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Investors banking on other Dow Jones bids

Published May 3, 2007


NEW YORK - Investors are betting that Dow Jones & Co., publisher of the Wall Street Journal, is now firmly in play, even after the controlling Bancroft family turned thumbs down to a $5-billion bid from Rupert Murdoch.

That was the message from trading in Dow Jones shares Wednesday. The stock, which surged almost 55 percent a day earlier after Murdoch announced his unsolicited bid, fell only 20 cents to end the day at $56 - within shouting distance of the $60 per share offer from Murdoch's News Corp.

Dow Jones said late Wednesday that the company's board would take no action on Murdoch's proposal. The company said a director representing the Bancroft family informed the board that members would vote shares constituting 52 percent of outstanding voting power against the bid, as had been widely expected.

Dow Jones shares fell 33 cents in after-hours trading.

The question racing through Wall Street and the newspaper industry was whether the Bancroft family, who controls the company through a special class of shares, will now turn to other media companies or outsiders to generate a bidding war.

Speculation has surfaced that another newspaper publisher, such as the Washington Post Co., or an Internet company could emerge as a bidder. Bancroft family member William Cox III told the New Yorker magazine in 2003 that the family would be more open to a proposal from the Washington Post.

The Bancrofts reportedly rebuffed an overture from the Sulzberger family, which controls the New York Times Co., in 2002.

Of the many names usually mentioned as potentially interested in acquiring Dow Jones, most were silent Wednesday about what their intentions might be. Gannett Co., the largest newspaper company in the country and publisher of USA Today - the only newspaper with higher circulation than the Wall Street Journal - declined to comment, as did the Washington Post Co.

Judith Czelusniak, a spokeswoman for Bloomberg LP, a major supplier of financial news, said that company would not be interested, but she declined to elaborate.

Peter Kreisky, president of Kreisky Media Consultancy, said Dow Jones has "blaringly underleveraged assets" that could be turned around by someone like Murdoch, and that Dow Jones' current management has been "very risk-averse to leveraging their brand."

According to Reuters, legal experts predict a possible flood of shareholder lawsuits if Dow Jones rejects Murdoch's bid and its shares tumble as a result.

Assuming no comparable bids emerge, lawsuits almost surely will be filed accusing the directors of failing to look after investors' interests, Thomas Dewey, a partner at law firm Dewey Pegno & Kramarsky, told Reuters.

While any number of companies would love to own Dow Jones, it's not clear how many besides Murdoch would be able to afford the $5-billion price tag as easily, or to justify the strategic fit. Dow Jones holds a special appeal to Murdoch, whose News Corp. is about to launch a business news cable channel.

Morgan Stanley analyst Lisa Monaco told investors that a joining of forces between Murdoch and Dow Jones was a "unique combination of content and distribution that few in the media business could replicate."

[Last modified May 3, 2007, 00:42:44]

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