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COPYRIGHT 2003 All rights reserved. Reproduced by permission of The Condé Nast Publications Inc.
At first glance, the Wall Street Journal and its parent company, Dow Jones & Co., appear to be models of serenity. The newsroom, as newsrooms go, is surprisingly tranquil, despite a recent round of layoffs. Paul E. Steiger, the managing editor (the paper's top editorial position), listens more than he exhorts, and jokes about how boring he is. The chairman and C.E.O. of Dow Jones, Peter R. Kann, glances at his watch when he makes presentations, as if he couldn't wait to flee.
The apparent calm is misleading. Kann will be sixty-one this year, four years short of mandatory retirement, and no one knows if his successor will be a journalist, like him and like his predecessors for the past half century. Steiger, too, is sixty-one, and the competition for his job has begun. The financial health of the company is less than robust; in 2002, Dow Jones lost eight million dollars, and reduced costs by nearly a hundred and seventy-nine million dollars. More than seventeen hundred full-time employees have been let go since December, 2000--about a quarter of the workforce--and some Journal employees say that the paper lacks the energy and investigative appetite it once had. Many reporters and editors, even though they like Kann personally, think that the company might be in better financial condition if its C.E.O. were a tough businessman.
People who work at the Journal speak as if they'd been through a war, and in a way they have. Their offices, at One World Financial Center, are across the street from the site of the Twin Towers, and were almost destroyed on September 11, 2001; many operations were moved to New Jersey. (Under Steiger, the Journal's extraordinary coverage of the day won a Pulitzer.) In January, 2002, the Journal reporter Daniel Pearl was kidnapped and murdered in Pakistan. A year after the terror attacks, the newspaper moved back to three of its seven floors, but the offices, with bare walls and empty bookshelves, have a Motel 6 feel to them.
The Journal, like two other great American newspapers, the New York Times and the Washington Post, is controlled by a family, and there is concern that the younger generation might want to sell the company. Unlike the Washington Post Company, which has diversified, and which expects to generate more revenue from its Kaplan unit, an educational-testing and teaching service, than from the Post, Dow Jones relies on the Journal for fifty-five per cent of its revenues and, in most years, seventy per cent of its profits. And Dow Jones, with revenues of about $1.5 billion, is just half the size of the New York Times Company. The Bancroft family has owned Dow Jones since the beginning of the twentieth century, and has steadfastly spurned overtures to sell, but its resistance may be softening. "Anything is possible--you never say never," said Leslie Hill, an American Airlines pilot and one of three Bancrofts who serve on the Dow Jones board, along with a family trustee, Roy Hammer. While the family has "a lot of pride" in its journalistic property, Hill says that family members sometimes disagree about financial issues. "I hear comments that they're not happy with the company's performance."
The strengths of the Journal are obvious. Its daily circulation (1,820,600) is exceeded in the United States only by that of U.S.A. Today (2,162,454); if one adds the paper's electronic subscribers who do not subscribe to the newspaper--there are almost four hundred thousand of them--the Journal ranks No. 1. The Journal also enjoys enviable demographics. According to readership surveys, the average annual income of Journal readers is about two hundred thousand dollars--about twice that of the Times. In the mid-nineties, when other newspapers were giving away their online editions (as most still do), Kann insisted on charging for his. The gamble resulted in the Web's largest subscription site; six hundred and eighty-six thousand subscribers paid either seventy-nine dollars annually if they did not subscribe to the newspaper or thirty-nine dollars if they did. L. Gordon Crovitz, the president of electronic publishing at Dow Jones, predicts that wsj.com "could one day have more subscribers than the newspaper."
Recently, I asked Paul Steiger to imagine telling a reporter to write about his employer. What would he want answered? There are two crucial questions, Steiger responded: "Is it big enough to stand alone in a world where most competitors are much bigger?" And will the Bancroft family continue to "believe in it as an institution that is more than just an income-producing business?" Steiger himself is optimistic on both counts.
Many companies--Rupert Murdoch's News Corp., Gannett, Pearson P.L.C., General Electric, Microsoft, Bloomberg, and Warren Buffett's Berkshire Hathaway, among others--have expressed interest in buying Dow Jones. (To shield the Journal from hostile takeovers, the family in 1984 submitted--and shareholders approved--a plan to issue a new, Class B stock with ten times the voting power of Class A stock. This plan would allow them to raise cash by selling Class A shares; at the same time, they would retain eighty per cent control over the new stock. The Washington Post and the Times have long employed two classes of stock.) Last year, Arthur Sulzberger, Jr., the Times' publisher, met in Boston with Roy Hammer, and proposed a merger of the two companies. Hammer rejected the idea. Sulzberger then wrote to him proposing that the Times acquire Dow Jones. The letter was vague on specifics but clear on intent. After informing Kann, but without consulting the board, Hammer telephoned Sulzberger to express surprise at the proposal, as he thought he'd made it plain that the company was not for sale. (Sulzberger declined to comment.)
Some members of the Bancroft family have said privately that an offer from the Washington Post Company and one of its directors, Warren Buffett, would be treated with more interest. "The Washington Post is a different animal," William Cox III, a family member who was a Dow Jones executive and now runs a hedge fund, said. "If you asked me if I had some interest, going forward, in being in business with Warren Buffett, you're damn right. He's very savvy on media investments." But Donald Graham, the chairman of the Post, insists that he has made no approaches. (The Journal and the Post already have a relationship: the international editions of the Journal began carrying Post stories early this year after the Times abruptly ended its partnership with the Post in the International Herald Tribune.) However, when I asked Graham if he would be interested in owning the Journal, he said, "Of course. So would thousands of others."
The Wall Street Journal was launched in 1882 as a business newsletter by two journalists, Charles Dow and Edward Jones. Fifteen years later, Dow Jones introduced its electronic news ticker, a wire service that today employs more than seven hundred people and has three hundred and twenty-six thousand subscribers around the world. With the death of Charles Dow, in 1902, the company was sold to its famously fat Boston correspondent, Clarence Walker Barron (who, in 1921, founded Barron's). When Barron died, in 1928, ownership passed to his stepdaughters, Jane and Martha. Jane Barron's husband, Hugh Bancroft, a Harvard Law School graduate who had worked alongside his father-in-law, took over the management of the enterprise. But five years later, at the age of fifty-four, Bancroft, who suffered from depression, killed himself. The company was left in the hands of the Journal's editor, and since then the Bancroft family has not had an active management role.
Today, the family consists of the descendants of the three children, now deceased, of Jane and Hugh Bancroft--about thirty-five adults, according to Roy Hammer. They are, among other professions, writers, investment bankers, equestrians, and philanthropists. Hammer, who is sixty-nine, is a slender man with expressive white eyebrows. Although he is not a Bancroft, he is by far the family's most powerful representative. During a four-hour conversation at lunch and then at his office, at Hemenway & Barnes, one of the oldest law firms in Boston, Hammer seemed to choose every word with great care, often taking long pauses between thoughts.
The Bancrofts have been represented by Hemenway & Barnes since the end of the Second World War, and Hammer has been their designated trustee for three decades. There is no family steering committee, but there is an annual Bancroft Family Forum, over which Hammer and his partners preside. "Every member of the Bancroft family who is eighteen years or older is invited," Hammer said. "We have a discussion about the company, about concerns they may have about the company."
Each quarter, the Bancrofts meet at Hammer's office to review their investments. A substantial part of the family's wealth is in Dow Jones stock, which pays regular dividends. (The family now owns about a quarter of the sixty-one million Class A shares and eight of ten Class B, or voting, shares. In good or bad years, Dow Jones dividends over the past five years have remained steady, at about a dollar per share.)
"The family is a factor when we discuss dividends, but not the...
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