NEW YORK, 3 May 2007 — A bare-knuckled battle looms over the surprise bid launched by Rupert Mudoch’s News Corp. for The Wall Street Journal parent Dow Jones & Co., an offer that has shaken up the sluggish newspaper industry.
The whopping $5 billion bid has sparked fears that the Australian-born media baron would bring his style of sensational journalism to the white-shoe corridors of the most prestigious US business daily.
The Journal reported on its news pages Wednesday that the controlling shareholders, the diverse members of the Bancroft family, would oppose the deal despite the stunning 63 percent premium to the share price before the bid was unveiled.
Widely spread out, the Bancroft family holds 24 percent of the capital but more than 62 percent of the vote in Dow Jones.
But opposition is coming from other quarters to the bid by Murdoch to add the Journal and other Dow Jones media properties to his empire, which includes the Fox News Channel, MySpace, 20th Century Fox and the New York Post.
The Newspaper Guild local 1096, which represents Dow Jones employees, gave a clear signal of opposition: “We believe a News Corp takeover would be a direct threat to the prestige, independence and unquestioned integrity of Dow Jones,” the union said in a statement.
“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.” Ben Bagdikian, a professor emeritus and former dean of the Graduate School of Journalism at the University of California at Berkeley, said Murdoch would likely use the acquisition to serve his own financial and political aims.
“Every media property Murdoch has owned has been put to his political purposes, as is demonstrated by how he uses the Fox networks to project right-wing politics (into) news and commentary and to cheapen the national culture,” said Bagdikian.
Newspaper analyst John Morton of Morton Research said Murdoch faced a tough battle with the Bancrofts, saying “I can’t imagine the day the Bancroft family will sell.” “They’ve always felt their special mission was to protect The Wall Street Journal and maintain its reputation,” Morton said.
Rick Edmonds, a media business analyst at the Poynter Institute, said the Journal is “a trophy property and he (Murdoch) likes to have those things.” But Edmonds said concerns about Murdoch’s meddling in news coverage raised when he acquired The Times of London proved to be unfounded.
“When he bought The Times in London there was a concern it would go downmarket and trashy,” Edmonds said. “Neither of those things happened.” Edmonds said that the offer is “eye-catching” because of its size. “It may not be an offer they can’t refuse, but it is hard to resist,” Edmonds said.
Some analysts said the bid could prompt other newspaper players like The New York Times Co. or The Washington Post or other investors to join the fray and possibly spark other consolidation.
But if the Bancrofts ignore the bid, public shareholders will almost certainly sue the company, said Paul Lapides, director of the Corporate Governance Center at Georgia’s Kennesaw State University.
The bid “may be a tough thing for them to turn down,” added Charles Elson, a corporate-governance expert at the University of Delaware.
Some said the Murdoch bid makes sense for News Corp. as it seeks to set up a new financial television channel later this year. “The idea is to dominate world financial news,” said media investor Larry Haverty of Gamco Investors.
Murdoch, who is chairman and chief executive of News Corp., said in an interview on his Fox News channel he wants the prize of the Wall Street Journal: “We feel this is the greatest newspaper in America. One of the greatest in the world.” “It has great journalists which deserve, I think, a much wider audience. We feel that with coming online and offline, there is a great deal to be done here,” added Murdoch.
Murdoch, who is now a US citizen and has reincorporated the group in the United States, said the bid represented “a big, generous offer.”
Dow Jones controlling shareholders oppose Murdoch bid
Shareholders with a controlling voting stake in Dow Jones and Company, owner of the Wall Street Journal, will oppose a $5.0 billion bid for the group by Rupert Murdoch’s News Corp., the Journal reported Wednesday.
It said a representative of the Bancroft family has told the board at Dow Jones there were sufficent shareholders with voting power to thwart a takeover offer for the publisher, launched by News Corp. on Tuesday.
Widely spread out, the Bancroft family holds 24 percent of the capital but more than 62 percent of the vote in Dow Jones.
But the front-page article in the European edition of the Journal added: “It isn’t clear if the family is opposed to an offer from News Corp.’s Rupert Murdoch or if it is simply trying to get Mr. Murdoch and other potential bidders to sweeten their offers.” The move by Murdoch, the Australian-born media baron, sparked a rally on Tuesday in other newspaper stocks and offered hints of a further shakeup in an industry in turmoil.
News Corp. said in a statement Tuesday it had made “a friendly offer” to acquire all of the outstanding shares of Dow Jones for $60 each in cash, or in a combination of cash and stock.
Murdoch, who is chairman and chief executive of News Corp., said in an interview on his Fox News channel he wants the prize of the Wall Street Journal: “We feel this is the greatest newspaper in America. One of the greatest in the world.” “It has great journalists which deserve, I think, a much wider audience. We feel that with coming online and offline, there is a great deal to be done here,” added Murdoch.
Murdoch, who is now a US citizen and has reincorporated the group in the United States, said the bid represented “a big, generous offer.” Dow Jones said simply its board of directors and trustees of the Bancroft family “are evaluating the proposal.” The bid would be a 63 percent premium to the most recent share price for the company that publishes the Wall Street Journal and its international and online editions and has other media interests worldwide.
Dow Jones shares surged 55 percent to close at 56.20, even though the closing price was below the takeover offer of 60 dollars per share.
Shares in the New York Times Co. meanwhile rallied 6.5 percent to 24.93 and McClatchy Newspapers added 2.0 percent to 29.48 in New York on Tuesday.
As the potential acquirer, News Corp. shares fell $1.01 to $22.99.
With his News Corp. umbrella, Murdoch controls the Fox television and film studios, and BSkyB in Britain. In newspapers, the company owns British-based dailies including The Sun and The Times, as well as the New York Post and The Australian. In 2005 he also bought the MySpace social networking website.
Rick Edmonds, a media business analyst at the Poynter Institute, said the Journal is “a trophy property and he (Murdoch) likes to have those things.” Edmonds said the acquisition of the Journal would also mesh well with Murdoch’s plans to launch a TV business channel.
The Journal reported that the offer “is almost certain to spark controversy” because Murdoch is best known in the US for his control of the tabloid New York Post and Fox News.
But Edmonds said similar concerns raised when Murdoch acquired The Times of London proved to be unfounded.
“When he bought The Times in London there was a concern it would go downmarket and trashy,” Edmonds said. “Neither of those things happened.” Edmonds said that the offer is “eyecatching” because of its size.
“It may not be an offer they can’t refuse, but it is hard to resist,” Edmonds said.
Indeed if the Bancrofts ignore the bid, public shareholders will almost certainly sue the company, said Paul Lapides, director of the Corporate Governance Center at Georgia’s Kennesaw State University.
The bid “may be a tough thing for them to turn down,” added Charles Elson, a corporate-governance expert at the University of Delaware.
The move comes at a time of turmoil in the US newspaper industry, with circulation slipping as more consumers turn to the Internet and other media.
A survey this week showed US daily newspaper circulation is down 2.1 percent from a year ago.
Fewer than half of all US adults currently read a daily newspaper, a far cry from 80.8 percent in 1964.
The Wall Street Journal is the second biggest US daily, and its circulation edged up slightly over the past year to just over two million.
Dow Jones traces its history back to 1882 when Charles Henry Dow and others started producing hand-written news bulletins in the Wall Street area. It has long been under the control of the Bancrofts, the descendants of Charles Barron, who bought the company in 1902.
The company created the first Dow Jones stock index in 1884, which remains a key benchmark for Wall Street.