News and Corporate Governance: What Dow Jones and Reuters Teach Us About Stewardship

Abstract

The outcomes of near simultaneous bids for the news organizations Reuters Group plc and Dow Jones & Co. Inc. in 2007 hinged on mechanisms of corporate governance put in place at each company to protect the integrity and independence of the editorial operations. Neither company is a particularly model of good governance, since the restrictions - super-voting shares at DJ, veto-power by the trustees of the Founders Share Company at Reuters - almost completely rule out an open market for corporate control. This paper looks at Reuters - and in even greater detail at Dow Jones, where the private actions of the board and shareholders came into rare public view. It suggests that stewardship theory plays a large role in protecting a perceived social value of the integrity of the news, figuring more heavily in crucial board decision-making than shareholder value. But the outcome of both cases means that the tension between the two is not easily resolved.

Keywords: corporate governance, stewardship theory, stakeholder theory, mergers, takeovers, Reuters, Dow Jones, newspapers, news industry, financial information, journalism, case study

JEL Classification: A10, G10, G34, L10, L20, B10, B14