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Letter to the editor

Murdoch's $5B bid sits tall on the table

Dow Jones' options are limited.

NEW YORK - Rupert Murdoch deliberately priced his $5-billion offer for Dow Jones & Co., which owns the Wall Street Journal, so high that others would find it tough to beat, it appears. On Thursday, two other potential bidders proved that point by dropping out of the running.

General Electric Co. held preliminary talks with Pearson PLC, a London-based company that publishes the Financial Times newspaper, about possibly combining GE's business news channel CNBC with the FT and Dow Jones.

But Thursday, Pearson's chief executive Marjorie Scardino - who is from Texas - told the FT's staff that while Pearson had "kicked around some ideas" about a three-way deal, "we didn't see that combination stacking up for our shareholders."

Murdoch's offer of $60 a share for Dow Jones represents a massive premium of about 65 percent over the levels that Dow Jones shares had been trading before the offer becoming public in early May. Many on Wall Street believe the price is too high to be matched by other bidders.

With GE and Pearson out, no other serious bidders are in sight for Dow Jones. Supermarket billionaire Ron Burkle has agreed to work with a union representing Dow Jones employees about finding a possible alternative to Murdoch, but so far nothing has emerged.

Murdoch, who built News Corp. into a major media conglomerate that spans the world, has long wanted to own the Journal, a prestigious, prize-winning newspaper that carries tremendous clout in the business world.

Gaining control of Dow Jones would bolster Murdoch's plan to launch a financial cable news channel that would compete with CNBC, which is a unit of GE's NBC Universal subsidiary.

A union that represents Dow Jones employees and a former Dow Jones board member say they fear the Journal's quality would suffer under Murdoch, however, and that he might bend the paper's coverage to suit his business interests.

Murdoch, however, says any concerns about meddling are unjustified.

The controlling shareholders of Dow Jones, the Bancroft family, initially rebuffed Murdoch's offer but later agreed to meet with him to discuss their concerns about maintaining the editorial independence and integrity of the Journal. With a combined 64 percent of Dow Jones' shareholder vote, the Bancrofts can veto any proposed change in control.

Both sides said the initial meeting went well, but no subsequent meeting was set up and the Bancrofts were meant to deliver a set of proposals to News Corp. about editorial safeguards for the Journal.

Instead, Dow Jones' board said Wednesday that it would take the lead in discussing "all aspects" of Murdoch's bid, including maintaining the Journal's independence. That could accelerate Dow Jones' negotiations with News Corp.

Despite the prestige and influence of the Journal, Dow Jones has fallen behind rivals such as Reuters Group PLC, Thomson Corp. and Bloomberg LP in delivering real-time financial data and information to investors.

[Last modified June 21, 2007, 22:57:54]