War at the Wall Street Journal (12 page)

I
N THE TEN YEARS
of family fireworks that followed Billy Cox's coming together with Elisabeth Goth for the express purpose of saving, and perhaps advancing, their fortunes, the disaster of Dow Jones remained a regular topic of conversation for Cox. Now fifty-one years old in the fall of 2006, his light brown hair thinning, his skin showing age spots, he had moved on to a second marriage and a career as an independent investor, far from the frustrations of his family and Dow Jones.

A few days prior to the publication of the
Fortune
article, Billy had left his job as managing director of Dow Jones Global Indexes. A few days later, he was on a plane to see Buffett again, who was interested in exploring a possible combination of Dow Jones and the Washington Post Company, in which Buffett owned a significant stake and where he served on the board. Billy continued to monitor Dow Jones's situation closely, sending off pointed missives to his family members, disputing Peter Kann's claims that all was well at the company. He continued to criticize the company in the press, much to the annoyance of his father, William Cox Jr. Billy talked to any reporter who managed to get him on the phone. He defended his indiscretion by saying he had no other choice: "There is no mechanism within the family to discuss openly the business issues surrounding Dow Jones," he told
Fortune
in 1998, in a follow-up story on his and Elisabeth's campaign. "I didn't see any other alternative." His Christmas card in 1997 lamented his "divorce" from "my ... mistress: Dow Jones."

If they were included in family meetings, he and Elisabeth were sternly warned not to talk to the press. Elisabeth eventually obliged; Cox never did. Because of his public critiques, bankers and private equity executives frequently contacted him, hoping for a sliver of insight into his family and Dow Jones and who might be willing to sell the company. He readily shared what he knew of his family dynamics. He had divorced his first wife, with whom he had four children, and remarried in 1998. With his new wife, Beatrice, who was French American, and his young son, Clarence, who was six years old, he moved to Barcelona to give Clarence a European education. Still, he returned often to Princeton, where his four children from his first marriage resided, and never missed an opportunity to launch into a litany of Dow Jones errors.

The New England sisters, he told them, were "clueless." His own siblings seemed woefully uninterested in Dow Jones. His father had stood with Dow Jones management against him, something he hadn't forgotten but tried to gloss over. "We agreed to disagree," he told his cousins. Still, he had felt abandoned ever since and took every opportunity to try to return the slight, rolling his eyes at his father's comments in meetings and mentioning how his dad didn't measure up to Jessie Bancroft Cox as a leader the family desperately needed. While Billy moved around Europe, his father had retired to Palm Beach and split his time between his airy home there and his summer place on Nantucket, playing golf and enjoying a quiet life.

At the time of the family forum in mid-October, five months after Zannino and Murdoch's first meeting, Billy had moved to Rome and had recovered from his second hip surgery. (He had sustained a nasty ice hockey injury a few years earlier.) As he approached the offices of Hemenway & Barnes, which occupied two floors of a red-brick building in downtown Boston, he felt the familiar bile rise in the back of his throat, but he wasn't going to let this opportunity pass. Today was the day he would deliver another message to his family.

Elisabeth wasn't attending the meeting that day. Frustrated by her failure years before, she had sold her personal holdings of Dow Jones stock (she remained a beneficiary of the largest trust, Article III) and backed away from the fight. She was preoccupied at the time with her new marriage to Robert Chelberg, an American software entrepreneur who lived in Prague. Just the week before the meeting Elisabeth had flown from Prague to the East Coast for Robert's grandfather's eightieth birthday party. Just before the party, she had met with the Hemenway & Barnes trustees. Elefante told her he was concerned about the company's ability to increase its stock price, given all the negative factors facing the newspaper industry. Rather than feel alarmed, Elisabeth was relieved. Finally, she thought, they are being honest with me. Maybe it was that Hammer was gone; maybe it was because the news had gotten so bad that it could no longer be ignored. Regardless, Elisabeth welcomed the candor. After the meeting at Hemenway, she checked in with Mike Hill, and the two commiserated about their frustrations with the company.

Since he left Dow Jones's employ, Billy had nurtured his disrespect for the factions of the family loyal to Peter Kann—namely, the New England branch of the Bancrofts who had descended from Jane Cook, the meek sister to Billy's boisterous grandmother Jessie Cox. Jane's daughters—Lisa Steele and her two sisters—were among those who saw selling their stock as heresy.

Lisa Steele, a member of Dow Jones's board, typically took Mike Elefante's advice, as she had Roy Hammer's before him. She was often busy with her real estate company, which promoted responsible development in the remote town of Shelburne, Vermont, and didn't have the time or inclination, unlike her cousin Leslie, to do a lot of her own research outside the official channels. It seemed like a waste of time to her. Moreover, the family's advisers had always seemed honest and forthright. Robes, when she wasn't on her boat, spent time at her house in Maine and was probably the family member closest to Peter Kann. Stevenson and her husband occasionally hosted family meetings, hoping to lessen the tension.

Billy's contempt for his family was returned. Some of his relatives said his ill temper had to be the result of a chemical imbalance. It wasn't. He was just almost perpetually annoyed at his relatives. Discreet where Billy was outspoken, understated where Billy showed off, Lisa and her New England sisters saw Billy as possibly dangerous to the family and someone who couldn't be trusted. Even the cousins in his own branch—the Hills—thought Billy too reckless. His problem in a secretive family may have simply been that he talked too much.

The occasion where Billy was headed on that October day was a Bancroft family forum, one of the family's regular meetings to discuss the state of Dow Jones. The New England sisters arrived and, after politely greeting Billy, sat far away from him in the large conference room upstairs from the law firm. Billy sat with Mike Hill and his wife. (Hemenway & Barnes didn't have a large enough conference room to comfortably seat the two dozen family members who showed up.) Also in attendance were the Hill siblings, who were increasingly dissatisfied with Hemenway & Barnes. Mike had gotten nowhere with all his letter writing, and the entire family was contemplating pulling their funds out of the firm, believing as they did that Hemenway had squandered the family's money.

Mike Elefante stood before the even more restive Bancroft clan that day. He took note of Billy's distracted expression across the conference table but didn't pay much attention. Billy was a regular at such meetings and always a bit of a troublemaker.

The meeting had an anxious but ultimately hopeful feel. From the perspective of Elefante and some of the Bancrofts assembled, Dow Jones's prospects seemed to be improving slightly. Rich Zannino had been in the CEO chair for roughly nine months and had begun a reorganization of Dow Jones. Many were relieved that Kann was finally gone from the CEO spot.

Elefante had broached the topic of forming a more ironclad trust—something like what the Sulzberger family had at the New York Times Company—that would allow the family to vote as a bloc instead of through the dozens of overlapping trusts that currently governed the family's money. But the conversation stalled, mired in the logistical hurdles of refiguring the trusts, not to mention the aimless dissatisfaction in the family that made any progress nearly impossible.

After a time, Billy forced himself to the front of the room to deliver his message: "Rupert Murdoch is going to make a bid for the company," he told his relatives gathered in the conference room above Hemenway & Barnes's office that crisp fall day. "I've been talking to some guys about it," he continued. "I think it could be $50 a share." No one took him seriously. Billy's history—always name-dropping, not entirely reliable—obscured his message. He had talked in the past about how bids were going to come in for Dow Jones. They never did. But this time, he
had
been talking to someone about a deal. An old acquaintance of his, Andrew Steginsky, a money manager who had served on the board of the Princeton Symphony Orchestra with him years before, had been telling him Murdoch wanted to buy Dow Jones.

The family had grown weary of his refrain. "It's coming," he said, pausing. He heard—he could barely believe it—laughter. "We've got to figure this out," he continued, his face flushing.

"Oh, he's got helicopters, eh?" Buzzy Stevenson, Jean's husband, replied, joking about how Murdoch would swoop in to take over the company.

"You guys aren't even gonna know what hit you," Billy sputtered, too exasperated to care anymore about what he saw as the family's complacency. He left the meeting, went back to Rome, and called his friend Andrew Steginsky.

 

Rupert Murdoch would talk to anybody who had a good piece of information for him. He was democratic in that way. And he could certainly keep more than one game going at once and spent most days on the phone, like the thousands of reporters he employed, gossiping. He talked to Jimmy Lee about Rich Zannino and Dow Jones's board, and he talked to Andrew Steginsky about the Bancroft family.

Steginsky, currently running his own investment firm, Steginsky Capital LLC, in Princeton, New Jersey, had started investing in News Corp. in the mid-1980s, when News Corp. already owned the
New York Post
and 20th Century Fox and later launched the Fox Broadcasting network. Still, the company was based in Australia and didn't have many American investors. Steginsky, then a fund manager at Schroders bank in New York, had good access to Murdoch, who always returned Steginsky's calls and occasionally invited him to News Corp.'s offices when both men were in Manhattan. Balding and slightly overweight, Steginsky didn't cut an inspiring figure. Perhaps this was the reason he was drawn to forceful entrepreneurs. He counted Rupert Murdoch as one such man.

Steginsky's opportunity to be truly helpful to Murdoch came in early 2005, when he was sitting with the mogul in Murdoch's midtown Manhattan headquarters. To make conversation, he asked Murdoch what he thought of the
Wall Street Journal,
a copy of which was sitting on Murdoch's desk. "I'd love to own it someday but the Bancrofts will never sell," Murdoch replied. Steginsky, reflexively ingratiating himself, responded that he knew one of the Bancrofts. He had once served on a board with Billy Cox III.

Steginsky's relationship with Rupert had deepened when Lachlan Murdoch arrived from Andover to attend Princeton University in the 1990s. Wary and perhaps too aware of the world and the way wealthy young men could be used and often hurt, Murdoch sometimes mentioned his son to Steginsky, who lived just minutes away from campus. Steginsky, who had a casual and obsequious manner, told Rupert he could at least have Lachlan over for dinner to make sure he was eating right. And so Lachlan came over, Steginsky cooked him meals, and the two got along. Steginsky was a fan of opera and would invite Lachlan to hear the arias using tickets from Schroders, which were happily doled out to Steginsky whenever he told his superiors he was entertaining Lachlan Murdoch.

Steginsky spent months trying to dig up a contact number for Billy, eventually tracking him down in April of 2005 when Billy was living in Rome. Steginsky had called and told Billy of Murdoch's interest. Billy was delighted. Murdoch's desire to own the
Journal
was always assumed in the Bancroft family, but it wasn't clear he was ever going to make the move. Now, this seemed concrete. Steginsky had a way of talking about Murdoch as if he were a dear friend, something Billy often did himself when he was talking about business deals. He mentioned the director Ron Howard and McGraw-Hill CEO Terry McGraw as if they were his brothers. Billy said he would set up a family meeting to discuss Murdoch's interest. Then came the Bancroft family forum in October 2006 when he finally delivered the message.

Afterward, he told Steginsky about the meeting and how the message was received. Steginsky realized he needed to delve deeper. He mentioned to Murdoch that it might be helpful to visit Billy in Rome, and Murdoch agreed. It was then that Steginsky, sensing genuine interest, suggested that such a trip and such a project might require a significant amount of time and money. Murdoch quickly said he'd give him some money up front for the time and travel and would compensate him generously if anything came of his work. Murdoch saw Steginsky as a small-time money manager who was eager to curry favor, but he sensed the sycophant might be useful.

As Murdoch was hearing from Steginsky about the Bancroft meeting, Jimmy Lee was busy arranging another meeting—this one a lunch—for Murdoch and Zannino. Four days before their meeting, on October 25, 2006, Murdoch got a call from Jimmy. Murdoch and Jimmy knew what they wanted to accomplish, and they spoke straightforwardly about Murdoch's next move. He wouldn't make an offer that day but would further gauge Zannino's stance. Both Murdoch and Jimmy knew about the Bancrofts' big family meeting in Boston and Billy's announcement of Murdoch's interest.

After they hung up, Jimmy called Zannino. Here, the conversation was much more complex. Zannino was careful and, as was frequently the case with an acquiree, not entirely ready to give up the reins. But Zannino was more aware than ever of the limitations of Dow Jones. The environment for newspapers continued to worsen. He had spent his first several months replacing his management team, reorganizing the company into two divisions, and cutting costs. But Dow Jones's stock price had barely budged, and the competitors were in nose-dives. Newspaper company profit margins were rapidly dwindling. In Chicago, the Tribune Company was desperately trying to sell itself at the urging of the Chandler family, which retained a large stake. The future of the industry was undoubtedly bleaker than its storied past, and even the optimists—who kept hoping that the masses of readers who had turned away from traditional newspapers would turn back to them in their digital form—were getting nervous. Zannino knew his company was up against it. When Jimmy called Zannino, the two started up the easy banter they often did, and the topic was Dow Jones. As usual, Jimmy took notes.