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Posted by: Jon Fine on December 03, 2008
(Part 2 of excerpts from a dinner discussion I had on Nov. 20 with Rupert Murdoch biographer/Vanity Fair columnist/Fine on Media pal Michael Wolff. If you haven’t seen Part 1, you might want to check it out, to see how Wolff expresses his distaste for MySpace’s audience in a subtle and measured fashion.)
Jon Fine: You raise the New York Times at the end of the book. You dangle the possibility that something is going to happen there, that there’s some kind of grand plan in mind. Do you see actual resonances between the Bancroft family and the Sulzbergers?
Michael Wolff: Totally.
JF: Why? There’s a difference between engagement and non-engagement. Between family members being involved, and not. You have a much stronger trust [governing the ownership of the company]. You have an almost family religion [with the Sulzbergers and the Times]. And the Sulzbergers are a family of eggheady eastern intellectuals, still, whereas the Bancrofts—
MW: If you want to call a Sulzberger an intellectual—you’ve never met a Sulzberger.
JF: [rolls eyes] Oh, ok, fine, “aspirations” to being intellectual.
MW: The truth about the Sulzbergers is that very few of them are involved in the business. Nevertheless, all of them live off the business. So they have the same problem-- actually, they have a greater economic problem than the Bancrofts had. You know, the Bancrofts managed to sell down a lot of the stock and keep [control], they revised the structure. The Sulzbergers don’t. They are really dependent upon those dividends.
JF: Which was cut today. Significantly.
MW: None of these people work. So. They have the same vulnerability there. And then I think ultimately-- you’re right about this idea of the religion and the culture, but I think ultimately that will work against them too. They will say, ‘we are a detriment to this paper. We can’t provide the executive talent, and we don’t have the financial muscle to keep it afloat.’
These are very serious problems they are looking at. First of all, they have a business structure that doesn’t work. Plus they have to be supported off of it. If you are in their shoes now, these . . . I don’t know what it is, 40 people who exist off of this, what do you do? I don’t know.
JF: But here’s the thing. You need a buyer. You need an event. What’s the event?
MW: You need a buyer. And the buyer is gonna be, worst-case, Rupert. Best-case . . . Michael Bloomberg, I suppose.
JF: Yeah, that’ll never happen. We know that’s never gonna happen.
MW: He may not now—
JF: I don’t think he gets into stuff—[Bloomberg] has this trader thing. He wants to win. I don’t know how you win with something like that.
MW: Does it change the game, the third term? It may. But I know this, that he was deeply taken with this idea. I am not sure he is the buyer, but he would be a great buyer.
JF: There were people around him who were deeply taken with the idea. I don’t know if he was ever deeply taken with it. There are people around him that need him to stay big somehow, and stay significant somehow. If he’s not gonna be mayor anymore, that’s a good way to do it. Therefore, they like it. In the same way they liked the idea of him being president. But, number one, he’s still gonna be mayor. [Pause] Probably.
MW: I am just saying he would be a very good buyer for the New York Times. Would he do it? Have things changed? I don’t know.
JF: You don’t detect a fundamental difference between the Bancrofts and Sulzbergers in terms of engagement with the asset? Being raised to view it as this kind of profoundly important central things, the family gathering in the same place regularly [um--not anymore]—
MW: There are some Sulzbergers who are significantly more engaged than any of the Bancrofts. There are many Sulzbergers who are at the same level of engagement as the Bancrofts. They go to meetings occasionally.
It endlessly fascinates me. As a matter of fact, I saw that [stock] price today and I thought, ‘Jesus.’
JF: Yeah. But someone’s got to buy it.
MW: I could buy it!
JF: OK, why don’t you? I hate to tell you: You can’t. The way it [meaning the family trust governing Sulzberger control] is written is much more, it’s much harder for this family to be, ‘OK, we’ll sell’ [than it was for the Bancrofts].
MW: You have to have a majority—
JF: It’s a 6 to 2 majority [of trustees that have to vote yes in order to change the trust].
MW: I don’t quite remember now. Essentially everyone has to agree. If you’re looking at not only your own way of life disappearing but also--have you seen it? The New York Times is running out of cash. It’s literally a distressed situation.
JF: They cut the dividend today, by a lot, to address that.
MW: So I think the family itself precisely because they are engaged in this will have a serious discussion: What’s the best thing we can do for this institution?
JF: Well, what is? My answer would be, you have to hunker down right now.
MW: When people say, let’s do the best we can for this institution, I think, and there is too much [inaudible] within the family to do what they have to do, and it may be too late. Which is to sell the Boston Globe, etc.--
JF: The buyer has disappeared. Jack Welch doesn’t want any part of it.
MW: Yeah. The fact that these people--Jack Welch was offering $900 million—
JF: He wasn’t offering that. But he was offering something.
The media, entertainment and marketing worlds continue to shapeshift on a near-daily basis, as new forms arise and old assumptions erode. Where is it all going? No one really knows. But on this blog BusinessWeek’s media writers Tom Lowry and Ron Grover promise to provide ample helpings of scoop, provocation, and sharp analysis as they track and annotate this constantly changing terrain.