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Murdoch’s Dow offer scares off other bids
NEW YORK (AP) — Rupert Murdoch deliberately priced his $5 billion offer for Dow Jones & Co. so high that others would find it tough to beat. Yesterday, two other potential bidders essentially proved his point by dropping out of the running.
General Electric Co. held preliminary talks with Pearson PLC, a London company that publishes the Financial Times newspaper, about combining GE's business news channel CNBC with the Financial Times and Dow Jones.
But yesterday, Pearson Chief Executive Marjorie Scardino — who is from Texas — told the newspaper's staff that although Pearson had "kicked around some ideas" about a three-way deal, "we didn't see that combination stacking up for our shareholders."
Mr. Murdoch's offer of $60 a share for Dow Jones represents a massive premium of about 65 percent over the levels that Dow Jones shares had been trading prior to the offer becoming public in early May. Many on Wall Street say the price is too high to be matched by other bidders. Shares of Dow Jones fell 94 cents to $59.71 on the New York Stock Exchange yesterday.
With GE and Pearson out, no other serious bidders are in sight for Dow Jones. Supermarket billionaire Ron Burkle has agreed to work with a union representing Dow Jones employees about finding an alternative to Mr. Murdoch, but so far nothing has emerged.
Mr. Murdoch, who built News Corp. into a major media conglomerate that spans the globe, has long wanted to own the Journal, a prestigious, prize-winning newspaper that carries tremendous clout in the business world.
Gaining control of Dow Jones would bolster Mr. Murdoch"s plan to start a financial cable news channel that would compete with CNBC, a unit of GE's NBC Universal subsidiary.
A union that represents Dow Jones employees and a former Dow Jones board member say they fear that the Journal's quality would suffer under Mr. Murdoch and that he might bend the paper's coverage to suit his business interests. Mr. Murdoch says those concerns are unjustified.
Mr. Murdoch owns newspapers in Britain, his native Australia and the New York Post, as well as the Fox network, Fox News Channel and the online social hangout MySpace. Several of his papers such as the Times of London are highly regarded, but he is also known for owning racy tabloids such as the Sun in England.
The controlling shareholders of Dow Jones, the Bancroft family, initially rebuffed Mr. Murdoch's offer but later agreed to meet with him to discuss their concerns about maintaining the editorial independence and integrity of the Wall Street Journal. With a combined 64 percent of Dow Jones' shareholder vote, the Bancrofts can veto any proposed change in control.
Both sides said the initial meeting went well, but no subsequent meeting was set up and the Bancrofts were supposed to deliver a set of proposals to News Corp. about editorial safeguards for the Journal.
Instead, Dow Jones' board said Wednesday that it would take the lead in discussing "all aspects" of Mr. Murdoch's bid, including maintaining the Journal's independence. That could accelerate Dow Jones' negotiations with News Corp.
The Bancroft family has controlled Dow Jones for more than a century. But unlike more tightly knit families that control other newspaper publishers, such as the Grahams of The Washington Post Co., the Sulzbergers of the New York Times Co. and the McClatchys of Sacramento, Calif., company McClatchy Co., the Bancrofts have some three dozen adult members scattered across the country. Rifts have emerged among its members about the future of Dow Jones.
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