The Man Who Owns the News (14 page)

Brother and sister Jane Cox Hill MacElree and William Cox Jr.—these are the oldest living members of the family and control a big Dow Jones stake.

Billy Cox III—he’s the troublemaker who first breached the family’s unity in 1997.

The three Hill brothers—Tom, fifty, Michael, forty-six, and Crawford, fifty-five—who’ve begun their own battle against the family trustees.

Leslie Hill—the fifty-three-year-old American Airlines pilot, now retired, a Dow Jones board member, and regarded by just about everybody as the most difficult, intractable, and unpleasant member of the family.

Christopher Bancroft—he’s a Dow Jones board member who controls a 15 percent voting stake.

Lizzie Goth Chelberg—the forty-two-year-old equestrian, the first of her generation to control her inheritance upon the death of her mother, Bettina Bancroft, joined with second cousin Billy in the 1997 brouhaha.

It’s a simple tale: While everybody lives off the proceeds of Dow Jones, they do not, by the logic of trusts and the math of reproduction, share equally. Nor is there any consistency in the way the various trusts established by Jane Barron Bancroft after her husband’s suicide—most of them were set up in 1934 and 1935—are organized. So what you have is just one of fortune’s inevitable messes, always ending in the acrimony and squabbling of heirs clinging to ever decreasing portions of the original estate.

By 2006, with Steginsky making his inquiries, parts of the family, spurred on by the younger members, have begun actively trying to unlock more cash from their billion dollars (give or take) that is stuck in Dow Jones and losing value. The $80 million or thereabouts in dividends that the family gets each year from Dow Jones (a significant part of the company’s profits) isn’t quite enough—not just because there are so many members of the Bancroft family, but because much of that money still flows to the third generation, leaving the fourth to scramble and implore. Hemenway and Barnes, which acts not only as the family’s lawyer and trustee but also as their money manager, is being pressured—particularly by the Cox-Hill branch—to look for solutions. The firm brings in a few investment banks to mull over the problem.

Merrill Lynch makes a proposal that the family should radically sell down its equity. But nobody wants this—nobody wants really to change anything. They just want more money. Meanwhile, Hemenway and Barnes doesn’t want to change anything either. Its business since the 1940s has largely been built on the Bancrofts and their quiescent ownership of Dow Jones—maintained, in much the same way that Peter Kann maintained his relationship with the Bancrofts, by treating them as investors who wanted to know as little as possible about their investments.

Part of the job—Kann’s job with Billy Cox and Lizzie Goth in 1997, and Michael Elefante’s job now at Hemenway and Barnes—is to manage the natural inclination of younger people to exert themselves.

Michael Hill has actually taken a course at Harvard specifically about what families ought to do with their businesses and fortunes. He has the idea that there are opportunities close to him that he ought to try to find something out about it. He has begun to believe that what stands between him and Dow Jones and him and his money is Hemenway and Barnes.

What Andy Steginsky has learned is that the Hills are not just unhappy with Hemenway and Barnes but are thinking about suing the firm. To Murdoch, this is, to say the least, a sign of the disarray he’s been counting on. On the other hand, one solution (or effort to mollify) that Hemenway and Barnes has proposed is to create a voting trust similar to the one the Sulzberger family has at the
New York Times
—in essence, pledging the family to vote together—which would allow the Bancrofts to sell down more stock but continue, with their secure voting bloc, to maintain control. This proposal for unity would be bad for Murdoch.

But, in a sign of ultimate disarray or paralysis, neither development—neither the lawsuit nor the voting trust—seems to be proceeding, leaving the family to descend further into feuding and discord.

THE MURDOCHS

Rupert Murdoch loves hearing the gossip about the Bancrofts. The e-mails he has been getting regularly from Andy Steginsky about the crazy Bancrofts are the high point of his day.

He is an expert on anybody who owns any media, but he has a special feeling for the history of families who own newspapers. That is his field of play. Since arriving in the United States in 1973, when he purchased the San Antonio papers, he has kept a clear schematic in his head of who is who—updated on a virtually daily basis. He admires the way the Sulzberger family has stayed unified and protects its interests. However, the present scion—Arthur Sulzberger Jr., the company’s chairman—is, in Murdoch’s estimation, an ineffective leader and lousy businessman (he is thin-skinned too, and more than once has tried to call Murdoch to complain about something the
New York Post
said about him—Murdoch doesn’t take the calls).

The Sulzbergers are followed by the Grahams, where Katharine Graham was the first lady and matriarch of the press. Her son Donald is a low-key and methodical steward who carefully developed the company’s interests in the education market; its Kaplan unit, which offers preparation for standardized tests and mail-order degrees, is now the company’s main profit driver.

There are the Chandlers, with the
Los Angeles Times,
whose Times Mirror Company was the most profitable newspaper company in the United States—but the Chandler family, by the fourth generation, was attenuated and remote from the business, which was sold in 2000 to the Tribune Company (the Chandler trusts, which became significant holders of Tribune Company stock, forced the underperforming company to put itself on the block in 2007—yet another signal to Dow Jones).

There are the Binghams of Tennessee, who owned Louisville’s
Courier-Journal
and the
Times
and whose family saga of good intentions coupled with incompetence and breakdown (and left-wing children) makes Murdoch cringe. There are the Ridders, who turned Knight-Ridder into the second-largest newspaper chain in the country—but earlier in 2006 Tony Ridder was forced by his disgruntled shareholders to sell. There are the families that have stayed private: the Hearsts and the Newhouses and the Coxes. The Hearsts, descendants of the greatest, or at least most iconic, newspaper proprietor of all time, William Randolph Hearst, are disengaged and passive figures, supported by a company that includes television and magazines as well as newspapers, run by professional managers. (Hearst himself made it clear in his will that he didn’t want his not necessarily so bright offspring running the business.) The Newhouse brothers—S.I. and Donald, who inherited their company from their father and who are even older than Murdoch—continue to run their newspapers and magazines with great canniness. Murdoch admires them—and once tried to get them to help him buy Twentieth Century Fox—as much as they admire him. (He wonders, though, what might happen to that company going forward; there’ll be a lot of Newhouse hands out.) The Coxes of Atlanta, descendants of James Middleton Cox, the Democratic candidate for president in 1920 (his daughter, Anne Cox Chambers, was Jimmy Carter’s ambassador to Belgium, and is among the most powerful people in Atlanta), with their Cox Enterprises continue to own newspapers and cable stations as well as the third-largest cable provider in the United States.

The thing you have to understand—and understanding this explains so much about Murdoch’s success—is that happy newspaper families are alike, and unhappy newspaper families are…well, they’re quite alike too: In the end, they all lose their papers. As cautionary tales go, you could hardly find a more hothouse example of families gone awry, of genetic dumbing down, of the effect of idiot-son primogeniture, and of the despairing results of idle hands than newspaper families. Newspaper families provide no surer way to produce incompetence and ineffective executives, no better guarantee of shareholder antagonism.

This is his opportunity: The Bancrofts are ridiculous.

A side benefit of his close look at the Bancrofts is to make him feel so much better about the dysfunction in his own family (
dysfunction
is a modish word that irritates him—he uses it only because his children say it so often). The Murdochs, who have had their problems, are not, he is confident, heading in the Bancrofts’ direction—not yet. The situation with his children was bad after the divorce, and it got much worse after the introduction of Wendi, followed by the birth of his young children—there were several anni horribili—but they have all managed to persevere. Lachlan’s break from the company, painful as it was, actually helped things.

Anyway, whatever he did, and whatever Anna might say about his absenteeism—and Homeric it could be—he has done something right. Or Anna has done something right. Or good genes are just good genes.

PRUE

Prue, Murdoch’s daughter with his first wife, Patricia Booker, is the only one of his children not directly competing for his business affections. But her husband, Alasdair MacLeod, after a News Corp. stint in London, took a high-ranking spot in Australia in 2004, so Prue is hardly neutral in the News Corp. sweepstakes. What’s more, her children, James, born in 1991, Angus, born in 1993, and Clementine, born in 1996, are the oldest grandchildren, which strategically positions them in the dynastic stream.

Then again, Prue has morphed into the official family wing nut. She gets away with saying what the others won’t, even things that the others won’t
think,
and she takes the various family members much less seriously than they do themselves. This involves, not least of all, seeing her three oldest half siblings as, each in their way, master-race prototypes. Where Prue is short, plump, unfashionable, and rather disheveled, her half siblings are each striking, precise, intense—almost too good to be true, at least at first glance. Indeed, both her brothers married models, each of whom bears an uncomfortable resemblance to their husbands’ mother, Anna—striking, precise, intense—and hence to their husbands’ sister Elisabeth, who is her mother’s clone.

Prue’s mother, Patricia, whom Murdoch met and married in Adelaide, was always regarded by Murdoch’s mother as less than she should have been. When he divorced her, in 1966, she married a bad-news Swiss jet-setter by the name of Freddie Maeder, with whom she began a partying life (funded with her former husband’s money), often leaving Prue behind.

When Rupert and Anna Torv marry in 1967 (she is not on the face of it a much better match—an Estonian Catholic is not exactly a catch in Anglo-Protestant-centric Melbourne), nine-year-old Prue begs to live with them. They move together to London in 1968. Prue is the difficult stepchild to a pregnant stepmother—and it’s all pretty much downhill from there. Her schooling is a disaster (Murdoch, trying to be an Australian egalitarian, first sends Prue to a London state school—she doesn’t last a term), her behavior often incorrigible, and her relationship with her stepmother at the very least strained and often much worse. Then there’s the move to New York—she’s fifteen and suddenly plunged into the Manhattan private school world at Dalton. She’s way out of her element among the New York rich kids. She’s one of the few Dalton students who don’t go on to college. Murdoch, at this point, still doesn’t see girls as having much of anything to do with what he does, certainly not as part of the future of News Corp. In fact, the only job Prue gets at News Corp. is a girl’s job—when she returns to London, she’s briefly a researcher at
News of the World
’s Sunday magazine.

At twenty-six, she makes what seems to be a favorable marriage to Crispin Odey, who will go on to be the highest-earning hedge fund manager in London. But a year later, they separate. Prue goes back to Australia—partly because her mother is in bad shape, in the midst of the depressions she will go in and out of after Freddie squanders the fortune Murdoch gave her on a failed orange juice company in Spain. At one point, Rupert and Prudence actually go to Spain together to retrieve Booker after she suffers a breakdown there. (Murdoch paid for her medical care and to set her up again in Adelaide before she died in 1998.)

In 1989, Prue, back in London, meets and marries Alasdair MacLeod, a Scotsman who shortly goes to work for Murdoch. Prue is strongly against Alasdair going into the family business—but Murdoch offers him a job behind Prue’s back.

Her resentments and general feeling of exclusion from the family continue and come to a head in 1999 when she is plastered on the front page of the
Sydney Morning Herald
under the headline “Forgotten Daughter.” Still furious about remarks her father made at a press conference in 1997 in which he’d referred to “my three children,” Prue agreed to sit for the only interview she’d ever given up to that point. In the interview she recounted how, after her father’s public slight, she had had “the biggest row I’ve ever had with my father. I rang up, I screamed at him, I hung up. He was very upset. He then sent the biggest bunch of flowers—it was bigger than a sofa—and two clementine trees.”

The interview appears the day of Lachlan’s wedding to Australian supermodel Sarah O’Hare. But Prue, who hasn’t seen the interview, arrives at Cavan—the 40,000-acre sheep station outside of Canberra Murdoch bought in the 1960s—for the wedding and can’t understand why everyone is so tense.

It must be “your fault,” she says to her father, telling him it has to do with the separation.

“It has nothing to do with me,” Murdoch says. “It’s your fault.”