- The Washington Times - Wednesday, May 2, 2007

Rupert Murdoch’s News Corp., owner of Fox News Channel and the New York Post, made a $5 billion unsolicited bid for Dow Jones & Co. that the Wall Street Journal parent’s controlling family rejected yesterday.

The Bancroft family, which owns more than 60 percent of the voting stock in Dow Jones, will vote against the $60-per-share proposal from the Australian media mogul, Dow Jones said last night.

“Dow Jones said its board would factor this information into its evaluation,” its statement said.

It remains to be seen whether Dow Jones, which also owns a newswire, the financial weekly Barron’s and the Dow Jones Industrial Average, is dead set against a takeover or if the New York company is simply baiting News Corp. and other potential bidders to raise the stakes above what was an already premium bid.

“It’s not surprising,” said Larry Grimes, president of W.B. Grimes & Co., a Gaithersburg firm that handles media mergers. “You get an unsolicited offer, it’s kind of standard practice not to just accept the first offer that comes on the table but to see if there’s any room for negotiation.”

A Dow Jones spokeswoman would not comment further and a representative for the Bancroft family did not return a call seeking comment last night.

News Corp. made the overture — which it described as “friendly” — two weeks ago in a letter to the Dow Jones board, CNBC first reported yesterday. The news vaulted shares of Dow Jones nearly 60 percent, from $36.33 to $56.20 on the New York Stock Exchange.

Mr. Grimes, who doesn’t own any shares of either company, said he would have advised the Bancroft family to reject the offer even if they were interested in it.

“I would say, ‘Hey it’s great that somebody has shown an interest and now they’ve set the bar at $60 a share, maybe indeed that bar can go significantly higher. We don’t know who else is interested, but guess what, we’re going to find out real quick,’ ” said Mr. Grimes, who speculated that the company has already heard from other potential buyers.

News Corp. did not respond to requests for comment and had not issued a statement in response to the Bancroft family’s announcement.

Before the Bancrofts made their views known, Mr. Murdoch spoke to Fox News host Neil Cavuto about his desire to own the Wall Street Journal.

“This is the greatest newspaper in America, one of the greatest in the world,” he said on Mr. Cavuto’s show yesterday afternoon. “But it’s got a really confined capital. It needs to be part of a bigger organization to be taken further.”

Mr. Murdoch’s offer values shares of Dow Jones about 50 percent above their 52-week high at a time when newspapers across the country have been struggling to retain subscribers and advertisers as both migrate to the Internet.

“It’s certainly a premium price they have offered when comparing it to other daily newspaper deals that have recently gone down,” Mr. Grimes noted. “However, this is not your traditional daily newspaper. This is a much more significant international franchise.”

Edward Atorino, a media analyst for the Benchmark Co., said he has “a feeling this will end up in court.”

“If [the Bancrofts] say no they are probably going to get sued, because this is not a little offer; this is a huge premium,” he said early yesterday afternoon. And considering the outcome of similar battles, the family could win, he added.

“The trustees have to decide what’s in the best interest of their beneficiaries. But how long would it take Dow Jones to get 60 bucks a share? They’re in a pickle here.”

As news of the offer spread yesterday, so did speculation that it could spark a bidding war, and potential buyers such as NBC parent General Electric Co., Bloomberg News and private equity groups, were floated. However, analysts questioned whether additional bidders would have the resources, let alone the motivation, to top such a price.

“Google or GE could buy [Dow Jones] because they want it, but nobody has the obvious fit that News Corp. does,” Mr. Atorino said. “Private equity guys aren’t going to bid 60 bucks — it doesn’t make sense.”

Likewise, Mr. Murdoch told Mr. Cavuto, “We’re offering a very, very high premium which I don’t think they could reach.”

A News Corp. takeover of Dow Jones would be perfectly timed to coincide with the debut later this year of a cable business news channel to compete with CNBC.

“This is a very unique fit for News Corp.,” said Mr. Atorino, who doesn’t own shares of either company. “This is not a newspaper deal, this is a conceptual strategy move on the part of Murdoch.”

The last year alone saw two prominent examples — in the cases of Knight Ridder and Tribune Co. — of newspaper shareholders pressuring their boards to put the companies up for sale.

The News Corp. proposal sent other newspaper stocks up yesterday, including Gannett Co., New York Times Co. and Washington Post Co., which all gained between 2.8 percent and 5.3 percent, according to Bloomberg News.

“I don’t see any reason for that,” said Mr. Grimes, who doesn’t own any newspaper shares. Mr. Atorino agreed that the offer has no direct bearing on other media companies.

In spite of their opposition to the News Corp. offer, Mr. Grimes said a buyout would give the Bancroft family an opportunity to make a graceful exit.

“A number of the major managers at Dow Jones and family members are getting up in age so I would think that they are thinking in terms of exit strategy, at least as far as their career, their families, their legacies are concerned,” he said.

A union representing workers for Dow Jones, the Independent Association of Publishers’ Employees, issued a statement opposing the proposed takeover.

“Mr. Murdoch has shown a willingness to crush quality and independence, and there is no reason to think he would handle Dow Jones or the Journal any differently,” the union said. “Moreover, the massive premium Mr. Murdoch is offering suggests only one recourse to make the acquisition profitable: gutting the enterprise and slashing the staff that make it the leading financial news organization.”

Mr. Murdoch said he wasn’t surprised by the union’s opposition, telling Mr. Cavuto that “naturally, people are a little bit frightened of change.”

He also said News Corp. does not see any regulatory hurdles that would prevent the deal if approved by the Bancroft family and Dow Jones shareholders.

Currently, CNBC has a partnership with Dow Jones that runs through 2012, the network said. When asked about what would happen to the partnership if News Corp. were to acquire the company, Mr. Murdoch told Mr. Cavuto, “There’s plenty of room for us to work together.”

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