Murdoch seeks Dow Jones

The Baltimore Sun

Shares of Dow Jones & Co. skyrocketed nearly 55 percent yesterday on news that News Corp. had made an unsolicited offer to buy the publisher of The Wall Street Journal for $60 a share, valuing the deal at about $5 billion.

The move would give Rupert Murdoch, chairman and chief executive of News Corp., control of the highly respected business newspaper at a time when he also is building a new business television network, significantly adding to his global media empire.

The initial report of the offer by CNBC helped send Dow Jones shares from an opening of $37.12 on the New York Stock Exchange yesterday to $57.30 by 11:22 a.m. The shares closed up $19.87, or 54.7 percent, at $56.20.

However, consummating the deal would require the approval of the Bancroft family, which owns a majority of the voting power of Dow Jones shares. The company said late yesterday that Michael B. Elefante, a director who represents the Bancrofts, told the board that the family would vote against the proposal. Dow Jones said its board would take the family's opposition into account.

In an interview on Fox News yesterday, Murdoch said he was interested in the Journal, the nation's second-largest newspaper by circulation, because it "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."

A report from CIBC World Markets yesterday said News Corp.'s "friendly offer" to acquire all of Dow Jones' outstanding shares for $60 a share in cash or a combination of cash and News Corp. stock was too high.

The offer is a 65 percent premium over Monday's closing price, but the report said it represented 16 times the estimated earnings for 2007.

Most newspaper and broadcasting companies are bought for 10 times to 12 times earnings, according to CIBC. "An outright purchase of DJ at this multiple does not make sense for" News Corp. but could make sense as part of a bigger financial plan, according to the report.

Edward Atorino, a media analyst for Benchmark Co. in Manhattan, said Murdoch's goal is to use The Wall Street Journal's resources and credibility to build his planned business news channel.

Another industry watcher suggested Murdoch would want the newspaper as a conservative mouthpiece that's more respected than the New York Post.

Murdoch also might want the Journal so the Post could consolidate its back-office operations with the paper. Murdoch previously sought to get in on a bid to buy Newsday's parent, Tribune Co., to possibly merge those operations with Newsday's.

In addition to the Journal, Dow Jones also publishes Barron's, Dow Jones Newswires, Dow Jones Indexes, and It co-owns SmartMoney.

News Corp. owns the New York Post and 27 newspapers in Australia, Asia and the United Kingdom; Hollywood studios; broadcast and cable networks; satellite television; book publishers; and magazines.

Mort Pierce, chairman and head of mergers and acquisitions at Dewey Ballantine, an international law firm based in Manhattan, said that while the offer might be in the best interests of shareholders, the Bancrofts don't have to sell. "This is America," he said. "You can't be forced to sell your property."

However, the Bancrofts' opposition doesn't mean the deal is dead. News Corp. could increase its bid, or other companies could join in the bidding.

But Bloomberg LP, the business news company, has said it isn't interested. And Murdoch suggested on Fox News that he bid high enough to discourage others from stepping in.

Alex Jones, director of the Joan Shorenstein Center on the Press, Politics and Public Policy at Harvard University, said Murdoch is interested in The Wall Street Journal for profits, prestige and, most important, power. "It seems to me this is about the editorial page and about the prestige of owning this very, very prestigious news organization," Jones said.

But S.W. "Sammy" Papert, chief executive of Belden Associates, a Dallas-based media consulting firm, said that although he wasn't familiar with the financial aspects of the proposed deal, "conceptually, the deal feels pretty good to me."

"Historically, Murdoch seems to 'get' digital media, and every newspaper publisher in the land is trying to figure out digital media," Papert said, noting that Dow Jones, which has managed to make readers pay for its online version, "has done a better job than most traditional publishers in developing digital strategies."

The union representing Dow Jones employees said the bid was opposed by the staff "from top to bottom," the Associated Press reported.

Richard J. Dalton Jr. writes for Newsday.

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