Punch Sulzberger and the trouble with media dynasties
It is easy to imagine the look on the faces of Rupert Murdoch‚Äôs children when they read the obituaries of New York Times owner Arthur ‚ÄúPunch‚ÄĚ Sulzberger, whose father thought him too stupid to run the company. Particularly when they came to the line: ‚ÄúIt‚Äôs impossible to be an assistant to your father.‚ÄĚ
Rupert Murdoch‚Äôs eldest son, Lachlan, is exiled to Australia after complaining his father wouldn‚Äôt let him do his job at News Corp. His daughter Elisabeth‚Äôs movie company, Shine, may be owned by News Corp, but she lives in London and keeps her interfering father at arm‚Äôs length. And after disappointing his old man by failing to smother the phone-hacking scandal at his British papers, James is scrabbling around at corporate headquarters on Sixth Avenue in New York, trying to make it work at his new job leading the company‚Äôs television interests ‚Äď everything, that is, except his father‚Äôs ‚Äúfair and balanced‚ÄĚ baby, Fox News.
It is one of the truisms of business that media companies are traditionally owned by strong-willed, dynasty-obsessed, egotistical patriarchs ‚Äď and in some cases, such as Katharine Graham at the Washington Post, matriarchs. It is the common thread that links Murdoch to Sumner Redstone and Mike Bloomberg to Si Newhouse. Not only do such alpha-male types revel in the power and influence they can exert atop a company reaching into the homes of millions. But these larger-than-life moguls unencumbered by interfering shareholders and fastidious directors are the only ones who can make the quick decisions and fast moves that media companies need to make it in a world of fast-changing technologies.
When things go wrong, of course, there is only one person to blame. Ted Turner, Hugh Hefner and Martha Stewart discovered that, and Oprah Winfrey is learning it by the week. Mark Zuckerberg, too. The problem with high-wire acts without a safety net is that bad decisions get found out fast. And it is only natural, perhaps, that those who manage to succeed in such a precarious trade soon come to the conclusion that because they drove their companies to success, success is something in their genes that they have handed down to their children.
Punch Sulzberger certainly thought so, even if his parents thought him ‚Äúsomething of a gamble.‚ÄĚ He may have preferred to address his readers through letters to the editor under the jokey pseudonym ‚ÄúA. Sock‚ÄĚ, but no one at the Times was in any doubt about who was in charge. The paper prospered under his stewardship, and his sole control meant he could take bold decisions that worked, such as publishing ‚ÄúThe Pentagon Papers‚ÄĚ against the wishes of Richard Nixon, and some that didn‚Äôt, such as vastly overpaying for the Boston Globe. Inspired by his parents‚Äô mistake, Punch handed over the reins to his son, Pinch, with what might politely be called mixed results.
The problem with dynasties, as the Tudors and Stuarts came to learn, is that genius can skip a generation. From rags to riches to rags in three generations is a common theme. Families that dissipate their holdings soon become prey to predators, as happened with the Bancrofts, who used to own the Wall Street Journal. And those, like Murdoch, who share their inheritance with their mother and sisters, then marry three times and father children with each wife, make it harder to hold on to the company.
Dividing shares into two classes can help, for a while. Murdoch runs News Corp by separating his family‚Äôs holdings from mere investors. But, as the phone-hacking scandal has revealed, eventually there is a limit to the backers‚Äô patience. News Corp is having to divide itself into the real business, the movies and the television interests, and Murdoch‚Äôs playthings, the newspapers, that almost all lose vast amounts of cash. Murdoch‚Äôs loyal investors are in the main business for the long haul, enduring a static stock price and even putting up with the hard-copy losses so long as the company grows, against the day Rupert can no longer keep up with events. Then they will want to cash in their chips, not wait to see whether James is a Punch or a Pinch.
Few megalomaniacs successfully plot their succession. Margaret Thatcher operated like a praying mantis, making love with then eating each pretender in turn. She ended up being ignominiously ousted in a coup by her peers. Apple without Steve Jobs is not Apple, as anyone who has been led up the garden path by Apple Maps knows full well. An orchestra without a conductor can play Beethoven‚Äôs Fifth, and not many would notice. But media companies need constant nurturing, goading and innovation. Looking back at his reign at the Times, Punch declared it proven that ‚Äúnepotism works.‚ÄĚ Alas for Murdoch‚Äôs children, markets today take a look at your bottom line, not your birth certificate.
Nicholas Wapshott‚Äôs Keynes Hayek: The Clash That Defined Modern Economics has just been published in paperback by W.W. Norton. Follow Wapshott on Twitter @nwapshott
PHOTO: Arthur Sulzberger, Jr., chairman of The New York Times Company, speaks at the Reuters Global Media Summit in New York, November 30, 2010.¬† REUTERS/Brendan McDermid