News Corp. pledged $2.5 mln to DJ watchdog's group

BOSTON/NEW YORK Thu Aug 2, 2007 7:42pm EDT

A photograph of the front page of the August 1, 2007 edition of the Wall Street Journal reports that News Corp will purchase Dow Jones. REUTERS/Mike Segar

A photograph of the front page of the August 1, 2007 edition of the Wall Street Journal reports that News Corp will purchase Dow Jones.

Credit: Reuters/Mike Segar

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BOSTON/NEW YORK (Reuters) - Dow Jones & Co DJ.N said on Thursday it did not know that one of the people named to protect its editorial independence after it becomes part of News Corp NWSa.N runs a foundation that received a donation pledge of $2.5 million (1.2 million pounds) from News Corp.

Rupert Murdoch's global media conglomerate selected Massachusetts Institute of Technology Professor Nicholas Negroponte to be part of the five-member special committee that will oversee the editorial independence of Dow Jones's news operations including the Wall Street Journal.

Creation of the committee and agreement on who would be on it was part of News Corp's $5.6 billion deal to buy Dow Jones.

Asked if the donation compromised Negroponte's independence as a member of a group designed to safeguard Dow Jones' editorial integrity, Dow Jones spokeswoman Linda Dunbar said: "We are confident of the capability of the individuals to make independent decisions."

In an e-mail interview with Reuters in May, Negroponte described Murdoch as a personal friend and a key backer of the One Laptop per Child (OLPC) foundation that makes inexpensive laptop computers for poor children.

News Corp is one of 11 parties, including Google (GOOG.O) and Advanced Micro Devices (AMD.N), that each pledged to give $2.5 million to OLPC, Negroponte said in May.

"If in fact Nicholas' foundation is receiving money from News Corp, that creates the perception and, quite possibly, the reality of a conflict," said Louis Ureneck, chairman of the journalism department at Boston University.

"Is a person truly independent if a decision he makes puts at risk a significant grant to his foundation? It strikes me that there is a conflict," Ureneck said.

Bob Steele, a journalism values scholar at the Poynter Institute, said it would be challenging for Negroponte to balance his loyalty to Murdoch as a friend and business associate with his responsibilities as a committee member.

"But it is possible," said Steele.

Poynter is a school for professional journalists in St. Petersburg, Florida.

It was not clear if members of Dow Jones's controlling Bancroft family, who negotiated and agreed upon the structure of the independent committee, were aware of the donation.

A Bancroft family representative declined comment. Some members of the family had opposed the deal out of fear that Murdoch would interfere with Dow Jones's news operations to further his business interests.

Another member of the independent committee, Thomas Bray, has ties to Dow Jones. Bray, former Detroit News editorial page editor, has written for Dow Jones's OpinionJournal.com. The Wall Street Journal reported that he would serve as chairman of the committee.

A News Corp spokesman said the company saw no conflicts of interest in Negroponte's appointment.

"Nicholas Negroponte enjoys tremendous support and respect across the media industry, and both Dow Jones and News Corp are proud to have him as an independent member of the special committee," the spokesman said. "OLPC is a well-respected charity with very broad corporate support."

Negroponte declined comment on Thursday, saying he had been asked to refer all media inquiries to News Corp.

He is on leave from MIT so that he can work full time on his efforts to launch the XO PC, a $175 laptop slated to go into production in October.

During the interview in May, Negroponte said he had known Murdoch since 1986 and had since worked with him on several projects.

"More recently I have come to know (his wife) Wendi and consider Rupert to be one of OLPC's chief strategists," Negroponte said.

"I ask his advice all the time. He asks mine on matters related to computers and communications. I would like to think I have been an influence on his distinctly digital life these days."

In September 2006, Murdoch entertained the foundation's board of directors at a New York restaurant and the group held its board meeting at News Corp headquarters the next day.

Last month, Negroponte's foundation disclosed that News Corp's MySpace social networking site was developing an Internet community for the underprivileged children who receive the group's laptop computers.

News Corp Executive Vice President Jeremy Philips, who oversees Internet investments, holds a seat on the OLPC board.

(Additional reporting by Robert MacMillan in New York and Svea Herbst-Bayliss in Boston)

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