In the Guardian‘s excerpt from Michael Wolff’s new book The Man Who Owns The News, it’s April 2007 and News Corp. (NWS) Rupert Murdoch wants to buy Wall Street Journal parent company Dow Jones. The family that owns the paper, the Bancrofts, won’t talk to him, but he’s developed a relationship with Dow Jones CEO Richard Zannino. Murdoch has decided to make him an offer:
During most of the winter, Murdoch’s people (his “henchmen”, they tended to call themselves) had continued to analyse the Dow Jones business. The company was trading no higher than the mid-30s; Murdoch had heard about Rich Zannino’s estimate of getting the share price to, tops, $45. Nobody at News Corp thought Dow Jones could be worth, most optimistically, more than $50.
But Murdoch insists they should offer $60 – and because he’s Murdoch no one is going to tell him he’s a fool. Dow Jones management and the Bancroft family may act sanctimonious and high and mighty, but $60 [which values the company at $5bn], Murdoch knows, will call their bluff.
In early April he makes the call.
He’s apologetic when Zannino, on vacation at the Ocean Club in the Bahamas, calls him back, sorry to disturb, but it’s important, he says, that he see Zannino as soon as he gets back. Suspecting something large, Zannino might here, too, have consulted with others at the company. But he doesn’t tell anyone – he persists in allowing himself to believe that seeing Murdoch, even urgently, could be about many things.
After 45 minutes in which they talk again about American Idol, Murdoch says: “Well, I’m thinking about making an offer to buy Dow Jones.”
Zannino demurs a bit: “You know Rupert, you know as well as anybody, this isn’t my call, it’s the family’s call. And the family has consistently – and Rupert, even as recently at our last board meeting – said that they’re committed to the independence of Dow Jones and they have no interest in selling the company.”
Murdoch: “I know that. I was thinking I’d take the offer directly to the board. I know the family feels that way. I’ve called [Michael] Elefante in the past. He won’t even take a number. The number I’m thinking of is … 60.”
Zannino: (internally) Holy Shit! (externally) Silence.
Murdoch: “So I’m thinking I’ll just take that directly to the board to try and get that through the board … So that’s what I’m going to do – I’m going to make an offer to the board. Did I just make an offer to you?”
Zannino: “No you didn’t. You mused about wanting to buy Dow Jones. I told you the family has the call and it’s not for sale, and you told me you were going to contact the board.”
Zannino is trying to find his balance – he’s walked out to the furthest point and now, teetering on the precipice, he’s trying to come back. Zannino tells Murdoch he isn’t going to tell his board about the offer, because it’s really not an official offer, suggesting to Murdoch that if anybody asks him about it, he should say he was just joking about the $60.
But, in the car, Zannino understands that the breach has just occurred – that he’s let Murdoch in. He breathlessly calls Joe Stern, the Dow Jones general counsel, and tells him: “He gave me a number.” Back at the Dow Jones office, each successive person let in on the news understands that the breach is real – and that they can’t close it.
Murdoch has correctly analysed that Zannino, who might have blocked his access to the board, has not.