News Corp shares tumbled another 27c to a a 10-month low of $26.98 this morning as the market frets with each passing day that Rupert Murdoch gets closer to reaching his ultimate empire-building dream of acquiring Dow Jones and The Wall Street Journal.

Rupert has long been criticised for managing his empire based on power rather than shareholder returns. News Corp has underperformed the Australian market for the past 20 years, although you’re still miles in front if you bought when it almost collapsed in 1991.

Paying $US5.5 billion for Dow Jones is the ultimate ego-driven deal for Rupert and shareholders fear that it will destroy value.

News Corp’s market capitalisation has already tumbled since the stock peaked at more than $32.50 in February. And after the huge buyback associated with the John Malone peace deal, News Corp is once again being transformed into a company with substantial debts.

Dow Jones is driving a hard bargain with Rupert, as this term sheet of any independence agreement for The Wall Street Journal reveals.

While Rupert can determine things like budgets and branding, he is agreeing to retain the three most important Dow Jones editorial personnel: Marcus Brauchli, WSJ managing editor, Paul Gigot, WSJ editorial page editor and Neal Lipschutz, Newswires managing editor.

Only a five person special committee of eminent community and journalistic figures can hire or fire these three and if one member goes, the remainder get to choose the replacement.

Why pay billions for something that you won’t control? The whole arrangement will be a major culture shock for Rupert, who is used to hiring and firing editors on a whim.

Rupert is even committing the rest of his global operations to the following editorial standards which are designed to preserve the “integrity, editorial independence and freedom from bias of News Corp’s publications and news gathering services”:

  • Facts are accurate and fairly presented;
  • Analyses represent the publications’ best independent judgments rather than their preferences, or those of their owner, sources, advertisers or information providers;
  • Opinions represent only the applicable publication’s own editorial philosophies centered around the core principle of “free people and free markets”;
  • There are no hidden agendas in any journalist undertakings; and
  • Accuracy and fairness extends to coverage of any real or perceived business interests of News Corp.

My goodness, talk about a culture shock. Could this really mean that when the equivalent of the next Iraq invasion comes along, every single News Corp paper won’t be signing from the same songsheet?

Peter Fray

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