Media Dynasties Seek to Stay in Control
STEVE INSKEEP, host:
The board of Dow Jones met yesterday to discuss the takeover offer from Rupert Murdoch's News Corporation. It's likely to be a hard sell for Murdoch. Dow Jones, which owns the Wall Street Journal, is a publicly traded company, but it has a dual ownership structure that gives real control to a single family.
With the newspaper business going through seismic changes right now, this kind of structure is coming under attack at other places too.
NPR's Jim Zarroli reports.
JIM ZARROLI: It was the kind of dramatic corporate infighting that the New York Times likes to cover, only this time the target of the battle was the Times itself. This spring, Hassan Elmasry, a portfolio manager at Morgan Stanley, who's unhappy about the way the Times is run, tried to force a change in the company's ownership structure.
Rick Edmonds of the Poynter Institute says this structure was set up years ago when the Times owners, the Sulzberger family, decided to take the company public.
Mr. RICK EDMONDS (Poynter Institute): It was a way for the families to get the benefit of public markets and the extra capital they would have, but at the same time retain voting control of the company.
INSKEEP: There are two classes of Times company stock, one of the shares that the public owns, but the controlling shares were reserved for the Sulzbergers themselves, and that gives them an outsized influence over the way the company is run.
There's a similar structure at the Graham family's Washington Post and the Bancroft family's Dow Jones. The companies argue that these families know and respect the newspaper business and will protect their core journalistic principles.
Porter Bibb is managing partner of Mediatech Capital Partners.
Mr. PORTER BIBB (Managing Partner Mediatech Capital Partners): It was done not so much to entrench owners but basically to insure that the public trust aspect of the business would be maintained and that they would not be handed over to profiteers or subject more likely to the vagaries of the stock market.
ZARROLI: But critics say that the families have also used their control to insulate themselves from the consequences of bad management decisions. And in recent years, as newspaper circulation has decreased, the sniping has become much more intense.
Media critic Jeff Jarvis says too often newspaper companies have been slow to react to the big changes taking place in the digital age.
Mr. JEFF JARVIS (Media Critic): It took years and years and years for the Wall Street Journal and other local papers in this country to realize they no longer had to waste money printing stock tables. The papers are not thinking strategically enough about how to change their mission in the world and what journalism really is. And it's not about printed on the paper.
ZARROLI: In the case of the New York Times, dissident shareholder Hassan Elmasry complained about the company's decision to build a new headquarters in Manhattan and to acquire the Web portal About.com. In the end, he failed to win over enough shareholders.
But time may be on his side. Porter Bibb of Mediatech says that when a company's share price underperforms for a long time, it can cause schisms in the controlling families. Bibb says that's what happened in the Chandler family, which became embroiled in a nasty fight over the ownership of the Los Angeles Times.
Mr. BIBB: What happens in these family-controlled properties is that eventually the generations begin to have different priorities and different needs, and the Chandler family basically fragmented and the majority of the family wanted to cash out and that's why they sold.
ZARROLI: There have been similar rumblings from the Bancroft family about management of Dow Jones. If Murdoch is to acquire the company, he'll have to convince enough family members he can do a better job running it.
Jim Zarroli, NPR News, New York.
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