Rupert Murdoch Sends a Clear Shot Across the Dow
The family-owned Wall Street Journal gets a rich buyout offer
The company currently generates 30 percent of its revenues online and has said it expects to increase that to 50 percent by 2009. So, while the Journal would be a trophy for the Australia-born media baron, much as is the Times of London, Dow Jones properties would also give him a big boost on the Web and television. "Murdoch is a big believer that the future is in digital, and Dow Jones is pretty well up the curve on that," says Edmonds.
Perhaps more important, News Corp. is set to take on financial cable network CNBC later this year, when it launches the Fox Business Channel. (CNBC, which broke the news of Murdoch's bid, has a contract with Dow Jones until 2012.) Although Murdoch has slowly been assembling a network team, a deal for Dow Jones would greatly speed up the job. "This is a very strategic move for Rupert. He needs content, an organization, information, and infrastructure," says Atorino. "And what sounds better, the Wall Street Journal Business Channel or the Fox Business Channel? It's a $5 billion no-brainer."
Family matters. The Bancroft family, which controls Dow Jones through a two-tier stock system that gives its shares more voting power, is not involved in front-line management and has always preferred to stay out of the spotlight. And though it appears to be unmovable at the moment, its "noes" may be softer than they appear. "I don't think their message is 'case closed,'" says Edmonds. "I still think Murdoch has a good chance."
After a meeting of directors last week, for instance, the company said only that the directors would "take no action" on the News Corp. bid. Perhaps more telling, it also disclosed that some four fifths of the family's voting power (or 52 percent of the company total) remained opposed to the Murdoch offer. That means that family members holding 12 percent of the company's votes have not decided to reject the offer, a sign that there may be deep divisions within the family.
It would not be the first time that later generations interested more in financial gains than corporate birthrights had forced the sale of a family-controlled newspaper. It happened with both the Louisville Courier-Journal and the Los Angeles Times.
The Bancroft family also could face mounting pressure from holders of common stock, as well as hedge funds and other high-risk investors. "If the Bancrofts flat-out refuse to sell, then it's game over," says Gamco's Haverty. "But I think it's unlikely that they would do that. It's a very generous bid, and News Corp. is the best strategic buyer."
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