Rupert Murdoch entered yesterday what could be the final phase of his efforts to buy Dow Jones & Co., publisher of The Wall Street Journal, with a deal seemingly on track to go to Dow Jones directors for approval this week.
The billionaire media mogul met with Dow Jones chief executive Richard Zannino for lunch at the New York headquarters of Murdoch's News Corp. to discuss his $5 billion offer. They then told their respective subordinates that the deal was on track, said people briefed on those conversations.
The board is likely to back News Corp.'s offer, contingent on getting approval from the sprawling Bancroft family, which has controlled Dow Jones for more than 100 years.
But even as Zannino and Murdoch moved to discuss the final price and other terms, opponents rallied around heir Christopher Bancroft's plan to buy up enough of his relatives' shares to block the deal.
Supporters of the Texas investment manager said he might need little more than $300 million to thwart a sale to Murdoch, a far cry from what Murdoch has offered. Dow Jones shares dropped 54 cents yesterday to $56.95.
But Bancroft's strategy remained in flux and fraught with risk.
Even if several hundred million dollars were committed to the cause, it might not be enough, depending on what legal wording governs which of the roughly 40 trusts that contain the Bancroft family's shares.
In addition, Christopher Bancroft could ratchet up the tension among the three dozen or so adults in the family if a large number demand a payment equal to Murdoch's current offer of $60 a share. In addition, it is unlikely Bancroft would have the money to accommodate all of them.
If Bancroft succeeds in getting the shares and blocking the sale, the value of the stock is likely to plummet by as much as two-thirds, to where they traded before Murdoch's bid, because traders have been anticipating a deal at the Murdoch offer price. That explains why hedge funds and others have been reluctant to lend Bancroft the money he needs for the gambit.
But Bancroft is expanding his discussions with others, including Los Angeles Internet entrepreneur Brad Greenspan, who previously joined billionaire supermarket king Ron Burkle in floating a plan to buy back some of the Dow Jones shares owned by family members. Burkle has been advising a union representing many Dow Jones journalists.
"I am, with my investment group, looking into this and definitely having discussions with different members of the Bancroft family," Greenspan said. "We're really interested in this transaction, in any way that we can get to participate in owning shares and getting some of these strategic plans in place."
Greenspan is expected to give more details of his plan to Dow Jones representatives today. In addition to the share buyback, he wants the company to borrow more and invest to promote video and other new offerings. Besides the Journal, Dow Jones owns MarketWatch.com, Barron's and Dow Jones Newswires.
Christopher Bancroft and other family members oppose combining the Journal with News Corp. Critics decry sensationalism in its British tabloids and the New York Post, and the conservative bent of its Fox News Channel. They also fear that Murdoch will steer news coverage to serve his business interests, a fear that Murdoch has rejected as baseless.
Joseph Menn writes for the Los Angeles Times.