Murdoch Bids $5 Billion for Dow Jones

The late Mike Royko used to say that no self-respecting fish would let itself be wrapped in a Rupert Murdoch newspaper. Mr. Murdoch is to the news business what muzak is to the art of music. So, when he bid $5 billion to take over Dow Jones & Co., publishers of the Wall Street Journal, he threatened to make the WSJ’s news section as bad as its editorial page. Mercifully, the Bancroft family, which controls a majority of the votes, doesn’t like the idea of joining News Corp. And yet, there’s that nagging feeling that the Bancrofts may take the money and run.

Mr. Murdoch’s bid was way out of line with the market’s valuation of Dow Jones. Bidding $60 a share, he put a 65% premium on the stock compared to its April 30 closing price. Dow Jones shares climbed sharply on the news of his offer, which remains friendly. If the trustees of the Bancroft family and the board of directors at Dow Jones shoot the offer down, that stock price is headed right back to the $30s.

Michael Elefante, a company director and Bancroft family representative, told the board shortly after Mr. Murdoch’s bid came our that “members of the family and the trustees of trusts for their benefit have advised him that they will vote shares constituting slightly more than 50% of the outstanding voting power” of Dow Jones against the deal. The questions are: 1) does that mean all 20 or so of the Bancroft family with shares to vote? 2) is he telling the truth? This journal in no way doubts Mr. Elefante’s honesty, but business negotiations in the media are not always handled with perfect forthrightness.

Other media companies may start bidding to keep Mr. Murdoch’s hands off Dow Jones. The New York Times and Washington Post corporate entities could make a rival offer, but with respective market caps of $3.6 billion and $7.3 billion, they lack the deep pockets of News Corps., with a market cap of $23 billion. Gannett, with a market cap of $13.6 billion, might step in, as could Thompson, with a market cap of $27 billion. Bloomberg is another possible suitor, and there are loads of private equity companies.

Mr. Murdoch may not get Dow Jones, but some analysts say that may not be his objective. He may sense that the time has come for someone to move the Bancroft family out of the way, and he’d rather see someone outside the media business do it. That, of course, is not Mr. Murdoch’s way. He means to buy Dow Jones, and he’s a long way from quitting the fight.

© Copyright 2007 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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