Posted on 07/06/2007 9:32:01 AM PDT by SirLinksalot
Rupert Murdoch has succeeded with his $5 billion bid for Dow Jones, owners of the Wall Street Journal, according to sources acting for the Dow Jones board. Negotiations have been completed and the board is confident the terms of the deal will be accepted by the Bancroft family, which controls a majority of voting shares in Dow Jones, over the next few days. A formal announcement is expected next week.
Murdoch’s News Corporation will take over America’s most prestigious financial publisher at the price he originally offered on April 17, when he proposed $60 a share when the stock was trading at $36, a 67% premium.
After lengthy talks involving many lawyers, the deal includes a legally-enforceable agreement with Murdoch which will supposedly guarantee the integrity and independence of the Wall Street Journal’s journalism.
Price has not been the major issue in the negotiations. Some members of the Bancroft family had hoped to spark a bidding war by enticing others to enter the fray. Pearson, owners of the Financial Times, and GE, the American conglomerate, flirted with an offer but walked away last week. Nobody else has been prepared to compete with Murdoch, who refused to increase his original offer.
Younger members of the Bancroft family, who have no involvement in Dow Jones, pressured their relatives to accept the Murdoch offer and pocket the 67% premium, knowing that, in the absence of another buyer, the Dow Jones share price would plummet if no deal was done. Those Bancrofts more closely associated with the company have reluctantly concluded that they have no alternative but to sell to the 76-year-old Australian-American media mogul.
According to sources acting for Dow Jones in the negotiations, the deal was delayed until agreement was reached on a legally-binding undertaking by Murdoch to preserve the Wall Street Journal’s editorial independence.
Under the terms of this agreement, News Corporation will have the ability to hire and fire the top editors and publishers (a matter on which Murdoch would not budge); but a nominally independent five-person committee will have the right of veto on these decisions.
Murdoch and Dow Jones will jointly agree the membership of this panel, which will have the power to choose its successors—a crucial concession to the Bancrofts who are sensitive to the claim that they are sacrificing the Journal’s editorial integrity by selling to Murdoch. The Bancrofts have received extensive legal advice in an attempt to satisfy themselves about the durability of the editorial safeguards.
The arrangement is a tougher version of the one put in place by the British government when Murdoch bought The Times and The Sunday Times in 1981. Murdoch will have less control over the independent directors at the Journal than he does at Times Newspapers, where they are regarded as weak and ineffectual. But one source, acting for the Bancrofts, admitted privately that the Dow independent panel was only a “fig leaf” to facilitate the sale and that over time Murdoch would get round it.
John Biffen, the Tory cabinet minister who signed off on 1981 deal to establish independent directors for Times Newspapers in London, has since conceded that the arrangement was also a “fig leaf” designed to allow the sale to proceed.
The impetus towards a deal increased when Dow Jones’s independent directors insisted at a meeting on the 20th June that they take charge of negotiations with Murdoch, representing the interests of all shareholders, including the Bancrofts.
Until then, the Bancrofts and Murdoch had reached a stalemate over how to guarantee the editorial integrity of the company’s properties, which include the Wall Street Journal, Dow Jones Newswires and Barron’s. Murdoch complained that the family was insisting on editorial controls that were too tight, saying publicly that the Bancrofts “can't sell their company and still control it.”
As a majority of Bancrofts reconciled themselves to an agreement, Murdoch feared that a potential hold-up could still emerge if several of the family refused to go along with the deal.
Their class B shares—which allow the family to have 64% of the voting stock despite only owning 24.7% of the company—lose their super voting rights when sold, meaning that any renegade Bancrofts would only need to control 10% of the company’s overall stock to have a majority of the voting shares.
But pressure from younger family members anxious to sell and the desire for the family to act in unison – coupled with the face-saving guarantees about the Journal’s independence – have made the deal palatable to even the most recalcitrant members of the family, though some are still reluctant sellers.
The deal has been sealed on the Dow Jones side by a five person-committee of independent directors consisting of Richard Zannino, CEO of Dow, Peter McPherson, the Chairman, Harvey Golub, Chairman of Campbell Soups, Lewis Campell, Chairman and CEO Textron, and Michael Elefante, senior trustee for the Bancrofts. Murdoch handled much of the negotiations himself for News Corporation, along with legal counsel.
Hopefully, the editorial pages will remain as good as ever. OK, OK, except for immigration, where WSJ is absolutely horrid.
Ha ha, be prepared for hysterical articles from the loony left predicting the imminent demise of American journalism. Oh, wait, they already hate the WSJ anyway..... but while its op-ed pages can be somewhat conservative (in the free market sense that allows no concern for protecting our southern border!), their stable of ‘news’ journalists can be as liberal as just about any major paper in America. All the unionized hacks who walked out the other day will be in hysterics now, fearing that their right to propagandize the public may be under threat despite the agreement.
Let’s all watch DU go berserk.
Everyone get ready to see ads featuring scantily clad women and big, front page stories about C-level adultery.
Good for Rupert....now about his kids..
Whooo hoo!
What’s that moaning noise I hear at CNBC?
Whooo hoo!
Hopefully the news pages especially A1 will lose their awful Leftward slant now.
The final demise of the New York Times newspaper will give relief not only to tree harvesters but will stop the many publications of national security secrets.
It would be hard to find an objective observer of the media who would not judge the NYT as the terrorists’ friend.
The death of the NYT was caused by the same thing that is killing off most large circulation dailies — and it’s not the internet. IT’S THE CONTENT, STUPID!
Oh darn, I misunderstood and thought he’d bought the NYT! Wouldn’t that be great?!
Good call, most of the financial rags with the exception of IBD, seem interested in holding to the same stupid views that the enviro-whacko’s hold so dear. To be crystal clear, Big Green is only interested in control, they don’t give a damn about the environment.
Good news. Expect Fox’s new business channel to be a scorcher.
Nothing on the WSJ website.
Murdoch’s heir is a flaming liberal. Murdoch is a very old man, and far more an entrepreneur than a conservative.
The news has a section for comments and a Linda Dunbar (who claims to be VP for Communications for Dow Jones ) responded thusly :
This story in incorrect. We have sent out a statement to that effect. Linda Dunbar Vice President, Corporate Communications Dow Jones
posted by Linda Dunbar on 06/07/2007
Once it looked like Murdoch was going to get it, I decided I'd let my subscription lapse.
REUTERS apparently reports that the deal has not been completed.
See here :
NEW YORK, July 6 (Reuters) - Rupert Murdoch’s News Corp. (NWSa.N: Quote, Profile , Research) has not yet reached a deal to buy Dow Jones & Co. Inc. (DJ.N: Quote, Profile , Research) as discussions continue, representatives for Dow Jones and its controlling Bancroft family said on Friday.
Talks are continuing over such issues as price, a source familiar with the matter also said on Friday.
Dow Jones shares gained 1.6 percent to $58.77 on the New York Stock Exchange.
The comments countered a report in London’s The Business weekly magazine that said the two sides have completed talks and were expected to announce a deal next week, citing unnamed sources acting for the Dow Jones board.
The report also said Dow Jones had accepted Murdoch’s original offer of $60 per share for the company.
A Dow Jones spokesman said the report was incorrect. A News Corp. spokesman was not immediately available.
Murdoch made an unsolicited $5 billion offer in May to buy the publisher of the Wall Street Journal newspaper. The offer values Dow Jones at a 65 percent premium to its stock price before the bid was disclosed publicly.
“There is no change in the status of the discussions currently under way,” a spokesman for the Bancrofts said. “News Corp. is continuing to conduct due diligence and the negotiations are not complete.”
News Corp. shares fell 9 cents to $21.55.
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