Quotes of the Day

"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.

All of which raises a question: What does a restless septuagenarian moving headlong into the digital age want with a somewhat beaten-down media property like Dow Jones, which over the years has misplayed some juicy opportunities to sell financial information in the digital world? Others may look at Dow Jones and see an excellent, world-renowned (though economically stagnant) print newspaper with a successful subscription-only website; Murdoch sees the engine of a global, interactive, multiplatform business-and-finance network that will drive his soon-to-be-launched Fox Business Channel, power up his 24-hour Sky News channel in Europe and fuel a still inchoate collection of online financial services. "We've got to lift our game tremendously," he says. "We'll sell our business news and information in print, we'll sell it to anyone who's got a cable system, and we'll sell it on the Web." Says News Corp. president Peter Chernin: "There are millions of people throughout the world joining the financial class, and the Journal is the premier financial brand. We have the size and international strength to monetize it globally." The Fox Business Channel, which will compete with CNBC, makes spending $5 billion for the Journal "an easy justification," Murdoch says. "It almost ensures the price is worth paying." The electronic rationale helped him persuade some skeptical colleagues, who thought Wall Street might punish News Corp.'s stock for bidding so much for a newspaper company. (It didn't.)

In financial terms, Dow Jones is a simple deal. The $5 billion price tag is easily absorbed by a company that earned $2.3 billion on sales of $25.3 billion last year and has little debt. But if the financials are simple, everything else about the deal is complicated. "The price of the Journal," says Murdoch, "is $60 plus vitriol."

Ironically, his quest for the Journal has helped set back Murdoch's reputation 30 years, to a time when he first took aim at the U.S. after having conquered pieces of Britain's Fleet Street newspaper establishment. In 1976 he bought the failing, family-owned liberal New York Post and solemnly pledged to "maintain its present policies and traditions." Then he yanked it hard right and down-market.

Today the notion of this tabloid terror controlling the world's leading business journal is being met with ferocious opposition in many quarters of the American media. Some of the opposition is principled, some of it is sanctimonious, and some of it seems driven by a tangle of ideological and commercial motives. Each day brings another investigative story about Murdoch using his media properties to boost his business interests, reward his friends and punish his rivals, and each story carries the message that this man will destroy the Journal by using its hugely respected news pages as his personal fief. Of course, its editorial pages are already more conservative than Murdoch.

Some remarkable stuff has been exhumed — like the time in 1984 (recently dug up in Slate) when Murdoch was trying to take over Warner Communications (now part of Time Warner, as is TIME) and ordered three New York Post reporters to investigate Warner boss Steve Ross — not for the newspaper but to help Murdoch's lawyer depose Ross. ("I don't recall it," Murdoch says, "But if we did it, we were wrong.") Or the time in 1994 when his Asian satellite system, StarTV, dropped the BBC — a constant irritant to Beijing — from its station roster. (Murdoch insists it was done for business reasons, not to curry favor with the regime.) Or the time in 1998 when he ordered his book-publishing unit, HarperCollins, to spike a memoir by Chris Patten, the last British Governor of Hong Kong and an unpopular figure with the Chinese government. "I was probably in the wrong there too," says Murdoch. "It's been a long career, and I've made some mistakes along the way. We're not all virgins."

With so many overlapping political, business and journalistic enterprises, he suggests, some conflicts are inevitable. "All these things come out of the woodwork! There are so many things going on. Half of this stuff I don't hear about until I read it in the paper." But Murdoch waves away the past and cuts to the heart of the matter: the Journal. "Why would I spend $5 billion for something in order to wreck it?" he asks.

Some of those who know him well suggest that the mainstream media caricatures him. "Murdoch has been overdemonized in much of this news coverage — some of it is every bit as lacking in objectivity as his papers are accused of being," says British media critic Roy Greenslade, a professor of journalism at London's City University who writes for the left-leaning Guardian in Britain. "Those who say he'll wreck the Journal are in for a surprise. What they miss is that he really does distinguish between his tabloids and his serious papers," says Greenslade, who has worked at both the Murdoch tabloid Sun and the Murdoch broadsheet Sunday Times. "At his tabloids, Rupert's word is treated as the word of God. At his serious papers, there's much more of a discussion."

His best editors know how to keep him interested but at arm's length. "He knows where the limits are," says the editor of the Times of London, Robert Thomson. "And if he's not interested, then where is the money going to come from? Where else is the money going to come from if Dow Jones wants to grow globally?"

Murdoch cheerfully admits to meddling with his tabloids. "They're different animals," he says. "You've got to make people want to read 'em. They've got to have some fun and a bit of edge. Agendas up to a point, and certainly crusades. But I don't call all those shots. I haven't got the time." He doesn't need to dictate or micromanage because he chooses editors who broadly agree with him. That's not unusual in the newspaper business. Some papers are allowed to diverge — the Sunday Times skews conservative, the Times of London more moderate.

So let's stipulate that the only thing to prevent Murdoch from wrecking the Journal will be Murdoch himself. (No editorial-oversight committee can stop him.) And let's admit the possibility that he may not be the same scorpion at 76 that he was at 51. He has always said that craving respectability is the beginning of the end for a journalist. "Journalists should think of themselves as outside the Establishment, and owners can't be too worried about what they're told at their country clubs," says the man who influences Prime Ministers and Presidents and still poses as a scrappy outsider. Yet his associates say he's finally considering his legacy and wants to run the Journal impeccably to upgrade his reputation. "He's thinking about his obit," says someone who knows him well.

He scoffs at the notion. "I'm not looking for a legacy, and you'll never shut up the critics. I've been around 50 years. When you're a catalyst for change, you make enemies — and I'm proud of the ones I've got." Murdoch has invested billions in newspapers when few others were willing, but he has also kept them alive through a lowest-common denominator approach typified by the trashy Sun, with its topless Page 3 girls on the breakfast tables of a million Britons. Murdoch wouldn't be Murdoch if he didn't love sticking it to sanctimonious J-school toffs. "When the Journal gets its Page 3 girls," he jokes late one night, "we'll make sure they have M.B.A.s."

"We're very proud of what we do at all our papers," he says on another day, in another mood. "And we just feel insulted by the coverage. We've got more than 50,000 people [in News Corp.]." We're sitting in his New York City office on a June afternoon. "We make mistakes here and there. But there's nothing wrong with the Post — most people would prefer to read it before they go to the Times. There's such a thing as a popular newspaper and an unpopular élite newspaper. They play different roles. We have both kinds. Just like we have the Fox network with American Idol and 24, and we also have the National Geographic Channel. It's hard for outsiders to understand that."

I toss out a theory: Fox News is one big reason Murdoch's critics are so incensed by the idea of his controlling the Journal. "Oh, yes!" he cries. So is Fox News an expression of his political views? "Yes! No! Yes and no. The commentators are not. Bill O'Reilly certainly not. Geraldo Rivera certainly not. But Brit Hume and his team on the nightly news? Yes. They play it absolutely straight!"

Murdoch isn't a party-line guy. He's a pragmatist. He likes strong politicians and change agents and winners; in recent years he has supported moderates like Tony Blair and Hillary Clinton. But he has a stubborn populist streak, and his populism finds an outlet on Fox News, a channel that gives voice to angry middle-aged white guys. "CNN is pretty consistently on the left, if you look at their choice of stories, what they play up. It's not what they say. It's what they highlight." (CNN, which is also owned by Time Warner, hotly disputes this charge.) Then he mumbles conspiratorially, "And if you look at our general news, do we put on things which favor the right rather than the left? I don't know." Has Murdoch just said what I think he said? Has he flirted with an admission that Fox News skews right? If so, he quickly backs away. "We don't think we do. We've always insisted we don't. I don't think we do. Aw, it's subjective. Neither side admits it."

If he gets the Journal, Murdoch swears, he has no plans to alter its journalism. "There'll be no change in the Journal's business coverage," he says flatly — but he does mean to expand its reach. He'd like the newspaper to be a national counterpoint to the New York Times in setting the country's agenda. "My worry about the New York Times is that it's got the only position as a national élitist general-interest paper. So the network news picks up its cues from the Times. And local papers do too. It has a huge influence. And we'd love to challenge it."

Change was coming to the Journal whether Murdoch bought it or not. Like other newspapers, it has to change and adapt. And its relative inability to change and adapt until now certainly can't be blamed on Murdoch. In the past three years, the Journal's trim size has been reduced to save paper costs, and the Journal added a Saturday edition to try to reach more advertisers. A new managing editor, Marcus Brauchli, who was a foreign correspondent at the Journal for 15 years before assuming his current post, has been installing his own top editors. Murdoch has pledged to keep him in place, calling Brauchli "an agent of change."

The owner-in-waiting will eventually want to see some, starting on Page One. He has little taste for the quirky "A-head" stories that run in the center columns. "To have these esoteric, well-written stories on Page One every day is great," he says, in a tone of voice that implies it's not so great. "But I still think you want some hard news. I'd try to keep many more of them for the weekend. I'm sick of putting the Journal aside because I don't have time to get through these stories." He might also relaunch the Saturday edition with a glossy magazine section.

When Murdoch talks about the future of newspapers, you get a sense of how contemporary he really is. Circulation and advertising revenues are ebbing away everywhere, he notes, proportional to broadband penetration. "You've really got to worry," he says. "Tribune Co.'s revenues [in May] dropped 11% across broadcasting and newspapers. That's huge. The Times dropped 8.5%. Half of men under 30 aren't reading print newspapers, and there's no sign that they come back as they age."

How does he respond to this bleak picture? By musing about investing even more in newspapers. "What if, at the Journal, we spent $100 million a year hiring all the best business journalists in the world? Say 200 of them. And spent some money on establishing the brand but went global — a great, great newspaper with big, iconic names, outstanding writers, reporters, experts. And then you make it free, online only. No printing plants, no paper, no trucks. How long would it take for the advertising to come? It would be successful, it would work and you'd make ... a little bit of money. Then again, the Journal and the Times make very little money now."

In other words, he hasn't decided what to do with the Journal, beyond investing in a beefed-up Washington bureau and more foreign bureaus, the better to challenge the Times and the Washington Post. He notes that the Journal leadership has tried to maintain the print circulation by not giving everything away online, but the percentage of heavily discounted print subscriptions is rising rapidly, a sign of ill health. WSJ.com has more than 900,000 subscribers, making it the largest paid-subscription site on the Web, but less profitable, Murdoch suspects, than it might be with a hybrid model — with free users driving ad sales and premium users willing to pay for high-end content. "But it needs to be studied carefully," he says.

Murdoch sensed the power of the Web not so much as a user but as a businessman who watched the bottom line. In late 2004, he says, he "began to feel the erosion of advertising in print and even the stalling-out of ads on television. So I said, Better pay attention to this." He set up Fox Interactive Media in Los Angeles and started looking for something to buy. Peter Chernin and Ross Levinsohn, then the head of FIM, brought him a games company called IGN, a sports site called Scout and MySpace. He snatched MySpace from archrival Redstone, which made his victory all the sweeter. (Redstone called Murdoch's victory a "humiliation" and later fired Viacom CEO Tom Freston.) Murdoch was surprised by what happened next. "It was an education for me, the way it took off. It was the cool young site. Now the average age is climbing."

MySpace's much smaller archrival, Facebook, is surging: what started as a narrower college site is broadening and accelerating, inviting everyone to join and offering new software tools so people can, for instance, start microbusinesses on their Facebook page. But as MySpace showed signs of reaching saturation, Murdoch began very preliminary, exploratory talks about trading the site for 25% or more of Yahoo! "Terry Semel was enthusiastic about it," he says of the then Yahoo! CEO. "We were looking to see if it was a good idea. I wasn't sure." Now Semel is gone, and Murdoch needs to see what Yahoo! will become under its new boss, co-founder Jerry Yang.

As younger media executives fall by the wayside (Semel is 64), Murdoch keeps fighting on all media fronts. "A media company is basically anything that communicates with people — news, ideas, entertainment, advertising — and allows them to communicate with each other," he says. "But the Internet is teaching people every day to expect everything for free. So it has to be advertising supported."

Murdoch is both the latest and the last of the outsize media moguls like Henry Luce, William Randolph Hearst and William Paley, men who loved their properties and used them to make fortunes and influence politics and society. But unlike many of his contemporaries, Murdoch has consistently been able to see around the corner. Love him or hate him, he moves into the 21st century as a new kind of media titan. Much as he'd like a legacy, he knows that worrying about it isn't good for business in the ever-morphing media environment. The Bancrofts relished their role as guardian of the Journal's independence, but they did not pay close attention to the business at hand. Murdoch is way too rich to care about money and way too involved to let the Journal's garden go unweeded. But he's still going to be Rupert, a man who buys ink by the barrel and isn't afraid to apply it.

• Eric Pooley
• Why does he want the Wall Street Journal and what will he do if he gets it? Eric Pooley got the answers from Murdoch himself