Is Nicholas Negroponte Murdoch's Trojan Horse?

Long story short: Some appear to think so, what with Negroponte having received some $2.5 million from Murdoch in 2005 to help fund his One Laptop Per Child initiative.

Yesterday I remarked on the importance of Negroponte's appointment to Rupert Murdoch's new Wall Street Journal editorial board.

I cited a report in the Washington Post that morning which almost as an aside, in the final paragraph, listed the five members of the board, among them Negroponte.

Yesterday's New York Times did note, in an article by Richard Pèrez-Peña, that "four of the five committee members were first proposed by Dow Jones, while Mr. Negroponte was proposed by the News Corporation."

Today, though, the stool hit the fan: a Financial Times headline reads, "Dow Jones unaware of New Corp link to committee," while the first paragraph of a story in today's Wall Street Journal reads, "A foundation run by one of the members of News Corp.'s proposed committee to protect Dow Jones & Co.'s editorial integrity has financial ties to News Corp., despite the agreement of both companies that committee members should be independent of both."

Here's the Financial Times story, by Aline van Duyn.

Dow Jones unaware of News Corp link to committee

Dow Jones said yesterday it did not know that Nicholas Negroponte, one of the five members of an editorial committee that will act as a buffer between Rupert Murdoch and the Wall Street Journal, has received money for his foundation from News Corp.

The connection between Mr Negroponte and News Corp, one of the key corporate backers of the One Laptop per Child foundation that makes inexpensive laptop computers for poor children, goes back to at least 2005 and has often been reported on.

The amount that News Corp contributed to the OLPC foundation is believed to be about $2.5m, an amount that other large companies such as Google also gave to the project.

Mr Murdoch has been a backer of the project, appearing with Mr Negroponte at the World Economic Forum in Davos in January.

Jeremy Phillips, a senior News Corp executive, is on the board of Mr Negroponte's foundation.

"We are confident of the capability of the individuals to make independent decisions," said Dow Jones spokeswoman Linda Dunbar, adding that the company had not been aware of the donation, Reuters reported. Ms Dunbar was not available for further comment.

A News Corp spokesman told the Financial Times: "Members of the committee were never meant to be people unknown to Dow Jones and News Corp.

"They are well-known and highly respected people with exceptional knowledge of the media industry, and they enjoy the confidence of both Dow Jones and News Corporation. That's all that matters."

News Corp this week struck a deal with Dow Jones to buy the company for $5bn in cash. The breakthrough came after enough members of Dow Jones' controlling Bancroft family agreed to back a sale to Mr Murdoch.

The deal is expected to be completed in three months, but still requires regulatory approval and has to be approved by Dow Jones shareholders. The establishment of the committee was a key part of the offer to the Bancroft family.

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Here's the Wall Street Journal article, by Sarah Ellison and Matthew Karnitschnig.

Member of Independent Dow Jones Panel Has Ties to News Corp.

A foundation run by one of the members of News Corp.'s proposed committee to protect Dow Jones & Co.'s editorial integrity has financial ties to News Corp., despite the agreement of both companies that committee members should be independent of both.

As part of its agreement earlier this week to purchase Dow Jones, publisher of The Wall Street Journal, for $5 billion, News Corp. agreed to create a five-member panel to protect Dow Jones's journalism from interference by its new owner.

One of the people selected to serve was Nicholas Negroponte, the founding chairman of the Massachusetts Institute of Technology's Media Lab, who is on leave from MIT while he oversees the nonprofit group One Laptop per Child, which provides inexpensive laptop computers to impoverished children. Among the group's financial backers is News Corp., which donated at least $2 million. Other backers of the group include Google Inc. and Advanced Micro Devices Inc. In addition, Jeremy Philips, a News Corp. executive vice president, is a board member of One Laptop per Child. News of Mr. Negroponte's ties to News Corp. was reported by Reuters yesterday.

A Dow Jones spokesman referred to language in the merger document that defined independent people as those "who, in the sole judgment of the Special Committee, are able to consider and evaluate objectively any issue that comes before the Special Committee and whose judgment is not impaired by any interest in or relationship with the company [News Corp.], Dow Jones, the Murdoch family, the Bancroft family or their respective affiliates. Employees, directors and consultants of the company, Dow Jones or their respective affiliates shall be deemed not to be independent."

A News Corp. spokesman said, "Dow Jones thinks [Mr. Negroponte] is independent, we think he is independent." The spokesman added that "there is no objective standard of independence." The spokesman also noted that another of the committee members, Thomas Bray, once worked for the Journal. "We didn't care," the spokesman said. The spokesman said he didn't know whether News Corp. advised Dow Jones of Mr. Negroponte's ties to Mr. Murdoch.

It isn't clear whether Dow Jones was aware of News Corp.'s ties to Mr. Negroponte's group, although it hasn't been a secret and was reported by the Journal in November 2005.

"We have confidence that Nicholas Negroponte can be an effective and valuable member of the Special Committee on editorial independence," said Wall Street Journal Managing Editor Marcus Brauchli and Editor of the Editorial Page Paul Gigot in a statement. "We did not envision that members of the committee, News Corp. and Dow Jones would have no associations among or with each other, only that they would be people of integrity who are committed to ensuring our editorial independence."

And Dow Jones spokeswoman Linda Dunbar said, "We are confident of the capability of the individuals to make independent decisions."

Bob Steele, an ethics scholar at the Poynter Institute, said, "It is certainly an issue that could create competing loyalties. If Mr. Negroponte's foundation is significantly dependent on financial wherewithal from Mr. Murdoch, then there is an interlocking relationship that could create competing loyalties."

Mr. Negroponte didn't respond to emails seeking comment.

Mr. Bray, who wrote a column for Opinion Journal, said, "I've really been gone from The Wall Street Journal in any real capacity since 1983." Mr. Bray is the former editorial-page editor of the Detroit News, and also worked for the Journal from 1964 to 1983. He says he wrote his last regular column for Opinion Journal toward the end of 2002. Mr. Bray says he has no financial relationship with Dow Jones. "Obviously I value the Journal and my years at the Journal. I don't pretend to be neutral about The Wall Street Journal or my regard for what it provides."

The other committee members are Louis D. Boccardi, retired chief executive of the Associated Press; Jack Fuller, former president of Tribune Publishing; and Jennifer Blackburn Dunn, a former congresswoman from Washington state. Theodore B. Olson, the former solicitor general of the U.S., had been considered for the committee but wasn't named because his current employer, law firm Gibson, Dunn & Crutcher, has worked for both News Corp. and Dow Jones. Mr. Olson couldn't be reached for comment. Each member will be paid $100,000 per year, plus expenses.

Meanwhile, Democratic presidential candidates Christopher Dodd, a senator from Connecticut, and former North Carolina Sen. John Edwards yesterday both called on Democrats to fight the Dow Jones purchase. Mr. Dodd said he worried it would be "very difficult for the Journal to offer fair and balanced reporting" while Mr. Edwards also called on his opponents to return any political contributions from News Corp. executives, a dig at front-runner Sen. Hillary Rodham Clinton, who has received donations from Mr. Murdoch and other company executives.

Meanwhile, Federal Communications Commission member Michael Copps, a Democrat, repeated comments yesterday at a blogger convention in Chicago that the agency should carefully review the deal. "Our responsibility is to protect the public interest when it comes to media consolidation," Mr. Copps said, noting that News Corp. has several television-station license renewals before the FCC, which would provide an avenue for such a review.

News Corp. attorneys don't believe the Dow Jones deal has to be reviewed by the FCC since there are no broadcast licenses to be transferred. In the past, The Wall Street Journal has been categorized by the FCC as a national newspaper, which would exempt it from local cross-ownership rules, but Mr. Copps suggested yesterday it might be considered a local paper, since it competes with the New York Times.

Separately, Dow Jones director Christopher Bancroft, a member of the family that controls the company, continued his effort yesterday to have the company pick up advisory fees he and other family members incurred during the Bancrofts' deliberations over the News Corp. offer, according to people familiar with the matter.

Dow Jones's board — with News Corp.'s acquiescence — agreed to pay $30 million to cover most of the family's costs in order to secure enough family support for the deal. The family's fees will likely exceed this sum, however, once the fees for advisory bills incurred over the past three months by Mr. Bancroft and other family members are included. Mr. Bancroft tried to find an alternative to the News Corp. deal. He argues that if he and other family members are left paying for their own hefty expenses, then they will realize less for their shares than the $60 paid to others.

Mr. Bancroft had offered, in exchange for having his fees paid, to abstain from a vote on the deal in his capacity as a trustee for the family's largest trust, which has a 13.2% voting stake in Dow Jones.

Under trust rules, the shares can't be cast in favor of the deal if he abstains, according to people familiar with the situation. It is unclear whether he would agree to vote yes on the deal in exchange for having his fees paid. Previously Mr. Bancroft has insisted News Corp. pay $66 a share — $6 more than it is offering — to the family in order to win his support for the transaction.

Hemenway & Barnes partner Michael B. Elefante, a Dow Jones director and the Bancroft family's lead trustee, is in charge of distributing the funds, including those that will be paid to his law firm. Mr. Bancroft has been pushing Mr. Elefante to have all of the family's costs paid, including his personal advisory fees, according to the people familiar with the matter.

Dow Jones said yesterday it wasn't involved directly in the talks with Mr. Bancroft, even though Mr. Elefante is a Dow Jones board member and will be distributing funds approved by the Dow Jones board. "Since the signing of the merger agreement with News Corp. on Tuesday, Dow Jones has not had any discussions with Christopher Bancroft about reimbursing his expenses or how he will vote on the proposed merger," said Dow Jones spokeswoman Ms. Dunbar.

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The way I see it, all the Chicken Little/"sky is falling" Sturm und Drang is just so much white noise and media chaff.

The fact is that Negroponte would be a great asset to any organization he was willing to join.

That he's paired with Murdoch and his essentially bottomless checkbook means that the world will become a far more wired place a heckuva lot quicker than any governmental or talking head interventions.

This is the Gates Foundation in overdrive with respect to universal access and a place at the main table — bring it on.