Pearlstine, Dow Jones, and me (from 1990): why I’m sick, twisted scum

[News that Norman Pearlstine, the former managing editor of the Wall Street Journal who once denounced me as sick, twisted scumhas just been appointed editor of the Los Angeles Times reminded me of this pair of articles I wrote for Left Business Observer in 1990. They were part of a series of profiles of major media enterprises that was co-published by LBO and FAIR’s Extra! Comments inserted by the 2018 me are in brackets, like these. A note on dollar amounts in these pieces: prices today are about double what they were in 1989–1990. And a note on the WSJ: although the paper was showing signs of decline almost 30 years ago, it was still an excellent publication. The front page was a daily masterpiece. It took Rupert Murdoch, who bought Dow Jones from the Bancroft family in 2007, to bring the WSJ to mediocrity. Some time after these articles appeared, I was told that Pearlstine was mighty touchy about accusations of social climbing because the family was very Midwestern and straight-arrow and thought he was bringing ill-repute on the paper.]

Dow Jones & Co.: going for the glitz?

Left Business Observer No. 37, April 1990

In a recent speech accepting the editor-of-the-year award from the National Press Foundation, Wall Street Journal managing editor Norman Pearlstine worried about the state of journalism—which, unlike publishing, isn’t a business, he said. Pearlstine poked fun at “service journalism” and the desire to be reader-­friendly. He worried that illiteracy is eroding the newspaper audience, that databases reduce journalism to info bits, that entertainment values are replacing news values, and that “custom publishing” means that advertisers will drive journalistic content. Pearlstine praised the Journal’s parent, Dow Jones, for supporting his paper, while wondering if other publishers will be so supportive.

All pretty unexceptionable stuff, but Pearlstine—who refers to papers as “products”—a label whose accuracy doesn’t soften the blow of hearing it from a journalist—should regard his own glass walls before throwing stones. Databases and other electronic outlets—increasingly customized- are now the major part of Dow Jones’ business. The thinness of the journalism in the paper’s specialized pages and sections—like the Law and Media pages and the “Money and Investing” section, creations of the Pearlstine era—suggests that accommodating advertisers may be their real reason for being. And the Journal’s financial coverage is diluted by too many how-to pieces on investing that end up cheerleading rather than casting an acid eye on Wall Street

Which isn’t to say that the paper has descended quite to the level of USA Todayor the New York Times: it’s better written and more willing to offend the powerful. A fine recent example is John Fialka’s story from September 15, 1989, “Mr. Kissinger Has Opinions on China—And Business Ties,” which pointed out the fortunate harmony of interests between the “commentator–entrepreneur’s” consulting contract with Beijing and his widely broadcast defenses of the Tiananmen Square bloodbath.

But at the same time the paper ran the Kissinger story, it was killing a story by Mary Walsh that explored the mujahideen-promoting con-men whom CBS rented to staff its Kabul bureau, and their links to a fishy charity called the Mercy Fund. (Walsh, who left the paper, tells the story in the January/February Columbia Journalism Reviewand in the May Progressive.) The paper further discredited itself by maligning Walsh’s reportorial skills and spreading lurid rumors about her. No one knows why—but fear of offending both the mujahideen’s Washington patrons and senior CBS executives are high on the list of informed guesses.

Is the Journal, a relative holdout next to most of its media colleagues, becoming yet another court painter to the power elite?

Journal eclipsed

Until recently, it was easy to treat Dow Jones and the Wall Street Journal as virtual synonyms. But from the beginning, the Journal was part of a multimedia empire. When Charles Dow and Edward Jones started the Journal in 1889, their firm had already been offering a messenger-delivered news service to Wall Street for seven years. Almost as soon as science complied by inventing the ticker, Dow Jones was delivering electromechanized news to financiers.

Now the electronic delivery systems—databases, tickers, and the new phone services—earn more than the newspaper. And the Journal, formerly a near-monopoly in business news and the country’s only national newspaper, is now facing competition from papers that didn’t exist a decade ago—USA Today, the national edition of the New York Times, Investor’s Daily, and the U.S. edition of the Financial Times. Only the latter is an equal journalistic competitor (well, maybe the Times is, too, if you measure by bulk), but the others are commercial competition nonetheless.

With competition comes the erosion of monopoly profits; the Journal, once one of the most profitable publications in the world, is now only doing middling well on the bottom line. The retrenchment in financial services means fewer advertisers and fewer readers. Much the same can be said of the Journal’s sister publication—for some reason, the relation is described as sororal rather than fraternal, even though almost 90% of the Journal‘s subscribers are men—Barron’s, that indispensable weekly chronicle of the financial markets.

Overall corporate profits from regular operations fell by 4.6% in 1989, with a 0.8% increase in information services offsetting declines of 11.4% at business publications and 8.0% in community newspapers. Publications, which as recently as 1987 furnished two-thirds of Dow Jones’ sales and over half of its profits, now provide less than half and less than a quarter of the corporate totals, respectively. The recent financial history of information services is virtually a mirror image of print’s. The community papers—the Ottaway chain, acquired in 1968—account for a small and declining portion of Dow Jones’ money stream.


The company is enthusiastically probing all the forms of our post-Gutenberg culture. Dow Jones News/Retrieval offers 55 business and general databases, among them the texts of almost 200 publications, including the full texts of the Journal and Barron’s. Last year, Dow Jones topped off its interest in Telerate, a provider of live prices and other information on financial markets around the world, and bought the entire firm.

Though Dow Jones boasts about Telerate’s market position, its products aren’t universally admired on Wall Street; a bond trader told LBO that if it weren’t for Telerate’s monopoly on U.S. government bond prices—one that isn’t likely to last—she’d have little use for Telerate’s screens. Dow Jones has been spending heavily to bring Telerate up to snuff against competitors like Reuters and Knight-Ridder, and it will have to continue to do so. Bitter print staffers are saying they are being asked to make up for management’s having overpaid for Telerate’s creaky technology.

“Synergy” is the magic concept in the media business these days, and Dow Jones promises to be no slouch at assuring the whole is greater than the sum of the parts. JournalPhone, which provides news for 75¢ a minute, is produced by the broadcast division of information services and marketed through the Journal. If it’s 10 PM EDT and you have to know where your Japanese stocks are, a call to 1-900-JOURNAL will answer the question. And at least for now, unlike some other 800- and 900-information-mongers, Dow Jones isn’t recording callers’ phone numbers for future marketing use—yet. Coming in 1990: JournalFax, another product of intracompany cooperation.

Information Services is now unveiling DowVision, a customized newswire imminently available in 12 cities. DowVision will offer Fortune 500 subscribers news relevant to their line of business along with custom software designed to merge this data with subscribers’ own software and internal communications systems. Alex Taylor III, writing in Fortune, described DowVision as being like “the franchise to sell McDonald’s hamburgers at Disney World.” Taylor was probably referring to the profitability of the arrangement, but a less boosterish reader has to worry about the nutritive qualities of the meals, be they Big Macs or DowVisions.


As Wayne Parsons argues in his useful new book, The Power of the Financial Press (Rutgers, $24.95), the professionalization of economics has left the business press with the task of developing a political agenda for the nonspecialist elites in the U.S. and in Britain. For example, the religious doctrine known as supply-side economics—along with several other obsessions of the Reagan agenda like pumping up the military and beating up small countries—was essentially developed on the editorial page of the Wall Street Journal, under the direction of editor Robert Bartley. [A note on titles: at the old Journal, the “editor” ran the opinion pages, and the “managing editor,” the news pages.] Now that the indiscretions of the go-for-it era so vigorously promoted by Bartley & Co. are becoming visible to all but the self-blinded, the page is getting ever-more bizarre.

Fortunately, the news pages have been largely immune to this nonsense. Jonathan Kwitny, who wrote for the paper from 1971 to 1988, looked deeply into the Iran–contra affair and certainly didn’t find democracy at work. For years, Kwitny reported on the extracurricular activities of Ollie’s army, as well as the more routine crimes of our business class. But Kwitny’s articles about Reagan–Bush foreign policy and the antics of the white collar netherworld don’t appear in the Journal anymore. He left the paper to produce a TV show , which was subsequently canceled by its sponsor, New York City’s municipal station.

But, Kwitny told LBO, another reason he left was that it had been getting tougher to do the kinds of stories he wanted. (Before talking, Kwitny insisted that it be prominently mentioned that he thinks the Journal is the best paper in the country and that its problems aren’t all Norm Pearlstine’s fault. Done.) Content had nothing to do with it—just turf: D.C. bureau chief Al Hunt and former foreign editor Karen Elliott House (see Kann entry in neighboring board list [at end of this post]) thought he was poaching on their real estate. The paper was also getting too bureaucratic, said Kwitny, too top-down; editors told reporters what to write about, instead of allowing story ideas to percolate upwards.

Turf battles are fought in any organization, but Kwitny’s experience is evidence for the ascendancy of a clique of the anointed—led by Kann, House, Hunt, and Pearlstine—at a formerly collegial organization. Outside the charmed circle, the majority of the paper’s nearly 600 journalists complain about travel restrictions, the less-than-inflation wage offer (about which the toothless company union will do nothing), favoritism, mysterious kicking upstairs, the promotion of stars and specialists over less glittery generalists, speedup, cutbacks, Phillips’ $1 million bonus (see board box), and managing editor Norman Pearlstine’s social climbing. The staff is quite paranoid, and known malcontents are zipper-mouthed with outsiders; one said, “I’m glad you’re doing this, but nobody’s going to help you.” Even ex-employees beg you for anonymity.


In a love letter to the Journal in the April Esquire, Joseph Nocera wonders why the paper is so good if the staff is so miserable, and concludes it’s because they’re miserable: producers must suffer so that consumers might be satisfied. What a repellent doctrine. And wrong, if it drives away the likes of Kwitny and Walsh.

Pearlstine’s au courant management philosophy is captured in the Journal‘s ad slogan, “Faster. Tougher. Smarter.” There’s less room in Norm’s hectic world for the leisurely, complex “leaders” (the stories that begin on the left and right columns of the front page) the paper excels at. Instead, as Kwitny says, there’s more breaking news of the sort that would have been on page 2 or 3 in the old Journal, out of an attempt to compete with USA Today and the Times. In the drive to be more popular, more of a general newspaper, the Journal has let its business reporting slip. Two recent examples: Newsday covers [the rapacious former airline exec] Frank Lorenzo, a figure who cries out for tough scrutiny, better than the Journal. And when leveraged buyout artist Jerome Kohlberg sued his former partner Henry Kravis, a story that could speak volumes about how the guys who creatively recapitalized Corporate America treated each other, the Journal was nowhere to be seen.

Somewhere the Journal is seen regularly, at least in the person of Norm Pearlstine, is at all the right parties in New York. While Pearlstine has long had social ambitions, his marriage to Nancy Friday a couple of years back seems to have sent him into high gear. To celebrate the union, the couple rented the Rainbow Room and invited the cream of New York society—Donald Trump, corporate raider Ron Perelman, Henry Kissinger, and, it is said, Journal advertisers who were utter strangers to the celebrants. And of course Pearlstine, a former Forbes editor, joined the swells at Malcolm’s final birthday party last September.

Perelman, chair of Revlon and husband of gossip-monger Claudia Cohen, has hired PR heavy Linda Robinson, wife of American Express chair (and Bush–Baker friend) James Robinson III, to burnish his image. Perelman no longer wants to be known as a “raider.” He now wants to be known as a “builder,” as a March 27 Journal leader by Randall Smith and David Wessel—a story whose depth of irony is difficult to measure—informed us. So persuasive is the Robinson–Perelman case that even investment banker Felix Rohatyn, who, once likened Mr. Perelman to “the Huns and the Visigoths,” now says that his new client “Ronald is handling himself quite well.” But Smith & Wessel saved this gem for their 18th paragraph: “The managing editor of the Wall Street Journal, Norman Pearlstine, is…a friend of Mr. Perelman, and Mr. Pearlstine’s wife, author Nancy Friday, is a consultant to Revlon on the psychology of beauty.” Smith & Wessel close their article with the news that for all his reputation for brashness, Perelman is really quite shy.

How nice. Like many Journal leaders, the Perelman story told a lot about how money and flackery shape our public life. But it also makes you wonder about the Journal itself. Under Pearlstine, the paper’s business coverage has grown notably fluffier, and it’s lost some of its best reporters. The new Journal may be faster, but tougher and smarter? Is there a publication in the country that isn’t tending towards Vanity Fair?

Was Pearlstine ‘s sermon that opened this article really an inadvertent confession of a bad conscience?

Conversations with a Journal editor

Left Business Observer No. 38, May 1990

Two days before last month’s issue went to press with its profile of Dow Jones & Co., I faxed some sharply worded questions to Wall Street journal managing editor Norman Pearlstine. I expected no reply; none of the other media companies profiled in previous issues wanted to give LBO the time of day, much less an interview. Much to my surprise, Dow Jones’ PR man, Roger May, called me and said Pearlstine wanted to talk. I didn’t have the nerve to tell May that the issue had gone to press; I feared losing the opportunity for an audience with this prince of journalism.

Had the interview been the end of it, this follow-up would have been rich with praise of Dow Jones’ openness and of Pearlstine’s generosity with his time. Unfortunately, Pearlstine subsequently denounced your correspondent as “full of shit,” a phrase which chased all thoughts of gratitude from my mind.

First, the interview. My questions fell into three basic categories, familiar to readers of last month’s article: accusations that the Journal’s news coverage, especially of financial issues, had been getting soft; the killing of Mary Williams Walsh’s story on the crew CBS rented to cover the war in Afghanistan (told in the January/ February issue of the Columbia Journalism Review and the May issue of The Progressive); and the journalistic import of Pearlstine’s social ambitions. Highlights of the interview follow:


Not surprisingly, Pearlstine dissented vehemently from this accusation. When I suggested that Newsday had done a better job of covering Frank Lorenzo and his airline empire, he exploded: “Newsday?!’ It was as if I’d said his paper had been scooped by My Weekly Reader. When I said that much of the Journal’s coverage of the financial markets read too much like cheerleading, he denied all, and asked who does a better job. “Barron’s,” I replied. He pointed out that their audience was very different—more sophisticated, more professional. (Is critical coverage reserved for professionals?) When confronted with Jonathan Kwitny’s observation that the Journal’s front page had become too newsy and less attuned to the long view, he said that Kwitny’s criticisms were those of a mere “reader,” as if his 17 years of writing for the Journal were irrelevant. Asked what was the paper’s weak point, Pearlstine said its coverage of international issues—a curious response, given staff cuts at the foreign desk. Several times, Pearlstine referred to newspapers as “products.”


Walsh, a veteran foreign reporter highly regarded inside and outside the Journal, wrote a long story investigating the gang of mujahideen-promoters CBS contracted with to cover the war in Afghanistan. The story never ran. Pearlstine says that her piece—despite all her “lovely writing” (a patronizing phrase)—“didn’t meet the standards” of journalism, and that several editors agreed with him, with the exception of page one editor James Stewart. Pearlstine said he was willing to defer to Stewart’s judgement if the piece—four times regulation length—could be cut down to 1500 words, a task delegated to Don Moffit. Pearlstine says Walsh rejected Moffit’s surgery, and killed the piece.

According to Pearlstine, the essence of Walsh’s argument was that Kurt Lohbeck, a freelancer whom CBS hired to cover the war—the biggest U.S. covert operation since Vietnam—had influenced Rather to more hawkish views, and that Rather was dying to ingratiate himself with Jesse Helms. Though Pearlstine believes Lohbeck is a “manipulative” guy, he thinks this argument doesn’t stand, for two reasons: Rather had adopted Afghanistan as a special interest long before Lohbeck got involved, and that Lohbeck certainly didn’t influence U.S. policy, which was to stop “Soviet expansionism.” Is Lohbeck, colorful as he is, worth seven columns in the Journal? Pearlstine also wondered why Walsh brought her husband to her interview with Lohbeck , a man for whom she harbored a “personal animus,” as Norm put it.

While the Journal was dithering, the New York Post ran a story touching on some of the material Walsh had been investigating, including accusations that CBS was sold some staged footage. Bill Carter, a reporter for the New York Times, called Pearlstine to comment on a CBS executive’s claim that the Post ran “a trashy story” that the Journal had rejected. Carter quotes Pearlstine in a September 29, 1989, story—anonymously, though his identity was later revealed—as follows : “Whether a story has a sufficient level of proof…is something for an individual editor to decide. And you can infer what you have to from that.” Pearlstine, apparently not trusting my powers of inference, said that you shouldn’t confuse the editorial standards of the two newspapers. (He also said that Carter claimed he was going to report that Walsh leaked the story to the Post, something Norm wished to refute, though the topic didn’t come up in Carter’s piece.) Walsh took this as a knife in the back, and resigned.

Walsh disputes Norm’s version. She says that although she didn’t like Moffit’s edit, she hadn’t decided to kill the story; she hoped they could work something out. To her, Moffit had turned a serious investigation of the relation between the media and foreign policy into a “folkloric” personality profile. She says that Journal editors never challenged her on her reporting; they had stripped her story of its meaning and then maligned her work to a Times reporter. As for her personal animus, Walsh says, “I don’t like con-men.” As for bringing her husband to the interview, she says Lohbeck was known around Afghanistan for toying with a loaded gun, and she was afraid of him.

Readers can check out Walsh’s stories in the CJRand The Progressiveand judge for themselves.

Social climbing

Pearlstine acknowledges that criticism of his closeness to New York’s nouvelle society is a “legitimate issue,” one that turns on that age-old journalistic question of whether it’s better to know your sources or not. While acknowledging his departure from the paper’s history, he clearly thinks it better to know your sources. He volunteered that D.C. bureau chief Al Hunt is also closer to the Washington power elite than any of his predecessors. He further volunteered that he was the first Journal managing editor to serve on the Dow Jones management committee, a departure from that totem of journalistic ethics, the separation of editing and management. Pearlstine defies anyone to specify how his social life has affected the paper’s news coverage, though the criticisms recounted in the last two sections of this profile do conjure up an odor not unlike gunpowder.

Pearlstine was sorry to hear that even ex-employees seemed “paranoid” about criticizing him, and disputed assertions of morale problems among the staff, though he did acknowledge that he was not the best communicator. On the basis of our 90-minute chat, it seemed that he didn’t stay around for second helpings when they were handing out the human warmth, either.

On May 3, Norm called me to express some displeasure at the fact that the issue had gone to press before the interview was conducted, a detail I hadn’t apprised him of. It was rude, I admitted, but I was afraid it might derail the interview; I donned an appropriate amount of sackcloth and ashes and hoped that would placate him. It didn’t. He launched into a remarkable tirade, highlights of which follow: “about the most immoral and obscene piece of journalism I’ve ever seen…aren’t you ashamed?… you’re full of shit…you’re scum… I don ‘t understand how you live with yourself…you’re sick, twisted…It’s tragic that you exist.” Wow. He claims it was just the timing of the interview that set him off, not the content of the profile.

There were several more pleasing phone calls that week: five present and former Dow Jones employees confirmed the accuracy of the profile, several with considerable enthusiasm. All prefer to remain anonymous.

[sidebar to original story]

Dow Jones’ board of directors

In an arrangement similar to those prevailing at the New York Times Co. and the Washington Post Co., two-thirds of the voting shares of Dow Jones & Co. are controlled by descendants of Clarence Barron, who bought Dow Jones from its founders at the turn of the century. The family exercises its control by electing two-thirds of the board of directors.

Amounts shown for “compensation, ” as the euphemism goes, include cash salary, bonuses, and contributions to profit sharing and retirement plans paid in 1989. The 24 most senior executives of the company were compensated a total of $1,918,421, an average of $496,600. Outside directors—those who aren’t employees of Dow Jones—receive $23,000 for their service plus $800 per meeting attended (last year, there were eight), an amount roughly equal to the national average earnings for full-time workers, and roughly twice average per capita income.

family (first cousins control 66% of voting shares)

William C. Cox Jr. Executive director, client relations. Only family member on board’s powerful Executive Cmte.

Bettine Bancroft Klink

Martha S. Robea


Neil S. Hirsch. President and founder of the Telerate subsidiary.

Peter R. Kann. President and chief operating officer. Compensation: $956,535. He is a director of Group Expansion (Paris) and chair of the Far Eastern Economic Review. Kann is married to Karen Elliott House, VP/International Group, who is a former Journal writer and editor of hawkish persuasion. She earned $64,737 in 1989, and serves on the boards of the Center for Foreign Relations, Georgetown Center for Strategic and International Studies, and Harvard’s Center for International Affairs. Staffers at the FEERare reportedly quite unhappy about working for House, complaining about constraints on reporting, though one source says these are old and essentially groundless sentiments that predate House’s reign.

James H. Ottaway Jr. Senior VP. Compensation: $746,091. Other boards/memberships: Associated Press.

Warren H. Phillips. Chair and CEO. Worked his way up the DJ hierarchy as correspondent and editor. Received a special $1 million cash bonus, in three annual installments, commencing July 1989. Compensation : $625,459.

Other boards/memberships: Columbia Univ., Kennedy School of Government (Harvard,) Queens Coll.


William M. Agee. Chair, president, and CEO, Morrison Knudsen Corp. (engineering and construction) and chair and CEO, Semper Enterprises (consulting). Former head of Bendix. Major actor in one of the most egregious takeover battles ever, the 1983 Bendix–Martin Marietta–Allied love-hate triangle.

Rand V. Araskog. Chair and CEO, ITT Corp. Other boards/memberships: Dayton Hudson, Hartford Ins., New York Stock Exch., Shell Oil.

Irvine O. Hockaday Jr. President and CEO, Hallmark Cards. Other boards/ memberships: Continental Corp., Ford Motor.

Vernon E. Jordan Jr. Partner, Akin, Gump. Strauss, Hauer & Feld , Democratic power-broker Bob Strauss’s law firm. Ex-CEO, National Urban. League. Other boards/memberships: American Express, Bankers Trust, Corning, J.C. Penney, RJR Nabisco. Revlon, Sara Lee. Union Carbide, Xerox.

Rene C. McPherson. Retired dean of Stanford Business School. Previously chair and CEO, Dana Corp. (manufacturer of vehicular and industrial components). Other boards/memberships: BancOne, Mercantile Stores, Miliken & Co., Westinghouse.

Donald E. Petersen. Retired chair, Ford Motor. Other boards/ memberships: Hewlett-Packard; numerous public-spirited organizations, mainly in Michigan.

James Q. Riordan. President and CEO, Bekaert Corp. (steel wire manufacturer). Former VP and CFO, Mobil Corp. Other boards/memberships: Amer. Counc. for Capital Formation, Tax Foundation, Tri-Continental.

Richard D. Wood. Chair and CEO. Eli Lilly & Co. Other boards/ memberships: Amoco, Chemical Bank. Other boards/memberships: Amoco, Chemical Bank; Amer. Enterprise Inst.. Business Roundtable, Cmte. For Econ. Devel., Conference Board, Council on Foreign Relations, DePauw Univ., US–USSR Trade Council.

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