From the WSJ Opinion Archives
BUSINESS WORLD
Necessary Skunks
What do Rupert Murdoch and Dale Earnhardt Jr. have in common?
Into a difficult family business situation comes a takeover offer at once humiliating and hard to pass up. That description applies to Rupert Murdoch's bid for Dow Jones. It also applies to the terms of Dale Earnhardt Jr.'s spurned offer to renew his contract with a racing team now run by his stepmother.
In both cases, sentiment and family tradition joust with hardheaded concern for the future.
One consequence of the elder Earnhardt's death was that his wife, the estimable Teresa, inherited his business, while Dale Jr. was lofted to such heights of marketability and fan adoration that it became impossible to equitably contain his value in a structure in which he was an employee of his stepmother. He asked for 51% of the company in return for re-upping--a semi-hostile takeover--and was turned down last week. As fellow driver Tony Stewart put it, without Dale Jr., his stepmother's company is "a museum."
When Rupert Murdoch offered 67% over its then-share price for Dow Jones, parent of The Wall Street Journal, he was saying: The paper's future is worth a lot more with me running it than with you running it.
After the crash that killed Senior, his wife devoted her management energies to cultivating the Dale Earnhardt legacy, and her connection to it. But she hasn't been the hands-on team owner required for success on the competitive Nascar circuit. Think Rick Hendrick, Jack Roush or Joe Gibbs. That's not Teresa, two of whose key employees publicly complained: "If she's going to spend four or five weeks straight on that boat of hers, she's going to have to let us run the company."
The Bancroft family trusts have guaranteed the Journal's independence, but haven't supplied the risk-hungry leadership required to capture our age's vastly expanding opportunities in financial news and information. As Warren Buffett bluntly put it last week, "they blew it."
At 32, Dale Earnhardt Jr. is a skilled racer and fabulously popular with fans and sponsors. But he's never won a championship and is in danger of becoming one of those drivers who stay around because of their popularity and marketing value but don't win and are no longer expected to win.
Great newspapers are great because talented, ambitious reporters and writers seek them out to work for them, not just because the owners have laudable intentions. The Dow Jones legacy has been terrific but what about the future? The world will continue to spawn alternatives to its franchise, and the Journal is in danger of becoming less and less central to the world's business life (and, sadly, that's regardless of any willingness by the controlling shareholders to become poorer and poorer to protect the Journal).
When Junior announced his defection, Teresa issued a statement in which the words loyalty and family were prominent. These are Nascar nation values. Yet throughout the garage area and fandom, opinion has run strongly in favor of Junior--because of his importance to the future of the sport.
When Mr. Murdoch floated his offer for Dow Jones, the press commentary, though coupled with the usual barbs for the man himself, was surprisingly supportive. The palpable reason is worry for the Journal's future if it adheres to its present path.
Mr. Murdoch's compromises--especially with respect to Chinese sensitivities--have rightly been criticized. But whatever you think of his politics, his media efforts have tended in one direction: more choice for consumers. And he's hardly a villain for offering a handsome price for a newspaper property.
At the same time, there's no getting around the fact that News Corp. is a very large business empire, with financial interests in many lands, mostly unrelated to news. Mr. Murdoch is 76 years old, and what comes next in a company primarily geared to entertainment? His soon-to-be-launched Fox business channel, which presumably would be melded with the Journal, might not prove a winning venture. When a strong proprietor departs the scene, such empires have a habit of being broken up.
Mr. Earnhardt will likely field an offer from Hendrick Motorsports, the superpower of Nascar race teams. But Hendrick already has three credible contenders and one certified legend, in Jeff Gordon. Adding Junior to this stellar cluster might be one solar mass too many, especially thanks to pressure from fans, the media and possibly Nascar itself to fulfill the Earnhardt legacy.
The sentimental favorite is also the sensible favorite, Richard Childress Racing. Junior could one day climb into his father's old No. 3. But not before he and Mr. Childress have won a championship with a number that's his own. The young Mr. Earnhardt is said to be working through his options now, aided by his sister, his chief adviser.
As for the Journal, one could think of alternatives to News Corp., but at this point somebody would have to get on his horse and go looking for them. A sale to the Washington Post comes to mind as highly attractive, but the Post has made no offer. Mr. Murdoch's hefty bid was calculated no doubt to deter other bidders. It seems to have succeeded.
This is what you get when you don't tend to your legacy effectively: You lose the initiative. If Dow Jones's controlling shares believe their proper course is saving the paper from Mr. Murdoch, more power to them, but doing so might require taking some affirmative steps now to secure the paper a realistic alternative.
Mr. Jenkins is a member of The Wall Street Journal's editorial board. His column appears in the Journal on Wednesdays.
