The Power and the Glory

I vividly remember his orders. The Journal could not be scooped by any other news organization or even the government lawyers investigating the case. I should follow the story no matter where it led. My only concerns should be accuracy, thoroughness and fairness. Anything less would cost the paper its most valuable asset, which is the trust of its readers.

Off I went, initially as part of a team of reporters, and eventually, as charges were filed and the case went to trial, on my own. I suppose I was too young, too idealistic, too naive to realize the burden I was shouldering and how awkward might be the task of writing about the company that employed me. I knew that the saga of Foster Winans, my colleague who wrote the Heard on the Street column and gave a smooth-talking stockbroker advance word of its contents, was a rich and important story. I wrote numerous Page One features and news articles, including daily coverage of the trial, which led to Winans's conviction and prison sentence. Not a single word was changed in anything but the ordinary editing process, and it never occurred to me that it might be.

My experience with the Winans case came back to me after Rupert Murdoch made his bold, surprising $5 billion bid for Dow Jones. I've written about many exciting takeover battles, but none has struck so close to home. I spent nearly 10 years at the Journal; I helped found this magazine, which is co-owned by Dow Jones; and my weekly column for SmartMoney.com runs in the Journal each week. I no longer own any Dow Jones stock and am not a Dow Jones employee, so I have no immediate financial stake in the outcome.

I happen to agree with what Murdoch told his biographer, William Shawcross: "All newspapers are run to make profits." Being better, smarter, faster has always driven reporters to excellence as well as to higher circulations and profits for their employers. And I've always believed this to be entirely consistent with high standards of editorial integrity, a strict separation of news and opinion, and an equally strict separation of advertising and editorial departments. These notions weren't handed down from on high or created by some panel of do-gooders. They were hewn from the rough-and-tumble, often brutally competitive world of daily journalism because they served the interests of readers and boosted circulation and profits.

Of course, some publications took other routes to profitability, including sensationalism, pandering to advertisers' interests, and promoting a political or social agenda at every opportunity. It's a free country. But it's no accident that the most admired, trusted — and most profitable — publications have, like the Journal, espoused high ethical standards that have evolved over many generations.

Since Murdoch's bid, these standards have taken center stage in the struggle for control of Dow Jones. Though everyone has assumed Murdoch would be willing to boost his $60-a-share offer, this takeover battle isn't really about money. Murdoch himself called the offer "insanely high," and no one has dared to disagree. If I owned Dow Jones shares purely as an investment, I would have sold on news of the bid, leaving the end game and the risk that no deal happens to the professionals.

Members of the Bancroft and Ottoway families who control a majority of Dow Jones voting shares have expressed their reservations about Murdoch's journalistic standards and integrity. Taken in the abstract, these issues can seem remote, better fodder for journalism seminars than takeover battles. The Wall Street arbitragers piling into Dow Jones stock show scant interest and even less patience. So I thought it might be helpful to illustrate exactly what these standards mean in practice.

A few years after the Winans case, when I had moved on to the mergers and acquisitions beat, another insider-trading case fell into my lap — Dennis Levine and Ivan Boesky. Once again, Pearlstine encouraged me and my colleague Dan Hertzberg to follow the story wherever it led, which was straight to Michael Milken, the junk-bond king, then at the height of his influence. He was without question America's most powerful financial figure. His firm, Drexel Burnham Lambert, was synonymous with junk bonds, hostile takeovers and the merger frenzy that in 1986 was propelling markets to new heights.

That the combined forces of Milken and Drexel might have any influence over Dow Jones, let alone the wherewithal to sue us, never gave me a moment's hesitation, and the topic never came up between me and Hertzberg or any of our editors. Only years afterward did Robert Sack, then the Journal's outside counsel (and now a federal judge), mention to me that if we'd been wrong, negligent or reckless, Dow Jones could have been litigated into bankruptcy.

The Milken story was also a vivid illustration of the separation of news and opinion. Under then-editor Robert Bartley, the Journal's editorial page was a staunch defender of Milken, even as Hertzberg and I, writing in the same paper, uncovered mounting evidence of Milken's culpability. I always admired Bartley's tenacious adherence to his principles, even when, as in the Milken case, I thought he was wrong about the facts. This is what an opinion page should be, and it would be dull indeed if no one ever disagreed. It was as important that Bartley had the freedom to criticize me and defend Milken as it was for me to pursue the story. No one ever suggested that I should limit or soften my reporting. On the contrary, I redoubled my efforts. Milken ultimately pleaded guilty to six felonies.

The same week as the Murdoch bid, Internet search giant Google was the subject of a class I teach at Columbia School of Journalism. We were discussing Google's controversial Dutch auction public offering, and I handed out copies of a series of 2004 columns I wrote on the topic in this magazine and on its Web site. The thrust of my columns was that big Wall Street firms had tried to sabotage Google's offering to punish it for bypassing the usual and lucrative (for Wall Street) underwriting approach. I was especially hard on Merrill Lynch. It was only in the context of the recent Murdoch bid that it occurred to me that Merrill Lynch might be one of Dow Jones's largest advertisers. I don't know whether it is or isn't. No one ever suggested I tone down my comments or not write about Merrill Lynch. The separation of editorial and advertising is so ingrained that as a reporter, I never thought about it, let alone allowed it to influence my coverage.

And so I find myself, nearly 25 years after the Foster Winans scandal, writing again about Dow Jones in a Dow Jones publication. I'm just one person, but I know experiences like mine have been duplicated countless times at Dow Jones. This culture has been nurtured for 105 years under the Bancroft family's stewardship and is surely a major reason that ownership of The Wall Street Journal confers instant credibility and prestige — so much so that someone like Murdoch is willing to pay 40 times earnings for the company when other newspapers are trading for a fraction of that multiple. If that's not good business, I don't know what is.