The family who controlled the Wall Street Journal sold out to a bidder who valued it more than they did, write Joshua Chaffinand Aline van Duyn.
The Bancroft family on Tuesday ended nearly four months of often tortuous negotiations between the dominant media mogul of his age and a fractious group of heirs struggling with the burdens and responsibilities of their family inheritance.
Unlike other US newspaper clans, they had distinguished themselves by not getting involved in the family business, content instead simply to collect their dividend cheques.
Instead of media, their chosen professions included environmentalists, fund managers, equestrians, racing-boat drivers and airline pilots.
In fact, the Bancrofts were mostly a mystery - even to executives who had worked at Dow Jones for years.
Their quiet life ended on May 1st, when business TV station CNBC reported that Rupert Murdoch's News Corp had offered $5 billion (€3.65 billion) to buy Dow Jones, owner of the prestigious Wall Street Journal newspaper.
That day, the family, which controls 64 per cent of Dow Jones's voting power, formally rejected Murdoch's bid. Yet they did not all want to turn it down. Indeed, about 20 per cent of the Bancroft family votes were already in favour of a deal.
Those divergent viewpoints grew into a full-blown family squabble over whether or not to even meet Murdoch and later whether they should sell the company after more than a century of family ownership.
In a letter that encapsulates the drama, Crawford Hill, one of the 35 or so adult members of the family, filled nearly seven pages with his reflections on the clan's stewardship of Dow Jones.
"There is a lot of family mythology and outright distortion going on that needs to be set straight, particularly about our 'legacy'," he wrote, proceeding to spell out that there was rarely a family discussion about Dow Jones and little effort by his parents or grandparents to promote the legacy.
"We never had, by the way, conversations that the Sulzbergers, Grahams and, yes, Murdochs, had every day," Hill said.
He urged his relatives to back a vote for Murdoch, and reminded them of Warren Buffett's recent assessment of their role. "They blew it," Buffett said, adding that Dow Jones could have been worth $50 billion instead of the $5 billion Murdoch intends to pay.
"We are actually now paying the price for our passivity over the past 25 years," Hill wrote.
As it turned out, several younger Bancrofts were concerned about their inheritance and they urged relatives to at least speak to Murdoch. On June 1st, exactly a month after they had rejected him, the Bancrofts changed course and agreed to a meeting.
The shift highlighted the importance of Michael Elefante, the Hemenway & Barnes lawyer. As lead trustee and personal lawyer to several Bancrofts, he wielded immense power in determining the fate of one of the world's most influential news organisations - a role that some observers believed was too much for him.
"Elefante doesn't know what to do," a person who dealt with him during the talks said. "He's like a guy who used to play weekend softball and now he woke up and he's in the major leagues."
During much of the process, it was also clear the Bancrofts were not experienced deal negotiators. In one example, some family members claimed they did not realise that a statement put out by the board would indicate the company was for sale. There was a last-minute effort to withdraw it, but it was already on the Wall Street Journal's website.
There were some comic touches to the saga. Christopher Bancroft, one of the family representatives on the Dow Jones board who publicly opposed a sale, and who lives in Texas and was occasionally spotted wearing a fishing hat, turned up late to the meeting with Murdoch and left other crucial meetings early. Much of the discussion between the family and Murdoch focused on the possibility of creating editorial safeguards for the Wall Street Journal, to protect the newspaper from the hands-on editorial style Murdoch had exhibited with some of his other media properties. To many observers, it was a hopeless exercise.
"Ultimately, the person who owns the paper in the long term controls what happens. I don't care what kind of editorial board you have. That's just the way it is," said John Morton, a long-time newspaper consultant. Others likened the Bancrofts' proposals to a "fig leaf", intended to ease their consciences and protect their reputations after selling the family heirloom.
As the Bancrofts stumbled at the task, the Dow Jones board was growing restless. Directors began to worry that the company was losing focus. They also feared being sued by common shareholders if a deal were to fall through and Dow Jones' stock collapsed.
Eventually, they decided to take matters into their own hands, announcing on June 20th that they would take over the negotiations. Their aim was to hammer out a comprehensive agreement with News Corp that the Bancrofts could either approve or reject.
Within a week, they reached a consensus with News Corp on the outlines of an independent editorial board. But two family directors - Christopher Bancroft and Leslie Hill - were having second thoughts. In addition to their concerns about Murdoch's editorial style, they also suspected that a cadre of bankers, lawyers and even some Dow Jones' executives was subtly pushing them into a deal they did not want. "They feel like they've been rolled," a person who knows several family members explained.
The two began a frantic search for alternatives to Murdoch, reaching out to other potential suitors, including Ron Burkle, the California supermarket mogul who is close to former president Bill Clinton, and Brad Greenspan, an early investor in MySpace, the social networking site. They did not appear to work together, however.
Murdoch was also growing frustrated. In a rare public slip, he appeared to lose his cool at the elite Allen and Company media summit in Sun Valley, Idaho. Uncharacteristically casually clad in khaki pants and a floral print shirt, he complained to a reporter that the Bancrofts "keep changing their minds".
As the efforts by Ms Hill and Bancroft ran out of steam, the Bancroft family had a last big meeting at the Hilton Hotel in Boston to hear the pros and cons. E-mails flew between the clan. Ultimately, they had to decide and, like so many families before them, they opted to sell to a bidder who valued it more than they did. - (Financial Times service)