News Corp. Chairman and CEO Rupert Murdoch. (News Corp.)
Rupert Murdoch, the press baron
who has put forth a $5 billion offer to buy Dow Jones and its Wall Street Journal
, is termed "a throwback to the William Randolph Hearst era, when publishers were openly partisan, made backroom deals, and even ran for office," as Howard Kurtz writes in The Washington Post
That reminds me of the time when Murdoch gave some thought to buying a Hearst property, namely the Seattle Post-Intelligencer
, way back in 1982-83. Hard to tell how serious it was then, or whether it could ever get serious again.
I was a bit player in the legal struggles over the formation of the original joint operating agreement (JOA), the federally blessed joint venture that yoked together the Seattle Times Co. and Hearst Corp. in an agreement that has just been renewed for another nine years, if not longer. I was publisher of Seattle Weekly
at the time, and I helped form an umbrella group, called People Opposed to a 1-Newspaper Town (or PO1NT) to oppose the proposed merger under the Newspaper Preservation Act. The late Bill Dwyer
was our pro-bono attorney, and this great lawyer gave the two papers fits before we lost the case in the Ninth U.S. Circuit Court of Appeals.
Key to the P-I
's case was its assertion that it was a failing newspaper, so far gone that nobody else would buy it, and therefore it needed the relief of a federally sanctioned commercial monopoly (combining all business functions but keeping separate and competing newsrooms). I and others made some calls to see if any other publisher might come forward and say they would be interested in buying the "failing" P-I
. That would have buttressed our case that there was a simpler course than granting the monopoly: just sell P-I
to somebody who would make a go of it, standing alone.
Somehow, a signal of interest
came from Murdoch, and Dwyer went to New York to talk with him. Dwyer reported years later that Murdoch had a keen sense of the Catch-22 of the whole situation. If he came forward and said he was interested in purchasing the P-I
, he would so anger Hearst that there would be no way the latter would ever sell to Murdoch. Another complication was that Murdoch in 1982 was in the process of buying the Boston Herald-American
from Hearst, so he had an additional reason not to antagonize the Hearst Corporation.
At any rate, Murdoch never came forward, and none of us could find any other publisher to express interest in a purchase. I remember having a mixture of disappointment at the legal setback and relief at not having Murdoch come into the Seattle market.
Murdoch's Catch-22 is just one of the perversities of the Newspaper Preservation Act
, which serves as a kind of incentive for weaker papers to go ahead and "fail" to be rewarded with monopoly. Many major publishers deplore the act, which is a prime example of special-interest legislation, but they form a kind of club, whose members would not overtly interfere with the request of another publisher for JOA status. That would be very bad form. (Murdoch, of course, is not overly concerned about form.)
Worse, these JOAs are also a way by which the stronger paper is able to prevent the junior paper from being sold to a genuine competitor, since anyone buying the lagging paper would be stuck in the JOA, with no way to turn the smaller paper around. The temptation is to let the struggling paper sink gradually away while still occupying the part of the market that a competitor or startup would need to have. Seattle has succumbed to this dispiriting arrangement ever since 1983 and, amazingly, has decided to keep it going even as newspapers are in desperate need of reinvention – an exercise possibly now put off in Seattle until 2016.
All that might have been avoided if, God forbid, the shrewd Rupert Murdoch had looked across his desk at canny Bill Dwyer and said, "Sure, I'm interested, and you can quote me!" Oh well, maybe Murdoch will be consoled by gobbling up The Wall Street Journal