give extra powers to independent directors on the papers' board. The six independent members are charged with protecting the two papers' editors-in-chief from interference by the owners "in expressing opinion or in reporting news that might directly or indirectly conflict with the opinions or interests of any of the newspaper proprietors," according to the newspapers' articles of association. The six board members are supposed to have approval over the hiring and firing of the top editors, who in turn are supposed to have sole control over staffing decisions.

Mr. Murdoch is not supposed to give directions to any journalist except each paper's top editor. In a letter to the Bancroft family last month, Mr. Murdoch proposed a board "exactly along the lines of" the one he established in London for The Wall Street Journal.

Mr. Murdoch made these promises as a condition of avoiding a British government review of the purchase. John Biffen, then the Secretary of State for Trade, cleared the deal in part because of the guarantee of editors' independence. Mr. Biffen says now that the guarantee was a "fig leaf" to blunt criticism that the government, in approving the deal, was granting Mr. Murdoch too much power. The government, he says, didn't consider Mr. Murdoch's promises all that important.

Several former editors of the London papers describe the independent board as ineffective, although they say that in recent years, Mr. Murdoch has left the newspapers alone. Sir Robin Mountfield, a current independent director, says the board acts like a "fleet in being," a naval term for warships that never leave port but still pose a threat to the enemy.

Frank Giles, who edited the Sunday Times from 1981 to 1983, says the board "had very little power or will to protect the independence of the papers they were appointed to safeguard."

In his autobiography, "Sundry Times," Mr. Giles wrote that Mr. Murdoch ordered him in January 1982 to replace the paper's magazine editor with an editor from the News of the World, an apparent violation of his promise not to dictate staffing changes. Mr. Giles says he reluctantly made the moves, pretending to the paper's staff they were his idea. He says he didn't appeal to the independent directors because he believed it wouldn't have helped. Mr. Murdoch denies he ordered the change, saying, "Frank's gone nuts."

Fred Emery, a former Times assistant editor, says Mr. Murdoch called him into his office in March 1982 and said he was considering firing Times editor Harold Evans. Mr. Emery says he reminded Mr. Murdoch of his promise that editors couldn't be fired without the independent directors' approval.

"God, you don't take all that seriously, do you?" Mr. Murdoch answered, according to Mr. Emery. Mr. Emery says he replied: "Of course we do."

According to Mr. Emery, Mr. Murdoch laughed and said, "Why wouldn't I give instructions to the Times when I give instructions to editors all around the world?" Mr. Evans was eventually forced out by Mr. Murdoch.

On Friday, Mr. Murdoch said his recollection of the conversation was that Mr. Emery "was extremely critical of Harry." Mr. Emery responds: "Having summoned me to this meeting, it is rather odd that Mr. Murdoch remembers only my criticisms, but not his own statements about the firm promises he had given to the British government" about the papers' editorial independence.

Bitter Battle

By the mid-1980s, Mr. Murdoch had given up his Australian citizenship and become an American. But he stayed very active in his native land, meeting regularly with editors, local politicians and others at his family's ranch near Canberra. In 1987, he won a bitter takeover battle for a major Australian newspaper chain -- a company his father had once run -- giving him a dominant position in the country's print media industry.

Two former Murdoch editors say Mr. Murdoch's longtime lieutenant in Australia, Ken Cowley, pressured them to play down stories harmful to Ansett, an Australian airline then half-owned by News Corp.

When the country's airline pilots went on a long strike in 1989, Mr. Cowley "wanted me to be against the pilots," recalls Frank Devine, then editor of the Australian, who says he favored a more neutral approach. That led to a "running feud" with Mr. Cowley, he says. In December 1989, Mr. Cowley fired him. Mr. Devine says he wasn't told why, although he contends it was "mainly because of our coverage of the pilots' strike."

Mr. Murdoch responds: "I don't know about that. At all." He says of Mr. Devine, who also edited two other Murdoch-owned papers: "Frank was a mistake of mine."

Mr. Cowley said in an email that he didn't put any pressure on editors about Ansett coverage, and Mr. Devine wasn't removed because of the Ansett coverage. Mr. Cowley stepped down as chief of News Corp.'s Australian unit in 1997.

More than a decade ago, News Corp.'s Australian unit struck a marketing agreement with the Australian Football League in which some of News Corp.'s Australian papers promised a minimum amount of news coverage of the sport, according to the AFL and News Corp. Promising coverage in return for anything of value is forbidden by many publications, which regard it as advertising masquerading as news. A group led by a News Corp. unit later won rights to televise league games for several years.

John Hartigan, chairman of News Corp.'s Australian unit, News Ltd., says he sees no problem with the arrangement. "All it was is a matter of allowing them to be guaranteed that the sport would be covered in the newspaper," he says.

Says Mr. Murdoch: "I have no knowledge of that at all. We certainly would never do that."

Expanding Abroad

Although Mr. Murdoch had become a formidable force in the English-language media world, he was itching to expand further. Moving into Asia, Latin America, and parts of Europe was more difficult, due in part to language and cultural differences.

In 1993, Mr. Murdoch focused on building a television-satellite business in Asia by buying a controlling stake in satellite broadcaster Star TV. His new clout in Asian satellite television drew widely reported criticism from Malaysian Prime Minister Mahathir Mohamad. Malaysia did not yet have a consumer satellite-TV service. But it was a potentially lucrative future market for Mr. Murdoch because it had lots of English speakers who might like Star's English-language channels.

News Corp.'s Sunday Times published articles alleging a British company was prepared to bribe Malaysian officials to win a construction contract. According to Sunday Times's editor at that time, Andrew Neil, Mr. Murdoch called him and complained that he was "boring people" and that he should stop the coverage. Mr. Neil said the row damaged his relations with Mr. Murdoch and contributed to his decision to leave the paper for a job on a new TV show in the U.S. on Mr. Murdoch's Fox network. The show never went beyond pilot episodes and Mr. Neil left News Corp.

Mr. Murdoch says the Malaysian prime minister never complained to him about the stories. But Mr. Murdoch says he did criticize them to Mr. Neil. "I remember the story which they tried to run and run and run. I said, 'Are you sure of your facts? Have you gotten a smoking gun here?' I might have asked him that. But I never tried to stop it or anything else."

Mr. Murdoch's first big foray into China was his purchase in 1986 of a controlling stake in the South China Morning Post, a Hong Kong daily. Hong Kong was then still a British colony, but its political and business fortunes were increasingly intertwined with the policies of the Chinese Communist Party.

The paper opened a bureau in Beijing. The two young American reporters who staffed it, Seth Faison and Marlowe Hood, say they were given free rein to write what they wanted. Phillip Crawley, then editor, says he received "not a word from Murdoch" about how to cover the June 1989 Tiananmen Square massacre or Chinese affairs in general.

In the late 1980s, the paper's managing director, Clarence Chang, visited Beijing to discuss a business deal with an arm of China's state media apparatus. He also met with Messrs. Faison and Hood, and complained about a column the bureau had written that poked fun at a spring festival show on China Central Television, according to Mr. Faison. He says Mr. Chang urged them to write more upbeat articles about China and to refrain from offending China's state media establishment. "It's good for me, it's good for you, and it's good for Rupert," Mr. Faison says Mr. Chang told them.

Mr. Faison, now a media consultant in Los Angeles, says they ignored the appeal and continued to write about China as they pleased. Mr. Chang says he doesn't recall the incident, but says he never pressured the news staff to tone down what they wrote about China.

Mr. Murdoch says that if the incident occurred, it was "good" the reporters ignored the request.

In 1993, Mr. Murdoch sold the South China Morning Post, or SCMP, at a profit. He said at a news conference at the time that he wanted to avoid conflict with Beijing and the risk of having Star TV "shut down because of the opinions of some of our editors." David Armstrong, the paper's then-editor, says Mr. Murdoch told him "that if he was going to do business in China, he would really have to sit on the SCMP, and he didn't want to do that."

Mr. Murdoch's plans for Star TV, which some users got access to by using satellite dishes, didn't go smoothly in China. In a 1993 speech, Mr. Murdoch described satellite-TV technology as "an unambiguous threat to totalitarian regimes everywhere." A few months later, China restricted the use of satellite dishes to limited areas, although a thriving illicit market for them has developed.

On Friday, Mr. Murdoch said that his relations with the Chinese government became a source of frustration. "I had not been received by a single minister or anyone," he recalled. "We just had a total blackout for five years." He said he believed that the government might have been told that he was a British spy.

Star TV carried the British Broadcasting Corp.'s international news channel, whose station identifier featured pictures of a Chinese man blocking a tank near Tiananmen Square. The BBC had infuriated Beijing with its coverage of the 1989 student protests and with a 1993 documentary, "Chairman Mao: the Last Emperor," which alleged that the late Chinese dictator had an appetite for young girls.

In spring 1994, Star TV dumped the BBC. Gary Davey, then head of Star TV in Hong Kong, says News Corp.'s relations with the BBC had been souring for some time. He says he told Mr. Murdoch that he wanted to launch a Chinese-language movie channel but didn't have extra space on the satellite. Mr. Murdoch, he says, "was emphatic" in his support of the decision to yank the BBC.

In a 1994 interview with journalist William Shawcross, Mr. Murdoch said, "They say it's a cowardly way, but we said that in order to get in there and get accepted, we'll cut the BBC out." Mr. Murdoch now says the decision to cut the BBC was "primarily a financial consideration. But it might have occurred to me, this might not hurt relations with Beijing."

In early 1998, with Mr. Murdoch's Beijing relations still testy, News Corp.'s HarperCollins publishing house decided to cancel a book by Chris Patten, Britain's last governor of Hong Kong, whom Chinese leaders loathed. HarperCollins initially said it dumped the book because it was boring. But then an internal memo from a HarperCollins official surfaced, citing Mr. Murdoch's concern about "negative aspects of publication." After Mr. Patten sued, the publishing house "unreservedly apologized" and admitted the allegations that the book was boring were "untrue." Mr. Patten later found another publisher.

Mr. Murdoch says he didn't want to publish the book in part because he thought Mr. Patten "was a terrible governor," and added, "No one in China ever spoke to me about it. I was never put under any pressure."

Mr. Patten credits the furor with boosting the book's sales. "God bless you, Mr. Murdoch," he joked recently in an email.

Bruce Dover, News Corp's Beijing-based executive at the time, says there was also friction with Chinese officials over articles in the Times. The officials complained repeatedly about the work of Hong Kong-based Jonathan Mirsky, an American-born veteran China watcher and often fierce critic of the Communist Party. Mr. Dover says he raised the issue with Mr. Murdoch and was told that muzzling Mr. Mirsky wasn't an option. Critics would be "all over me," Mr. Dover says Mr. Murdoch told him.

Mr. Mirsky continued reporting for the Times from Hong Kong until after the colony's 1997 handover. He later complained publicly that his stories were routinely spiked by the paper, and that Mr. Murdoch's interests in China had compromised coverage.

Peter Stothard, then editor of the Times, says that wasn't true. He says interest in Hong Kong's transition to Chinese rule waned in all British media after the 1997 handover from Britain to China. Coverage of the former colony did drop off in other London papers. The Times's independent directors reviewed Mr. Mirsky's complaints and found them without merit, although they didn't talk to Mr. Mirsky.

Mark Shuldham Schreiber, one of the directors, says board members asked Mr. Stothard if he had received any "outside pressure" to quash Mr. Mirsky's stories. When he said no, there was no reason to pursue it any further, Mr. Schreiber says.

Newspapers now account for only about 14% of News Corp.'s total operating income, or $450 million in the nine months to March 31, according to the company's financial statements. Much of the money is made by big-selling tabloids such as London's Sun, while some of its best-known titles -- such as the New York Post and Times of London -- are consistent money-losers.

The Times, competing in a crowded market, lost $89 million in 2004, according to a person familiar with its accounts. The New York Post, which until recently trailed competitors such as the New York Daily News in circulation, has long been estimated to lose tens of millions of dollars. Even the Australian, which turned a profit in 1985 for the first time, doesn't consistently make money, according to one News Corp. executive. The circulation of the national daily lags that of several of the major metropolitan dailies in Australia.

Nowadays, Mr. Murdoch has much to occupy his attention beyond newspapers. Aside from monitoring News Corp.'s film and television operations in the U.S. and satellite-TV interests overseas, he also is contending with the upheaval caused by the Internet. News Corp. has a thriving presence on the Web through its ownership of MySpace.

In the fall, he plans to launch a new business-news TV channel and has said he hopes The Wall Street Journal could help it. If he is successful in his bid for the Journal, he insists that he plans no changes on the news side, and will mostly focus on boosting its advertising and circulation, and its Web site.

He says he will maintain "an absolute wall" between the paper's business side and its newsroom, even when the paper is reporting on News Corp. "I just ask you to spell my name right," he says.

Write to Steve Stecklow at steve.stecklow@wsj.com, Aaron O. Patrick at aaron.patrick@wsj.com, Martin Peers at martin.peers@wsj.com and Andrew Higgins at andrew.higgins@wsj.com

Sponsored by   DIGG THIS   GET RSS FEEDS