Consider it the end of the Murdochian siege.
Long ago, the Bancrofts thought they had long ago built a high, stonewall, impregnable against rogue invaders, especially those coming all the way from Down Under. Turns out that the wall was indeed medieval, unable to withstand the shot of high-powered ($60 a share) cannon. The wall popped several chasms, the castle's inhabitants were at each other's throats, and in the cover of darkness and deadline, Rupert Murdoch's News Corp forces burst through.
The Murdoch victory becomes a signal event in American journalism. And we can draw several immediate lessons:
---First, of course, is that the two-class wall is susceptible in the age of digital warfare. Two-class share systems aren't really a wall. Yes, they slow the process -- a good idea when principles of free, independent press need to be judged alongside if share price maximization -- but they don't guarantee anything.
---There are no suitable white knights waiting on the sidelines to save the very best of the American press. Maybe a couple of jesters, or magicians who try to weave tax-savings spells, saying they can pull rabbits (and reporters) out a hat.
---Publishers better value their own assets before interlopers do. Murdoch's Dow Jones vision is right-on. It's the idea of a global business news and data business delivered to the laptops, desktops, phones, PDAs and TV monitors of everyone's who wants in on capitalism around the globe. At last check, that was everyone except the North Koreans. But he was willing to put a price on his vision -- the $1.5 billion premium. Dow Jones, ahead of most other newspaper companies, had been moving along the right road in getting its assets ready for the age Rupert sees. But they were too slow, and what's that say about the rest? While few companies have the assets Dow Jones have, all can make better use of what they do have
---The outsized premium didn't help newspaper stocks overall: Though Dow Jones stock sold high, before, after and during last week's market turndown, newspaper stocks have suffered. This price is about a unique set of news assets. Today, the Times is up -- undoubtedly on speculation its premium assets may be valuable to an acquirer -- but that will be an anomaly when the blush of the sale is over, and other share prices return to where they were.
---The News Corp bid is just a preview of things to come: The structure of the industry is getting worse, not better. The digital transformation won't come fast enough to make a smooth transition from print to pixels. We're still at the beginning of re-defining journalism in the 21st century, not at the end.
The acquisition is a warning shot: Standalone newspaper companies must answer the question: What happens when they come for us?
The web's starting to come to life -- in midsummer no less -- with concern about the New York Times, its Sulzberger Protection Plan and its strategy. Sam Zell's attempt to takeover -- and presumably dismantle -- the Tribune is now threatened by the debt "crisis." McClatchy stock is in free fall. And most ominously, all the classified, retail and national ad numbers are getting worse.
All press companies -- whether they've got 10% of their companies tied up in newspapers or all of it -- better be working on the long-term plan. That may mean going private, taking on cash-rich partners, or selling themselves to friendly uncles who have cash flow from other businesses to protect news operations. Cost-cutting, out-sourcing and off-shoring will all help, but they don't look sufficient. At some point, traditional news operations will lose a critical mass of news-gathering and into the breach will come online-only operations, unburdened by legacy costs. That won't entirely be a bad thing, but we all want to know and be able to trust who in fact is bringing us our news, who's keeping tabs on the government and the powerful. Right now, the press we knew is in full retreat and their replacements are but sprouts.
In a sense, we're at the end of one era, while the next hasn't quite begun. It's limbo. It could last a year or five, and in the meantime, what about the readers? Sure they are noticing, and talking about, slimmer papers and fewer stories. But for the moment, they have few new choices to consider.
Complete Dow Jones coverage, here