"No One Would Listen" to Harry Markopolos -- Including the Media

Harry Markopolos's book No One Would Listen has zoomed to No. 19 at Amazon.com and I can see why: it's a fast-paced thriller that is clearly the best book so far on the Bernie Madoff scandal. Markopolos sheds new light on how the SEC screwed up its Madoff probe--and how the media also dropped the ball.

Markopolos's book (marred only by, arghhhhh, reconstructed quotes) describes in detail his contacts with the late John Wilke of the Wall Street Journal, which fizzled out after a year. Forbes and the New York Times also were contacted and did nothing, but Markopolos had placed all his eggs in the Journal basket, which was a mistake.

Markopolos writes:

The question I wrestled with for a long time was: Why? When the newspaper that existed only to cover the financial world was handed a detailed explanation of the biggest fraud in Wall Street history, why wouldn't someone at least conduct a cursory investigation? Three phone calls, two phone calls, that's all it would have taken to verify that I wasn't some kind of nut, that the accusations I was making were based on fact. A half hour, that's all.

So far there are two alternative, contradictory explanations of what happened.

One, from Joe Nocera, is that Wilke "spent a little time rummaging around the Madoff story, but he didn’t really have any way to get at it, other than to take Mr. Markopoulos’s word for it, and that wasn’t good enough for either John or The Journal."

The other is that Wilke was eager to do the article but was stymied by his editors.

There's now an alternative theory being floated. A Wall Street Journal review yesterday concedes that "the press also did not cover itself in glory," but goes on to suggest that it was at least partly Markopolos's fault that he was ignored.

Former Journal editor Richard Tofel writes:

The author of "No One Would Listen" is fond of describing himself as "slightly eccentric," but he is not exactly self-aware. By his account, the fault for his having been ignored throughout eight years of warnings is everyone else's. But that conclusion requires ignoring much of his story.

Tofel goes on to recount some eccentric behavior by Markopolos and concludes his review as follows:

None of this behavior makes Mr. Markopolos's case against Mr. Madoff any less convincing. Nor does it excuse the SEC. But it does provide a fuller picture of the author than the cardboard cut-out of the lonely hero we've been hearing about for the past 15 months. With his book, Mr. Markopolos sheds more light than he intends on just why no one would listen.

Indeed. If Markopolos's case was convincing, that doesn't excuse the SEC--or the media.

I have a better explanation for why Markopolos didn't make any headway in the press: he just failed to contact enough reporters.

When Wilke began to lose interest, Markopolos should have gone back to Barron's, which ran an early account raising questions about Madoff, or approached Fortune or BusinessWeek, or other people at the Times or Journal. Or any number of other publications.

In other words, Harry Markopolos could have used a good press agent--which says a hell of a lot less about Markopolos than it does about the financial press.

© 2010 Gary Weiss. All rights reserved.

The Wall Street Journal is Short Staffed

Yup, that's the explanation that's percolating out of the Wall Street Journal on why it ignored Bernie Madoff whistleblower Harry Markopolos.

An anonymous source tells the CJR's Audit that unnamed Journal editors, and not reporter John Wilke, were to blame:

This person says Wilke wanted to do the story but couldn’t get approval within the Journal’s labyrinthine editorial structure to proceed.

“Wilke was hot for the story but the editors had him on other things,” my source says. “The paper had been through cutbacks and didn’t have enough people to do everything at once.”

Yeah, right. As I said before, they didn't believe Markopolos. If they did, if they believed it was possible a former Nasdaq chairman and one of the most distinguished people on the Street was a crook, it stands to reason they would have gone all out to investigate that. These are not stupid people.

In effect, this anonymous person is saying "despite the possibility of Madoff possibly being a crook and ripping off investors, we couldn't spare anyone from the mutual fund scoreboard or the Page One A-Head desk, and none of our X-dozen Wall Street reporters were available, as all were doing more important things than determining whether a vaunted Wall Street figure was a criminal". But there you have it, third hand, through an anonymous source. Sure would be nice to get an official explanation.

By the way, if they really were all tied up with more important things, why didn't they tell Markopolos to take his story elsewhere?

UPDATE: The Audit updated its item to reflect further comment from the Journal, whose spokesman now says that this unnamed source is wrong:

CORRECTION:
In this post I said the Madoff story got caught up in the “Journal’s labyrinthine editorial structure.” In fact, I didn’t have enough evidence to support that. Subsequently, the Journal spokesperson got back to us, saying this: “As a general rule, we don’t comment on our news gathering decisions, but the statements you are providing us are materially wrong and don’t come from a person in a position to know our editing decisions.”

That apparently relates to the "didn't have enough people to do everything at once" quote above, which I had found amazing. Evidently it's not true.

OK, so what is the truth? Only the Journal can address that. Since this happened under a previous editing regime and different ownership, I can't see what's stopping the newspaper from explaining why it ignored Markopolos.

UPDATE: A letter from Jesse Eisinger, published at Talking Biz News, points out that reporter John Wilke had a full plate during this entire period. I have no doubt about that, which is why Markopolos should have been referred to another reporter. I can't understand why Markpolos didn't do that on his own initiative, after it became clear he was getting a runaround.

© 2009 Gary Weiss. All rights reserved.

We Need to Know Why Harry Markopolos Got the Bum's Rush

Ryan Chittum of CJR's Audit column follows up on the strange story of the Wall Street Journal and Harry Markopolos, the Bernie Madoff whistleblower.

Reacting to my blog post yesterday, in which I theorized that the Journal simply didn't believe the guy, Chittum says:

That sounds right to me. We all know who Markopolos is now. But who knew him then? Trust me, Journal reporters get a lot of cranks weaving elaborate conspiracy theories and trying to convince the WSJ to print them.

I see Chittum's point, and of course the folks at the Audit know whereof they speak. The former editor of the Audit, Mark Mitchell, has morphed into a shrill stock market conspiracy theorist, now on the payroll of Overstock.com's wacky CEO Patrick Byrne. Mitchell recently alleged that the Audit was "bribed" by a hedge fund. So as you can see, it happens in the best of families.

But the problem with the "crank" theory is that Markpolos simply did not have any of the hallmarks of a crank. He was a trained forensic accountant and fraud examiner. He worked for a respected money management firm. His motives were as impeccable as his credentials, and while he may have been a bit overbearing, suggesting lines of questioning, their treatment of the man simply makes no sense to me.

The Madoff morass is just too big, too destructive, too poorly timed to let a shrug and a "I doubt he contacted us" and "we cover even bigger scandals" suffice. I think the Journal should do what what the New York Times has done in the past, most recentlty in its 2005 post-mortem of the Valerie Plame affair, and cover this story itself. It should explain how it passed up on an opportunity to expose the biggest financial scandal in history. It should explain why somebody at the newspaper didn't hear this man's story.

I would not be terribly surprised if the Journal does just that. Like it or not, the newspaper is part of the story, just as the Times was with Valerie Plame.

© 2009 Gary Weiss. All rights reserved.

More on Markopolos, Bernie Madoff and the Wall Street Journal

Jason Linkins patiently combed through all the emails and other documentation released by Bernie Madoff whistleblower Harry Markopolos the other day, and the result is a definitive, blow-by-blow account of Markopolos's dealings with the Wall Street Journal in the Huffington Post.

As I observed in an update to my earlier post, former WSJ managing editor Paul Steiger told Editor & Publisher that he didn't know that Markopolos approached his paper. Indeed, the E&P story questions whether the newspaper received a tip from Markopolos at all:

Former Wall Street Journal Managing Editor Paul Steiger said he does not recall the tip a Journal reporter supposedly received about Bernie Madoff three years ago, and adds he "highly doubts" it happened.

Excuse me? Is he saying that Markopolos did not approach the Journal, that his testimony is false?

Anyway, as recounted by Linkins, who based his account on the voluminous supporting documentation released by Markopolos, the whistleblower struggled throughout 2006 to get the Journal's attention, and actually kept the faith through 2007. I repeat: 2007! The man's patience was extraordinary.

First 2006:

Markopolos stayed on the hook with the Journal through 2006. In August, he finally mentions that he's "meeting with the WSJ in two weeks," a meeting he secured after threatening to take the story to "Ben Stein over at Barron's." An "immediate response" from the WSJ, with a meeting set-up, was his reward.

Even still, the next reported contact with Wilke was at the end of September 2006. Wilke was still working the story at that time, but it's telling that in his September email, he captures the effort as one "to get the Bernie Madoff Story up and running."

In November 2006, Markopolos said the following in an email to a third party:

"[Wilke] said that his editor thinks that hedge fund scrutiny will increase now that Democrats are in power and greenlighted John's investigation starting in January.

I guess we wait and see what transpires...the guy does top shelf corruption stories, but everything he investigates in on a schedule."

Yeah, I guess so. Makes you wonder, reading this, if there was more than one person in the Journal's Washington bureau, or more than one person covering finance at the Journal.

Then came 2007, and Markopolos was still being led around by the nose:

By January 2007, Markopolos had detected further disturbing news on Madoff, still sending the news to Wilke like shock and awe: "Bernie Madoff purported to deliver 8.45% to his investors in 2006...It didn't happen because it is mathematically impossible."

The defibrillation didn't help. By February 2007, Markopolos is sounding a downcast note: "The Wall Street Journal's John Wilke has been a huge disappointment. Obviously they were the wrong choice. Eventually Bernie will blow up and everybody will say, 'I told you so.'"

Nevertheless, at the end of June, Markopolos is back in touch with Wilke, encouraging him to go out on strike: "Keep it up. Murdoch would be poison for the paper." If Wilke continued to be a "disappointment," Markopolos didn't let on. His Murdoch criticism was larded with praise for the paper and its "insightful financial journalism" and the need to preserve it.

So, at some point, Wilke manages to get back in Markopolos' good graces. But movement on the story seems to grind to a dead halt soon after. For months, the collected emails from Markopolos are mainly filled with gallows humor on the coming disaster, shared with the handful of contacts with whom he'd been pursuing the investigation.

Since the Journal is unlikely to ever explain itself, I'll try to offer my guess as to what why a top investigative reporter and his editors dropped the ball so terribly:

They didn't believe Markopolos.

It's that simple. I can't think of any other possible explanation, and I don't think that any other one has any chance of being credible.

© 2009 Gary Weiss. All rights reserved.

The Wall Street Journal Blew a Chance to Expose Madoff

A bombshell is buried in Harry Markopolos' prepared testimony to a House panel today: he contacted the Wall Street Journal on the Bernie Madoff fraud three years ago, and the newspaper did nothing.

It seems that the Journal missed an opportunity to achieve one of the biggest scoops ever, win a Pulitzer Prize and all that other good stuff--and extinguish the biggest fraud in financial history.

Markpolos says as follows:

[Pat Burns, communications director at Taxpayers Against Fraud] put me in contact with John Wilke, senior investigative reporter for the Wall Street Journal's Washington bureau. Mr. Wilke and I would become friends over the next three years. Unfortunately, as eager as Mr. Wilke was to investigate the Madoff story, it appears that the Wall Street Journal's editors never gave him approval to start investigating. As you will see from my extensive e-mail correspondence with him over the next several months, there were several points in time in which he was getting ready to book air travel to start the story and then would get called off at the last minute. I never determined if the senior editors at the Wall Street Journal failed to authorize this investigation.

According to his timeline, he contacted the Journal in December 2005. The emails to which he alludes can be found here.

At another point in his testimony, Markopolos pays the Journal the ultimate non-compliment by lumping together the newspaper with the lunkheads at the SEC, saying, "Unfortunately neither the Wall Street Journal nor SEC were inclined to even pick up a phone and dial any of the leads I provided to them."

Amazing, huh? Not to me. As I pointed out in Wall Street Versus America, in the mid-1990s "a few traders tried to arouse the interest of the Journal in the inside details of Mob infiltration of Wall Street firms--and the Journal, after some initial interest, did nothing."

Back then, the traders went to a highly regarded Journal reporter. No point in mentioning his name, because the fault, as with Madoff, was apparently with his editors.

However, Markopolos' experiences with journalists weren't all quite so dismal. He contacted Michael Ocrant, a reporter at MAR/Hedge, who ran his own article on Madoff in 2001, several days before the more widely reported Barron's article on the same subject. Greg Newton, now writer of the terrific Naked Shorts blog (which alluded to the Journal's failure yesterday), was publisher of MAR/Hedge at the time. But back then Markopolos didn't have all the information he had developed by 2005, which he was willing to give to the Wall Street Journal on a silver platter.

UPDATE (11:20 a.m.): Markopolos just raised the issue of his contacts with the Journal at the hearing, saying "I believe that senior editors of the Journal respected and feared Mr. Madoff" and wouldn't let him "get on the plane" and meet with him on the fraud. So I guess the cat is out of the bag, unless the media continue to ignore this intriguing aspect of the Madoff story.

Would my alma mater and the WSJ's competitor, Business Week, have done any better? In 2000-2001, with longtime finance editors Seymour Zucker and Bill Wolman on the job, I'd say definitely yes. They were tough as nails, and had the guts to tackle such a story. It's the editors who count in such situations at least as much as reporters.

That cuts both ways. Whenever I proposed a tough article at the magazine, these two gents always had to wage World War III in order to get it printed. Some editors at BW, even at the highest levels, hated investigative stories (until a month or two after they were published. Then they'd love 'em!).

Seymour and Bill retired in 2001, and I don't really know whether their successors as of 12/2005 would have had much appetite for a complicated story like this with a high-visibility, respected target. My gut instinct is that the reaction would have been the same as at the Journal.

UPDATE: The Journal, to its credit, mentions Markopolos' testimony concerning the paper in its online story today:

Mr. Markopolos said that in December 2005, he contacted a reporter at The Wall Street Journal, resulting in a number of phone calls and emails. Mr. Markopolos said he thinks that senior editors prevented the reporter from the newspaper's Washington bureau from flying to Boston to meet and discuss the Madoff issue. A spokesman for Dow Jones & Co., publisher of The Wall Street Journal, declined to comment on Mr. Markopolos's statements.

Former Journal managing editor Paul Steiger told Editor & Publisher that he "doesn't recall" an approach from Markopolos. Entirely possible, I guess, as not every tip goes that far up the ladder. But then he says:

"Just look at the people the Journal has done tough stories on," Steiger recalled. "People that were much bigger than Madoff. We would have loved to have done the story."

I agree with him until he says "We would have loved. . " The Journal was approached by the same whistleblower who caused members of Congress to scream at the top of their lungs at SEC officials yesterday, and nothing was done to pursue the story.

I think that readers of the Journal deserve a better answer than that.

© 2009 Gary Weiss. All rights reserved.

Stating the Obvious

The Wall Street Journal today repeated a point that I made in Wall Street Versus America, in a Salon article two years ago, and in this blog countless times: that the lessons of Enron have been lost, and that regulators have learned absolutely nothing from the corporate scandals of the early part of this decade.

Today's financial crisis has shown what a real debacle looks like. And it has made clear that executives' duties to public companies have, if anything, been loosened, not reinforced. What is worse, the post-Enron crackdown appears not only to have failed to stop flagrant corporate risk-taking, but to have lulled Washington to sleep.

"Enron was a gnat compared to what's going on," said Sidney Powell, a Texas attorney for former Merrill Lynch & Co. employees. Those employees still are awaiting retrial for participating in a Nigerian power deal with Enron in 1999. "There is blame far and wide here, beginning 20 years before. [Securities & Exchange Commission] failure. Congressional failure. The whole system needs to be retooled."

This is a problem that one sees with the law-defying gnats of Corporate America, such as my favorite corporate fraud poster child Overstock.com, and the burned-out carcasses of Wall Street. It is as if Enron never happened.

The two presidential candidates, while vaguely running against Wall Street, have been slim indeed in the specifics of what they will do to rescue the regulatory apparatus from years of neglect.

© 2008 Gary Weiss. All rights reserved.

The Wall Street Journal Demonstrates its Editorial Independence?

Note the question mark. I had my doubts in light of Marcus Brauchli's resignation, but they were somewhat assuaged by this prominently displayed article in the Journal today.

While I tend to agree with CJR Daily's description of the editorial independence committee as the "little commitee that failed," I thought the Journal's own coverage was reassuring. In effect, the Journal is asserting its editorial independence by writing about its lack of editorial independence.

This is not to say that any newspaper can ever be "independent" of its owner -- the whole exercise is a bit ludicrous -- but the Journal's feisty staff is clearly trying. It's a losing battle, of course, but a brave one.

Incidentally, I'd be interested to see more analysis of the Journal in the Murdoch vs. pre-Murdoch era. One study found that there is more emphasis on political news, but that doesn't mean much because this is an election year. I'd rather see some examination of the extent to which the takeover has changed the Journal's traditional emphasis on investigative and long-form journalism.

Sometimes anecdotal evidence is better than line-count surveys, however.

© 2008 Gary Weiss. All rights reserved.

Is Dow Jones at the 'USS Missouri' Just Yet?

I know, I know, I've said in the past that Rupert Murdoch's acquisition of Dow Jones is a foregone conclusion. I've illustrated that point with old photos of the Japanese surrender on the USS Missouri, in my usual understated way.

Still, the Wall Street Journal article today leaves me wondering if the long-awaited Unconditional Surrender is actually happening.

Yes, the board of directors last night voted to recommend the merger.

Yes, the votes seem to be there.

But then we get the following in the Journal article today:

As of yesterday afternoon two of the company's family directors were actively engaged in pursuing alternatives to Mr. Murdoch, according to people familiar with the matter. Christopher Bancroft has been talking to Internet entrepreneur Brad Greenspan about a proposal to buy a portion of the company. Mr. Greenspan, who has talked to other family members, was working on a more detailed proposal to send to Dow Jones representatives yesterday and is looking for investors, according to a person familiar with the matter. Mr. Greenspan is working with advisers at New York firm Dinosaur Securities.

I know, this is desperate and probably doomed to failure. But...... I still wonder if we are at that "USS Missouri moment" just yet.

© 2007 Gary Weiss. All rights reserved.



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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site, gary-weiss.com.

Yahoo Message Board as 'Blog'

The Wall Street Journal today had an entire editorial devoted to Whole Foods CEO John J. Mackey's "anonymous blogging".... except.... except.... he wasn't blogging.

Well, he did have a blog, but that was under his own name.

At issue is not his blogging but his posting on a Yahoo message board devoted to Whole Foods stock. Big difference.

When not misunderstanding what Mackey was doing, the rest of the editorial was an attack on Regulation FD. That seems to be the position taken by Mackey as well: "Regulation FD be damned."

I just wish that defenders of Mackey would have the intellectual honesty to simply come out and say it.

© 2007 Gary Weiss. All rights reserved.



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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site, gary-weiss.com.

Dow Jones Union, Unhappy With Frying Pan, Covets the Fire

I have great respect for the Dow Jones employees union, and used to be somewhat active in it during my time at Dow Jones in early Eighties. But I really think that the people running that union have taken leave of their senses.

Today comes word that the Dow Jones board met with a possible alternative to the dread Rupert Murdoch -- "Internet entrepreneur Brad Greenspan and supermarket mogul Ron Burkle" -- according to the usual "people familiar with the matter" quoted by the Wall Street Journal today.

What's grotesque is that these two individuals, who could very easily be far worse to the Wall Street Journal and the other properties than Murdoch ever could be, were brought to the table by the union representing Dow Jones editorial employees.

That is nothing short of amazing. Does the union, the Independent Assn. of Publishers Employees, have any idea what a Journal run by guys like Burkle and Greenspan would be like? I don't, and I shudder to think. As Peter Kann, the ex-Journal managing editor, told the Journal today:

, , , if the family is going to sell I see no point in pursuing industrial conglomerates, Internet entrepreneurs, supermarket magnates and real-estate developers. None know anything at all about journalism. As to Mr. Murdoch, at least he loves newspapers, presumably would invest in the WSJ and Dow Jones, and would seem to have little incentive to tarnish a trophy he has coveted for so long.

If IAPE wants to preserve the editorial independence of Dow Jones, it needs to oppose any buyer, not just any buyer whose name begins with "Rupert." This "anything but Rupert" strategy could very easily backfire, when (not if, when) the post-takeover layoffs begin.

If the person performing the layoffs is a supermarket or a vitamin or an Internet or a ladies-corset magnate, he could simply say, "I have to do this so that I could afford to save your blessed company from Rupert Murdoch."

Perhaps IAPE should take a train ride to Philadelphia one of these days, and think about what happens when amateurs buy newspapers. After the Philadelphia Inquirer was sold to local entrepreneurs, the aftermath included advertisements on the front page and plastering the name of a bank across the business section.

© 2007 Gary Weiss. All rights reserved.



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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site, gary-weiss.com.

CJR Parses the 'Anonymice'

CJR Daily's Dean Starkman produces yet another smart article (the third, or maybe fourth in a row) in the Audit section, correctly analyzing the latest turn of the screw in the Dow Jones-Rupert Murdoch takeover struggle.

A New York Times article on Monday quoted an unnamed source at Dow Jones as saying that the Murdoch merger was delaying layoffs at the Wall Street Journal.

Starkman observes as follows:

I know it's subtle, but let me translate: Newsroom, stop opposing the sale or you'll lose your jobs, and then where will you be? Without a job. And then how will you feel? Bad, right?

. . . Audit Readers, remember what I told you: Top DJ executives and editors now have powerful incentives to favor the sale. Readers interested in the long-term health of the business press shouldn't care about executive severance packages, editors' guaranteed jobs, reporters' unguaranteed jobs, the value of options enhanced by the Murdoch offer—or anything, really, other than how best to preserve a vital information source.

Glad to see such spot-on reporting in CJR Daily's Audit section, which is emerging from a lengthy funk and is far improved.

© 2007 Gary Weiss. All rights reserved.



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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site, gary-weiss.com.

Whither Barron's in the News Corp. Empire?

One essential element has not been mentioned in the tussle between Dow Jones and Rupert Murdoch is the fate of the prestigious, market-moving, influential Barron's financial weekly.

That absence stood out like a sore thumb in the "agreement in principle" between Dow Jones and News Corp., anticipating the all but inevitable takeover.

The text was posted here last night.

Note that this agreement is narrowly constructed to cover just the Wall Street Journal and the Dow Jones news wires. Barron's is not mentioned, and has been ignored in the public back-and-forth over editorial integrity.

Under this agreement, the editor of Barron's can be replaced immediately, and this publication could immediately be used as a showpiece for News Corp. staffers and editorials. Its staffers, if not covered by the existing CNBC deal, could be immediately utilized by the new Fox business news channel.

Or at least, that's what I would do if I were Rupert Murdoch. I'd put one of my own people in charge of Barron's ASAP.

I wonder if this omission is a reflection of the lack of importance given to Barron's by both sides.

Or is it a reflection of what has been widely known for some time -- that the management of Dow Jones is grievously incompetent?

If so, we in the media who are watching this deal are not any better. Apparently nobody has given the fate of Barron's any thought. Remember that this is not a stock-touting newsletter. It is a respectable, highly reputed investment journal with a reputation for hard-hitting investigative reporting. (Full disclosure: I used to work there in the early eighties.)

In the media coverage of the Murdoch takeover, Barron's usually gets mentioned only in an offhand fashion as part of the Dow Jones organization. It has otherwise been overlooked, and nobody has noticed that it is not covered by the management-employment guarantees and editorial-independence strictures that have been discussed.

Dean Starkman of CJR Daily's Audit section says that the News Corp. "can't cover" the U.S. business story, and details why in an article yesterday. If there is any validity to that point of view, it certainly applies to Barron's as much as it does the Wall Street Journal. Yet the media has ignored this whole aspect of the takeover as much as the Dow Jones board.

Dean says the media has done a "terrific job" covering this story, but I am not so sure.

© 2007 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site, gary-weiss.com.

Journalists as Furniture

Talking Biz News reports today that Wall Street Journal reporters stayed out of work this morning. They're upset about slow progress in union contract talks, and of course upset by negotiations to sell the company to Rupert Murdoch.

The underlying rationale behind this move is that journalists matter to the functioning of a newspaper, and that the Journal's staff of first-class journalists is pretty nigh irreplaceable.

I therefore suggest that my colleagues at the Journal read the article by Ken Auletta in this week's New Yorker. I would suggest they read the fourth page of the online version. Auletta hearkens back to Murdoch's acquisition of a magazine where he was employed:

To try to forestall a Murdoch takeover of New York magazine thirty years ago, about forty writers and editors and art directors went on strike. I was at the magazine then, and, with delusions that I was on a diplomatic mission, led a small delegation to visit Murdoch’s outside counsel, Howard Squadron. I was certain that, once Murdoch understood that the staff would leave, he would retreat. Squadron listened politely, and replied, “You don’t understand. If you leave, Rupert will replace you like he replaces furniture.”

That sound you hear at World Financial Center is a moving van. Word is out today that the "editorial safeguards" hammered out between Dow Jones and Murdoch aren't safeguards at all.

UPDATE: The New York Times now says that the article to which I just linked, which says that Murdoch would have power to hire and fire editors, is inoperative. In a kind of non-correction correction, the Times says that power would reside in an independent board.

© 2007 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site, gary-weiss.com.

A Pact to Guarantee Editorial Integrity?

Reuters reports that Dow Jones and News Corp. have "basically agreed" on a pact to guarantee Dow Jones's editorial integrity. If so, this means that Rupert Murdoch's takeover is pretty much a done deal.

I think any such agreements aren't worth the paper they're written on, but then again I'm cynical. Still, I wonder if there is even an attempt made to prevent the kind of layoffs that I see happening down the road. I'm sure Murdoch will try to pare down Dow Jones News Service, for instance, by requiring Wall Street Journal reporters to contribute to the wire. That would erode the intergrity of the Journal by simply giving Journal reporters a lot more work to do.

Hell, I've seen that happen at a number of news organizations without Rupert Murdoch or some other bogeyman trying to gain control. It just happens when you try to squeeze profits from the newspaper biz.

© 2007 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site, gary-weiss.com.

The Wall Street Journal Writes Its Own Obituary

Be sure to get today's edition of the Wall Street Journal, to read the page one lead, "Behind the Bancrofts' Shift at Dow Jones." It's a detailed, nuanced story that is long, and thus represents the kind of journalism that is likely to go out the door when Rupert Murdoch takes over.

Not if. When.

It's not every day that a newspaper gets a chance to write its own obituary, so be sure to get a copy of today's Journal.

© 2007 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site, gary-weiss.com.

How to Guarantee No Coverage in the Wall Street Journal

Let's say you're a corporate raider and you don't want to be written about in the Wall Street Journal. How do you guarantee the Journal won't write about you? Simple: just send a memo to the managing editor marked "personal and confidential."

That apparently will do the trick, according to this morning's New York Times. Seems that Journal managing editor Paul Steiger learned about the Rupert Murdoch takeover offer several weeks ago, directly from Murdoch himself.

According to people briefed on the situation, Mr. Murdoch first approached [Dow Jones CEO Richard] Zannino the week of April 9, and they had a breakfast meeting at which Mr. Murdoch expressed his interest in buying Dow Jones. Mr. Murdoch then submitted a letter to the Dow Jones board on April 17, formally making an offer.

Several days after that, he sent an e-mail message marked “Personal and Confidential” to Mr. Steiger telling him of the bid, and offering his reassurances that he would uphold the editorial integrity of The Journal if he were successful.

Mr. Steiger felt bound by the “confidential” nature of his communications with Mr. Murdoch, according to people within Dow Jones, and it weighed heavily on his decision.

I don't see why. The email was (presumably) unsolicited and there was no agreement beforehand to keep the contents of the email confidential. While I can understand why Steiger wouldn't want to blast it over the front page, I can't see how he and the rest of the paper could have just sat on this explosive news for weeks, without attempting to publish it.

If Murdoch had wanted Steiger to keep the bid confidential, he should have called him and said, "Paul, I have something sensitive I'd like to discuss. Can we go off the record?" If Steiger then said "Yes," his lips would be sealed forever. Murdoch ought to know the protocol by now; he always talks about how he is a "lifelong newspaperman" etc. etc.

It's unclear from the Times story if legal constraints, or advice, might have prevented Steiger from running with the story. But he did make it clear that the front office had no role, telling the Times: “Rich Zannino never spoke to me or communicated in any way about the situation — and neither he nor anyone else at Dow Jones corporate was involved in any way, either directly or indirectly, in The Wall Street Journal’s news decisions.”

In the end, it was leaked (probably from the Murdoch camp) to CNBC, so the Journal wound up being scooped on its own story.

I have more to say about the Murdoch offer, in an article that goes live tonight elsewhere on the web.

UPDATE: Dean Starkman of CJR Daily's "Audit" section agrees with me. That's nice, but I really wish Dean would stop referring to himself in the third person. Or, just to rephrase, "This blog really wishes Dean would stop referring to himself in the third person."

© 2007 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
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