NEW YORK Rupert Murdoch’s News Corp. reached a tentative agreement to buy Wall Street Journal publisher Dow Jones & Co., the Journal reported today, but he must still win over the company’s controlling shareholders.
The Bancroft family, which has 64 percent of Dow Jones‘ shareholder vote through a special class of stock, has been deeply divided over a sale to Mr. Murdoch due to concerns over whether the Journal would remain editorially independent. Several key family members have sought alternatives to an acquisition by the media baron, but so far no serious contenders have emerged.
The Journal reported that the tentative $5 billion agreement would go to Dow Jones‘ board late today. The deal then would be presented to Bancroft family members on Thursday by Michael Elefante, the Bancroft family’s lead trustee and a director of Dow Jones.
The family would have several days to make a decision.
Christopher Bancroft, another Dow Jones director, has reached out to major stockholders to buy enough shares of Dow Jones to block a sale, and another Dow Jones director and Bancroft family representative, Leslie Hill, has been trying to find other buyers, the Journal reported.
Mr. Murdoch resisted pressure from Dow Jones to raise his initial $60 a share offer, which represented a huge premium of about 65 percent over the mid-$30s level that Dow Jones stock was trading at before the proposal became public in early May. Shares closed at $56.95 yesterday.
Mr. Murdoch has long wanted to own the Journal, along with its clout on Wall Street and a history of outstanding journalism. He has said he would invest in the Journal’s online and overseas operations, and help build a business-themed cable news channel that would rival General Electric Co.’s highly profitable CNBC network.
A union representing Journal reporters and other Dow Jones employees has objected to Mr. Murdoch’s bid, saying he would downgrade news coverage and interfere with newsroom independence for his own business interests.
The Bancrofts originally rebuffed Mr. Murdoch’s approach but then agreed to meet with him in early June. The two sides agreed to form a committee that would approve the hiring or firing of top editors at the Journal to ensure independence.
A committee of Dow Jones directors, including a representative of the Bancroft family, met last week with supermarket billionaire Ron Burkle and Web entrepreneur Brad Greenspan, but no counteroffer has emerged. Earlier, General Electric and Pearson abandoned exploratory talks to combine GE’s CNBC channel with Dow Jones and Pearson’s Financial Times newspaper.
Besides the Journal, Dow Jones also owns Dow Jones Newswires, the Factiva news database, Barron’s, a group of community newspapers and several well-known stock market indicators including the Dow Jones Industrial Average.
News Corp. owns the Fox broadcast network, Fox News Channel, newspapers in Britain, Mr. Murdoch’s native Australia and the New York Post, the Twentieth Century Fox movie and TV studio, and MySpace, the online social networking site.
The Bancroft clan trace their ownership of Dow Jones to Clarence Barron, a Dow Jones correspondent who bought control of the company in 1902. Over the years, their ties to Dow Jones have become more remote. No family member is involved in day-to-day operations, but the Bancrofts control the company through a special class of shares.