Rupert Murdoch: White Knight, or Dark Destroyer?

There's a good rule of thumb in any takeover battle, when looking at the target company: if the company's competitors oppose the deal, it's probably a good deal. Let me add another: if the company's present owners start falling back onto soaring rhetoric in defense of the status quo, it's probably a good deal.

Exhibit A: Peter Kann's letter to the Bancroft family, which uses the term "public trust" no fewer than three times. (No, I'm not entirely sure what that means either, but you might start here in order to get an idea.) Here's my favorite passage:

I clearly can understand that in rejecting a takeover offer you are foregoing some financial benefit. To that I can only say that you are not alone in seeing other and even higher priorities. There are many people in our larger society who make career and other decisions that do not always maximize financial benefit. And that also is true of many of the people of Dow Jones. Just consider, for example, the many talented reporters and editors who have worked for the Journal over so many years and how many of them could have made so much more money working in law or banking or public relations. Rather, they devoted their careers, and they still do, to something more important -- to pursuing a form of public service in a company that has seen itself as a public trust and that has been protected by a family that shares that commitment.

Some financial benefit is right – he's talking over half a billion dollars. (How did I get that number? The Bancrofts own 24.7% of the company, which is worth $60 per share, or $5 billion, to Rupert Murdoch. I'm assuming it's worth $35 a share if they keep it, which is probably overoptimistic. The difference comes to $515 million: a lot of money to walk away from.)

As for the noble selflessness of Journal reporters and editors – well, let's just say that I've known a few of them in my time, and I don't think that most of them would have lasted very long at a bank or a law firm. It's true that journalism doesn't pay very well, and that those of us who practice it don't do it primarily for the money. But that doesn't make us particularly noble. In any event, exactly the same argument can be made about journalists on the New York Post or the Sunday Times: I somehow don't see a mass exodus of WSJ journalists to Cleary Gottlieb and Goldman Sachs in the event that the paper is bought by News Corp.

And I'm sure that all the talk of public trusts being protected is ringing a bit hollow right now to the former employees of the Far Eastern Economic Review, who were fired en masse in 2004 because Dow Jones couldn't work out how to make one of the world's most respected newsweeklies profitable. Rupert Murdoch would not have made that decision: he would be more likely to invest in the property, I think, than to essentially shut it down.

John Heilemann, this week, says that Rupert Murdoch is a "white knight". I think he's closer to the truth than Kann is.