If the phrase ‘jumped the shark’ hadn’t long ago done so itself, we might write that the news coverage of News Corp’s bid to buy Dow Jones jumped the shark this morning. The business news media is obsessed with the story—which just happens to be about the business news media. And sometime late last night and early this morning—to the sound of full-color print presses humming and newspaper delivery trucks idling—the coverage of the story really began to plumb the depths of its own navel.
This morning the New York Times delivered the news that—as the headline proclaimed—‘Wall St. Journal Editors Held News of Murdoch Bid.’ (Click here for Joe Weisenthal’s reaction in Opening Bell.) It’s a story that the Times editors viewed as important enough to run on the front page of the business section. So what we end up with is a story in a business section (the Times) about how a business news organization (the Journal) covered an acquisition about a business news organization (also the Journal). And now all the other business news organizations (CNBC, the wire services, DealBreaker) are reporting and commenting on that.
The story actually has two parts, each competing for which was the most obvious. First, there is the news that the Journal editors had advance knowledge that News Corp—not, despite the headline, Murdoch himself—had made an offer for Dow Jones, the parent company of the Wall Street Journal. This comes as a surprise to exactly no-one—except perhaps the editors of the Times business section. The top editor of the Journal, Paul Steiger, is also a vice president of Dow Jones & Company, a corporate position with enough seniority that it would be surprising if he didn’t know of the acquisition. What’s more, Murdoch has promised to retain Steiger as managing editor of the paper. This promise has been widely reported and it was always unlikely that Steiger first heard about it from outside news sources. Of course he knew. In fact, he found out in an email directly from Murdoch himself.
Second, there is the news that the Journal did not report on the offer until after it was disclosed on CNBC by David Faber. But this fact was already widely known. And the conclusion that the Journal ‘held’ the news is either obvious or false. In one sense, it is obvious, since having the knowledge and not reporting it logically entails the conclusion that it was held. In another sense, it is false to say that the Journal held the news—or at least unsupported by the evidence marshaled in the Times story this morning. The Times does not demonstrate—or even imply—that editors at the Journal prevented reporters from covering the story. Instead, it seems that Journal reporters failed to uncover the bid on their own, and the editors who knew about the bid did not reveal the information to reporters or assign them to report on it.
The reporters—Andrew Ross Sorkin and Richard Perez Pena—note that it is “not unusual for senior editors of news organizations to balance their corporate and editorial roles when faced with these kind of decisions.” What they do not say is that the law may prohibit editors who are also corporate officer from disclosing non-public, material information to reporters. Federal disclosure rules prohibit public companies and their officers from disclosing material information except through press releases filed with the Securities and Exchange Commission. The purpose of these rules is to ensure all material disclosures are equally available to public investors. Disclosure by an officer such as Steiger to his reporters might have given a market advantage to readers of the paper and violated those rules.
The connection with insider trading allegations is tenuous and not very well-explained in the Times article. There was unusually heavy trading in options for Dow Jones stock prior to the public revelations of the deal, and the SEC is investigating these trades for possible insider trading. But, as Opening Bell wrote, it is highly unlikely that anyone connected with the Journal engaged in insider trading. Nonetheless, it is possible that the SEC may question editors at the Journal about who might have learned about News Corp’s bid from them. A Wall Street Journal reporter was famously accused of leaking inside information about the content of his ‘Heard on the Street’ column, although the Supreme Court split on whether this violated insider trading rules.
A more concrete connection might be that the failure of the Journal’s editors to publish the story in their own paper might have allowed others with non-public information to profit from by purchasing options. This issue isn’t heavily plumbed in the Times piece but in an interview this morning with CNBC Sorkin made it clear that he thinks this is an important angle to the story. “This transaction is particularly interesting because there was this unusual trading, and was there a question at some point when these editors were holding the news as to…there was actually material things taking place, and people were trading on it, whether you needed to publish. And it’s really unclear as of now what that decision making process entailed,” Sorkin told Becky Quick on Squawk Box. But Sorkin’s question assumes that the editors who knew about the transaction were also aware of the unusual options trading. There has been no indication that they did know about the activity in the options market. Here at DealBreaker we aren’t aware that any news source reported on the options trading prior to the deal becoming public knowledge. And, in fact, we learned of the unusual options trading from Deal Journal, the Wall Street Journal’s deal blog.
The biggest piece of news in today’s story is actually buried after the jump, several paragraphs down. “Several other editors were aware of the offer,” the Times reports. The Times isn’t sure how these editors learned about the story. But it is indeed a ‘nettlesome’ issue if they ‘held’ the story. They too might have felt obliged by corporate confidentiality to hold the story from their reporters—although this may reveal that it was a mistake for the story to be disclosed to them at all, putting them in a position where they were forced to perform a high-wire balancing of their roles as journalists with their roles as employees of a public company. But the exact timeline of when or how these editors learned of the bid is unclear, and it is possible that Journal reporters were working on the story but had not put it into shape to publish it prior to the day the story broke on CNBC. The trail of this knowledge—who knew what, when and how—will no doubt be the subject of intense media scrutiny over the coming days and weeks.
One thing that is not clear from the Times story is how it learned that Journal editors had knowledge of the bid before it was made public. The Times cites “people inside of Dow Jones who were briefed on the situation.” So did Journal editors reveal this story—the story about Journal editors not revealing the story of the News Corp bid to the paper’s own reporters—to the Times rather than to its own reporters? Why did this story appear in the Times and not the Journal? To take the inquiry a step further, why was the story revealed to the Times rather than other news organizations—such as Reuters, Bloomberg or the Washington Post—that have been reporting on the story?
Now we enter the next stage of navel gazing: the tut-tutting of the broader media about the bad behavior of the Journal editors. But journalists will have to be careful when throwing stones not to hit their own glass houses. CNBC has been criticized for underplaying—and perhaps even spiking—the story of Todd Thomson’s relationship with CNBC anchor Maria Bartiromo. The New York Times has taken flak for under-reporting the dissatisfaction of some activist investors with its dual class share structure and management. (Disclosure: at DealBreaker we have a policy of not reporting on any matters that are internal to DealBreaker or our parent company, Dead Horse Media.)
No doubt the next phase of this story will be for Wall Street Journal reporters to start hanging around the New England homes of the Bancroft family, hoping to catch them as they cross their own doorsteps. This time-honored news tradition—known in the trade as "doorstepping"—is probably more familiar to the public from celebrity scandals and high-profile trials. But the temptation to track down family members and stake out their homes has to be irresistible to reporters. But if this does happen, one wonders if the family members might start to consider accepting News Corp's bid just to regain their privacy.
Onwards and inwards, fellow navel gazers!
Why Wall St. Journal Editors Held News of Murdoch Bid [New York Times]
What Did WSJ Editors Know? [CNBC]