Murdoch To Times: I Will Bury You! Keller Bristles

At 3 p.m. on Oct. 12, three days before the launch this week of the Fox Business Network, Roger Ailes gave a rally-the-troops speech to FBN rank-and-file, according to a staffer present. The Fox News president warned that the upstart network would encounter a doubting mainstream press, just as Fox News had over a decade ago. “Don’t worry about what people may say about us,” Mr. Ailes told his staff. Then he dug into his mid-1990’s newspaper archives, and gleefully quoted from a notably skeptical—and, as it turned out, unprescient—assessment of Fox News’ prospects. The article was from The New York Times.

Even as Rupert Murdoch uses FBN, his latest News Corp. project, to take on the existing business television establishment in the form of CNBC and Bloomberg, he and his top lieutenants appear to have one eye on the coming struggle with a more iconic foe. To Mr. Murdoch, The New York Times represents exhibit A in his case that the mainstream—that is, the non-Murdoch-owned—media ignores a certain viewpoint: namely, that particular blend of conservative populism, tabloid exuberance and capitalist cheerleading with which he has rewritten the rules of the news business. Now Mr. Murdoch, 76, is gearing up to use The Wall Street Journal to further that viewpoint—and in the process, knock The Times off its pedestal.

“My worry about The New York Times is that it’s got the only position as a national elitist general interest paper,” Mr. Murdoch told Time magazine in June. “So the network news picks its cues from The Times. And local papers do, too. It has a huge influence. And we’d love to challenge that.”

It’s becoming clear, then, that Mr. Murdoch plans to give The Times its first taste of real competition since the New York Herald Tribune folded in 1966, by going after The Times’ status as the national paper of record. But what’s not clear is whether The Times accepts that the gantlet has been thrown down.

Since Mr. Murdoch and his band of pirates began rattling their sabers this summer, Times publisher Arthur Sulzberger has maintained a dignified silence—and he declined The Observer’s request to comment on the coming showdown. But Bill Keller, the paper’s executive editor, questioned the viability of Mr. Murdoch’s plan to build an alternative national paper. “Good journalism for an intelligent general audience is hard,” he told The Observer in an e-mail. “And we’re really good at it. Taking on The Times is not as easy as waving a credit card and proclaiming yourself ‘fair and balanced.’”

Ever since his bid to buy Dow Jones was announced on May 1, media hand-wringers have spilled plenty of ink on the subject of what Mr. Murdoch would do with The Journal. And in recent months, a picture—albeit still fuzzy and indistinct—has begun to emerge.

In early August, just days after bickering Bancrofts accepted News Corp.’s $5 billion offer, Marcus Brauchli, The Journal’s managing editor since May, held a conference call with reporters and editors from the newspaper’s various bureaus. Journal staffers from several cities—including Chicago, Boston, Atlanta and San Francisco—were involved, according to a source on the line. On that call, Mr. Brauchli for the first time relayed to the bureau staffers Mr. Murdoch’s intention to chip away at The Times’ newspaper-of-record mantle, by offering more general news. In the long-term, Mr. Brauchli told his team, The Journal hoped to reorganize its resources so that, for instance, when a bridge collapses in Minnesota, it could quickly be on the scene, just as The Times is.

But making that happen will be far from easy. “My feeling always was that the paper is best off defining itself as a business newspaper, albeit with often much broader coverage than strictly business,” said Peter Kann, who spent four decades at Dow Jones, most recently as chairman and CEO. “Where you cross the line to become a more general interest paper, I don’t know.”

In interviews over the summer, Mr. Murdoch also suggested that several other less far-reaching changes could be in the works: He noted, among other things, that more resources might be funneled into covering politics, both in Washington and internationally, and that he’d give serious thought to eliminating the online pay wall and replacing it with a model based on ad revenue.

There’s already evidence that some of these moves could soon become reality. As The Observer reported last month, Mr. Brauchli recently announced that John Bussey, known as an experienced, take-charge editor, would be the new Washington bureau chief. And, sources say, he’ll likely assign the well-regarded Gary Putka, who had been a top candidate for the bureau chief job, to oversee some coverage of homeland security and national affairs from Boston. “There’s an assumption that there will be more resources going into Washington,” Gerald Seib, who was recently named the paper’s executive Washington editor, told The Observer.

Perhaps more portentously, on Oct. 16—four weeks after The Times ended TimesSelect, which had put its columnists off-limits to readers who weren’t paid subscribers—The Journal experimented by taking down its own more comprehensive online pay wall for a day, increasing speculation that it could come down permanently in the not-too-distant future.

Industry analysts say such a move would be one of the most threatening actions The Journal could take with regard to its new rival. “If Murdoch takes down the pay wall, the competition for the business reader will increase,” said Ken Doctor, a media analyst with Outsell Inc. “The Times has a strong franchise in business news, and then The Wall Street Journal can go directly at that and say, ‘We are the No. 1 business source and those of you using The New York Times business can go to us for free now.’” Mr. Doctor continued: “Business customers are among the most lucrative online, and if Murdoch takes them away, it’s the greatest hurt he could inflict.”

All this activity, combined with Mr. Murdoch’s very public declarations of his intention to challenge The Times, has left some top editors at the Gray Lady scratching their heads.

Dean Baquet, The Times’ Washington bureau chief, said he believes “The Journal has not, itself, figured out how it would change the mission of its Washington bureau.”

As for Mr. Keller, he told The Observer: “I don’t know what Murdoch really intends to do, but if his plan is to put money into serious, credible news gathering, that’s good for the country, good for the news business and good for us.”

He went on: “We have every reason to feel confident that we can hold our own if Murdoch decides to build The Journal beyond its business-reader base.” And he added: “In all the Murdoch parlor gaming, I don’t hear anyone suggesting that he would attempt to match the depth of our coverage in culture, science, education, health, religion, sports, lifestyle, etc., etc. Not to mention business coverage that even devout Journal readers find they can’t afford to miss.”

One way to hold off The Journal is to poach its talent. Since the Dow Jones deal was announced, Mr. Keller has held open slots on the Times staff, anticipating waves of refugees from The Journal as a result of Mr. Murdoch’s takeover. According to one Times staffer, it was expected that The Times “would have been able to pick people off left and right.”

But the mass exodus hasn’t yet materialized. According to sources at both papers, when The Times’ business editor, Larry Ingrassia, recently contacted several Journal reporters—including James Bandler and Mark Maremont, who together won a Pulitzer last year, along with several other Journal reporters, for their work on backdating stock options, as well as Melissa Marr, Kate Kelly and Mike Siconolfi, a Journal veteran of more than 20 years—about moving over, he came up empty-handed. (The sources stressed that Mr. Ingrassia didn’t make specific job offers.)

Indeed, it may be just as likely in the long run that the poaching goes the other way. In his June Time magazine interview, Mr. Murdoch mused: “What if, at The Journal, we spent $100 million a year hiring all the best business journalists in the world? Say, 200 of them.” What if, indeed.

Some analysts don’t think The Times has much to worry about—at least for now. “Murdoch can broaden the editorial base and he could damage The Times’ core readership base, but he would have to spend a lot of money,” said Ed Atorino of Benchmark Co. “The New York Times is a pretty strong franchise. At the least, it would take years to put a dent in The Times.”

But spending a lot of money is hardly something that Mr. Murdoch has been unwilling to do in the past. And Mr. Atorino admitted that the disparity in size and value between the two companies—News Corp.’s market capitalization stands at $69.6 billion, while the Times Company’s is just $2.7 billion—gives Mr. Murdoch some advantages. “News Corp can spend $5 billion without a dent,” he said, referring to how much the company is shelling out on Dow Jones.

It’s also no secret that the Times Company remains on precarious financial footing, This year it has already written down the value of New England Media Group—which includes The Boston Globe—by $814 million; sold some television affiliates; seen sharp advertising losses; faced a shareholder revolt, led by Morgan Stanley, against company leadership; and watched as The Times’ former West 43rd Street headquarters changed hands for $350 million more than Mr. Sulzberger unloaded it for in late 2004. And since 2003, the Times Company’s share price has plummeted from $46 to $19, while News Corp’s has risen from $17 to $24.

But don’t look for Mr. Murdoch to immediately gin up an all-out circulation battle, as he did when he used the New York Post to take on the Daily News. “Murdoch doesn’t need to defeat The New York Times, but if he could take away 3 to 5 percent of its business, then that’s going to hurt them when they’re already in a period of hurt,” Mr. Doctor said. “It’s not a knockout blow, but it makes the hill The Times has to climb even higher as they make the transition from print to digital.”

So the war could drag on. But as Mr. Murdoch is fond of saying, he may have another 20 years in him—his 98-year-old mother is still alive—and it remains to be seen whether Mr. Sulzberger has the stomach to beat off such an aggressive competitor. As Mr. Keller notes, The Times sits solidly at the top of the heap, but Mr. Murdoch has always been adept at leveraging his status as the underdog newcomer—even with a multibillion-dollar corporation behind him—into an asset.

In taking on The Times, Mr. Murdoch may have set himself his toughest challenge yet. But as Mr. Ailes pointed out this week to the FBN team, those predicting Mr. Murdoch’s failure in the past have almost always been off the mark.

– By Michael Calderone
John Koblin contributed reporting to this article.

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