Murdoch Fails the Litmus Test

Last week, I came up with my own litmus test which the Bancroft family could apply to Rupert Murdoch in deciding whether or not to accept his $60-a-share offer for Dow Jones. Clearly Rupert does interfere in properties like the New York Post and HarperCollins, so just ask him whether or not those properties have editorial independence. If he lies and says they do, then you can't trust him.

Well, Rupert seems to have done just that, pretty much. Aline van Duyn and Josh Chaffin of the FT asked him about his infamous decision to spike a book by Hong Kong governor Chris Patten – a decision which was universally understood as an attempt to refrain from pissing off the Chinese authorities.

“I had told the HarperCollins editors not to publish the Patten book because I did not think it would sell, but then they went ahead anyway,” Mr Murdoch said. “When I then found out they were publishing it, I told them anyone else could publish it, just not them. In retrospect, it would have been better just to publish it.”

Bad answer, Mr Murdoch. I know you're a hands-on manager, but you don't spike books like that on some kind of gut feeling about whether or not they will sell. In fact, I doubt you can come up with a single instance where you made that kind of decision about a book which was not politically sensitive.

If this is the kind of non-interference that the WSJ can look forward to -- if Murdoch thinks that he'll be able to make this kind of decision there for "business reasons" while "preserving editorial independence" -- then the Bancrofts are probably justified in not selling to him.

On the other hand, Christopher Bancroft is also being a bit disingenuous when he says that Murdoch's bid would not benefit "Dow Jones and its shareholders". Of course it would benefit Dow Jones's shareholders: there's no other way that the stock is ever going to go for $60 or more. But a principled owner does of course have every right not to sell for financial reasons alone.