Former Time Inc. Chief Discusses Dow Jones Offer

During a luncheon speech last week, Former Time Inc. editor-in-chief Norman Pearlstine -- now a senior advisor to the Carlyle Group -- was asked about the future of Dow Jones Co., publisher of the Wall Street Journal, which is weighing a $5 billion buyout offer from News Corp. Before joining Time and the Carlyle Group, Pearlstine worked for 23 years at The Wall Street Journal, where he was managing editor and executive editor. Staff writer Thomas Heath provided this excerpt from Pearlstine's speech, which was hosted by the Potomac Officers Club at the Ritz-Carlton Hotel in Tysons Corner:

"...I was asked about the Bancroft Family that owns Dow Jones. It's been an extraordinary saga that's been going on for three months. As someone who worked at The Wall Street Journal and and for Dow Jones...I've read all this with great interest and with great concern.

Within the family itself...this is a family that has had no involvement in the company in any meaningful way since Clarence Barron bought The Wall Street Journal and combined it with his paper Barron's. Yet, it is a family that has always supported management in terms of its commitment to editorial independence and the highest quality of journalism. It's also a family that has supported management in a number of business decisions that have made the company more vulnerable to takeover than might otherwise be the case.

The family is very concerned about Rupert Murdoch because if you study Rupert Murdoch or if you read The New York Post or if you watch Fox News, you have trouble equating that journalism with the type of quality journalism that The Wall Street Journal has tended to represent over the years. And I think that has led to a fair amount of disquiet on the part of journalists, of course management and on the part of the family. I think over the last three months, Murdoch has done a very good job in explaining that he is smart enough to understand that the premiere business publication in the United States is dead if it loses its editorial credibility and its editorial independence and that he wouldn't be willing to spend $5 billion on an asset...to destroy it.

It is interesting to me that at this point, the top editors of The Wall Street Journal, the management of Dow Jones and the board, including all of the outside directors, voted for approval...But you are now left with the family that has to make the decision. It's, I think, very close to call at this point because there are multiple trusts and different generations that have different time horizons, different aspirations and different interests. If I had to guess, I think it probably goes through. But if I had to guess, I'm one of those people who actually thinks Murdoch would put energy into the enterprise and would make it a better newspaper and a more vibrant publication. I say that in part because I've spent a lot of time reading The Australian, which is certainly one of the best papers in that country. The Times of London is not significantly different from the other quality papers in England. I think all of them have slipped a bit over the years. I see the (Financial Times) as an international paper not as a London paper. Everything I hear from Murdoch is that he wants to invest. That he wants to put more resources into the publication.

And so, at a time when you're faced with a 67 percent premium over where the stock was and you have someone who wants to invest in the product and the people who work there at the highest levels insist that they become comfortable with this board under Murdoch, I think it's going to be hard for the family to vote it down. But the Bancroft family is a quiet, independent group of mavericks... "

By Mike Shepard  |  July 30, 2007; 5:24 PM ET  | Category:  Carlyle , Private Equity
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