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Letter to the editor

Wall Street Journal headed to Murdoch

The Dow Jones board backs the takeover deal. Shareholders are expected to support it, too.

By ASSOCIATED PRESS
Published August 1, 2007

NEW YORK - Rupert Murdoch finally won his long-coveted prize on Tuesday, gaining enough support from the deeply divided Bancroft family to buy Dow Jones & Co., publisher of the Wall Street Journal and one of the world's most respected news sources.

For Murdoch, the $5-billion deal represents the pinnacle of his long career building News Corp. into a $70-billion media empire that includes more than 100 newspapers worldwide, satellite broadcast operations, the Fox television network and the online social networking site MySpace.

Combined with the planned beginning of the Fox business news channel in October, the purchase of Dow Jones makes Murdoch the most formidable figure in business news coverage in this country, perhaps worldwide.

It also gives a larger voice in national affairs to an owner whose properties often mirror his conservative politics.

The boards of both companies voted Tuesday night to approve the deal.

The next step will be a general shareholders meeting to ratify the pact, with Murdoch expected to win if nonfamily shareholders vote overwhelmingly for the deal, as expected.

The decision signals the end of an era for Dow Jones and the controlling Bancroft family, an intensely private clan that for generations had allowed the Journal to operate independently and become one of the nation's most prominent and trusted newspapers, even as its finances deteriorated.

For four months, some three dozen members of the Bancroft family engaged in an intense, sometimes tearful debate about the Journal's future, at times pitting siblings against one another and children against their parents.

The final decision was in doubt well past the 5 p.m. Monday deadline set for the family. In a twist in already tortured negotiations, some family trustees demanded that News Corp. pay the fees for the family's bankers and lawyers - which could reach $40-million - in return for their support. After an exhausting night of conferences calls, the deal was made.

A trend continues

For the rest of the industry, the deal, which follows the recent sale of Knight Ridder and the pending sale of Tribune Co., again raises the question whether newspapers can exist independently of giant media conglomerates, as advertising dollars migrate to the Web and readers have access to vast new sources of online information.

Murdoch has talked of pumping money into the Journal, beefing up its coverage of national affairs and its European and Asian editions, which could pose a serious challenge to competitors like the Financial Times and the New York Times. That could mean losing money in the short run, something Murdoch has always been willing to do to attract readers and gain influence.

Some Dow Jones employees see having such a wealthy, engaged owner as an improvement after years of uncertainty. Still, there was no official announcement at the Journal's newsrooms, where some reporters mourned the loss of independence, as did others in Manhattan's financial district Tuesday.

'It's a sad day'

"It's a sad day for journalism," declared Jason Bader, a Wall Street lawyer who picks up the Journal every day on his way to work and said he had been watching the story develop with disdain.

Sitting under a tree at lunchtime, Bader said he feared that the Wall Street Journal would take on the tone of another News Corp. media property: Fox News Channel, which he considers sensationalist and biased.

"Rupert Murdoch is the devil, and I will never believe another word out of that paper," Bader said. "I will never read it again."

News reports of the deal triggered an outpouring of comments on the Journal's own Web site, many critical of News Corp., and some regrets from other shareholders.

"It's a bad thing for Dow Jones and American journalism that the Bancroft family could not resist Rupert Murdoch's generous offer," James H. Ottaway Jr., a former Dow Jones executive and a major shareholder, said Tuesday.

Not everyone was unhappy with the news - and some people were openly elated. In the advertising community, executives expressed optimism that Murdoch would invest resources in the Journal, making it more attractive to advertisers.

Jim Cramer, host of CNBC's Mad Money and a former hedge fund manager, said he expected Murdoch to transform the Journal into a "more relevant paper."

It will likely take three to four months for the transition in ownership to take effect. At the family's insistence, News Corp. has agreed to retain the top editors at Dow Jones, including Marcus Brauchli, the managing editor of the Journal, and Paul Gigot, the Journal's editorial page editor, and has accepted limits on its ability to remove or replace people in those posts.

The Bancrofts hope the arrangement, which they negotiated before the final deal, will restrict Murdoch's ability to influence content, but many media experts have said he had circumvented similar agreements in the past.

[Last modified August 1, 2007, 01:34:16]