Dow Jones meets 'Idol, ' balks at Murdoch deal
By WASHINGTON POST
Published May 2, 2007
WASHINGTON - Rupert Murdoch's News Corp. made an unsolicited takeover bid for the parent company of the Wall Street Journal, an offer that generated instant resistance from the company's controlling family and set up a media culture clash.
The offer seeks to marry the pinstriped Journal - widely regarded as the paper of record for the U.S. economy - and Murdoch's News Corp., home of American Idol, Fox News Channel's Bill O'Reilly and the New York Post tabloid.
For Murdoch, the Journal would be a key component of a business news channel - a rival to CNBC - that he plans to launch on cable this year. But first, he must persuade the Bancroft family, which controls more than 60 percent of Dow Jones & Co. voting power.
Dow Jones director Michael Elefante said family members and trustees told him that they would vote against Murdoch's proposal.
The board said it would consider the family's opposition when considering Murdoch's offer, which at $60 a share represents a substantial premium over the stock's trading value.
In a television interview Tuesday, Murdoch said he hoped the Bancrofts would "take it calmly and think about" the offer.
Dow Jones stock over the past year has traded in the $30s and topped $60 only once, in 2000, before the Sept. 11, 2001, terrorist attacks sent Journal advertising and Dow Jones shares downward.
"There's plenty of time, " Murdoch, 76, said on Fox News.
The bid would offer cash or a mix of cash and stock for all outstanding Dow Jones stock, which closed Monday at $36.33 a share. The stock price rose 55 percent Tuesday, to $56.20 yesterday, after the bid. Murdoch's offer would be worth at least $5-billion, including existing debt.
"It's a generous offer, " Murdoch said. "We are the sort of people with the same traditions that I think will prove great guardians for this paper."
Some quarters disagreed.
"If Murdoch gets control of the Wall Street Journal and Dow Jones and if he follows the pattern of his past acquisitions, he will use the Wall Street Journal to serve his own purposes, financial and political, " Ben Bagdikian, author and former dean of the Cal-Berkeley journalism graduate school, said in a written statement.
The union representing Journal employees also opposes Murdoch's bid. "Mr. Murdoch has shown a willingness to crush quality and independence, and there is no reason to think he would handle Dow Jones or the Journal any differently, " read a statement from the Independent Association of Publishers' Employees.
Murdoch's politics could be a match with those of the editorial page of the Journal, which is known for its conservatism.
The audacious News Corp. bid came two weeks ago in a letter to the Dow Jones board, the company said in a statement Tuesday. Like the Washington Post Co. and the New York Times Co., Dow Jones has a dual-class ownership structure that allows the Bancroft family - descendants of Clarence Barron, founder of the modern Journal - to control the company while holding a minority of the stock.
News Corp. offered to buy all outstanding shares of Dow Jones common stock. Late Tuesday, News Corp. confirmed that the offer remains in place.
In addition to the Journal, Dow Jones owns Barron's financial weekly and the Dow Jones wire services. The combination would give Fox's new business TV channel unrivaled access to what many consider the best and most comprehensive financial coverage in the United States.
The Journal has "great journalists; it's got great management, " Murdoch said. "But it's got rather a confined capital; it needs to be part of a bigger organization to be taken further."
The early Wall Street money is on Murdoch, despite the Bancrofts' initial resistance.
"We think the family is more likely than not to accept, " wrote Deutsche Bank analyst Paul Ginocchio, who put Murdoch's chance of winning Dow Jones at 75 percent.
Despite its prestige, Dow Jones is tiny compared with News Corp. Murdoch's empire is valued at $70-billion and the company reported more than $5-billion cash on hand at the end of 2006. Even with its stock surge Tuesday, Dow Jones is valued at only $4.3-billion. Murdoch could write a check for Dow Jones.
[Last modified May 2, 2007, 01:50:56]
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