"They're taking five billion dollars out of me and want to keep control," Rupert Murdoch was saying into the phone, "in an industry in crisis! They can't sell their company and still control it that's not how it works. I'm sorry!"
It was a little before 5 o'clock on Friday, June 22, and the chairman of News Corp. the world's third largest media conglomerate, with a value of $68 billion, and one of the few megacorporations controlled by a single individual was at his desk on the eighth floor of his midtown Manhattan headquarters, trying to shore up a deal he had dreamed about for a decade. On the wall beside Murdoch, 76, six muted flat-panel television monitors were tuned to 11 different stations five split-screened and one devoted entirely to his beloved Fox News. But he never glanced at the monitors. He was speaking in soft bursts to an investment banker on the other end of the line. Murdoch had stripped off his jacket and tie, and his thin, dyed-brown hair was scattered across his scalp. His controversial $5 billion deal to acquire Dow Jones & Co. and its crown jewel, the Wall Street Journal, was in danger of crashing. Murdoch was playing poker: to get the deal back on track, he had to threaten to walk and mean it.
Two months earlier, at a secret March 29 breakfast in the News Corp. building, Murdoch had told Dow Jones CEO Richard Zannino about his $60-a-share offer for the company a staggering price for a stock that had been trading around $36. But the family that has controlled Dow Jones for more than 100 years, the Bancrofts, at first rejected Murdoch's bid because some of its members loathed his tabloid style and feared he would trample the Journal's independence. The family haggled for two weeks over a proposal designed to buffer the Journal's newsroom from Murdoch. A few hours earlier on this Friday afternoon, Zannino had called Murdoch to say the proposal was finally on its way and Murdoch had gathered that he'd be pleased with it.
It didn't turn out that way. Murdoch hated the proposal. In his view, it would give the Bancroft family more involvement over the Journal after they sold it than they had exercised before. So he rolled up his sleeves and started working the phones, making his feelings known to key players in the deal, turning up the pressure and threatening to pull his offer a move that would have sent Dow Jones stock plummeting back to earth. "Dave, you can put the $5 billion away," he told News Corp. CFO Dave DeVoe. He consulted with three advisers about whether to withdraw: group general counsel Lon Jacobs and corporate-affairs chief Gary Ginsberg, who were in the room, and his son and News Corp. heir apparent James Murdoch, the CEO of News Corp.'s European satellite-TV system, who called in from a yacht near Valencia, Spain. Murdoch wanted to jolt the Bancroft family back to reality, and if the deal was going to die, he wanted to be the one to kill it. "If we clean this up to our satisfaction, the family will reject it. So why don't we just reject them?" The phone buzzed again. Zannino was on the line.
"Hello, Rich. I've read it," Murdoch said. "I don't know what you were thinking." He walked through all the ways the proposal was unacceptable. "Oh, yes, we reject this."
As it turned out, Murdoch didn't have to withdraw his bid. The threat of pulling was enough to get the family to budge. Within days, Murdoch and the Dow Jones board had agreed on an independent editorial-oversight committee; a sufficient percentage of the Bancrofts were expected to agree as well, though that wasn't a sure thing. Any deal can blow apart at any time, and this one was especially combustible, but what seems clear is that the Bancrofts, whose Class B supervoting shares give them effective control of Dow Jones, would now find it difficult to pull back from selling their cherished newspaper and the company that owns it.
Should the deal close as expected, Murdoch the ultimate outsider, the ink-stained interloper who started in 1953 with a single paper in Adelaide, Australia would add capitalism's daily chronicle to an empire that now comprises the Fox movie studio and television network, satellite TV systems in Europe and Asia, more than 100 newspapers and a fast-growing Internet division that includes MySpace, the massively popular social networking site. Two years ago, Murdoch's archrival, Sumner Redstone of Viacom, thought he had a deal for MySpace, but News Corp. swooped in and snatched it, bidding $580 million, $30 million more than Redstone and far more than anyone else thought it was worth. Then the site grew from 20 million members to almost 200 million, Google paid $900 million for the right to advertise on the site, and suddenly Murdoch's price looked cheap and Murdoch looked like an Internet visionary. "I love being called that," he says, "but the truth is, I'm just lucky and nimble." He generates his own good fortune by being perhaps the most gifted opportunist in media, a man whose nose for a deal makes him the last of the true media moguls, the one who's still building grabbing Dow Jones, dreaming about trading MySpace for a big chunk of Yahoo!, trying to launch a Polish TV network. News Corp.'s voting stock, of which the Murdoch family owns 31%, has gone up 18% in the past year, making him worth $9 billion.
And he lives like an old-fashioned tycoon too, hopscotching the planet on his 737 and recharging on his yacht off St. Tropez. Recent stop: London, where he got thrown from a horse (but didn't break anything too busy). His likeness was unveiled at the National Portrait Gallery and he threw a party in Kensington Gardens for 400 friends, including incoming British Prime Minister Gordon Brown. Murdoch and his third wife, Chinese-born Wendi Deng, 38, have added two daughters, ages 3 and 5, to a fiercely competitive yet surprisingly close-knit family of four adult siblings from his two previous marriages. Murdoch likes to say he has 20 good years left. His mother is 98.