New York – Rupert Murdoch’s News Corp. made an unsolicited offer to buy Dow Jones & Co. for $5 billion, the companies said Tuesday, but the deal, which would add The Wall Street Journal to Murdoch’s global media empire, faces doubtful prospects because the controlling shareholders of Dow Jones said they would vote against it.
Clinching ownership of The Wall Street Journal would mark a huge coup for the 76-year old media mogul, landing Murdoch the most authoritative voice in the world of business journalism as well as key know-how and personnel as News Corp. gears up to launch a business-oriented cable news channel to rival CNBC, which first broke news of the proposal earlier Tuesday.
The offer of $60 per share represents a huge premium of about 65 percent over Dow Jones’ closing share price on Monday. However, Dow Jones said late Tuesday that the Bancroft family, the company’s controlling shareholders, said they would vote shares representing just over 50 percent of the company’s voting power against the deal.
That leaves Murdoch with the option of making a sweeter offer, or it could open the door to other potential bidders. When informed of the Bancrofts’ opposition to his proposal during a live interview with Neil Cavuto on Fox News Channel, which is owned by News Corp., Murdoch said he hoped they would think about the offer, and that his company would be “great guardians” of the storied newspaper. “There’s plenty of time,” Murdoch said.
The union representing Dow Jones employees, the Independent Association of Publishers’ Employees, was harshly critical of the prospect of being owned by Murdoch and issued a statement saying that the bid was opposed by the staff “from top to bottom.” “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. “Despite our differences of opinion with current management, we strongly encourage the Bancrofts to continue to stand up for the institution’s independence and to walk away from this offer.”
Dow Jones’ shares shot up $20.95, or 58 percent, to close at $56.20 in very heavy volume on the New York Stock Exchange after reaching as high as $58.47. They had traded in a 52-week range of $32.16 to $40.08 before Tuesday’s news.
Like several other newspaper owners, Dow Jones is controlled by a family through a special class of stock. But unlike the Grahams at The Washington Post Co. or the Sulzbergers at The New York Times Co., the Bancrofts do not have an active hand in running the company.
The company raised the ire of shareholder advocates two years ago by making changes to its rules that would let the Bancroft family maintain voting control even if they liquidate part of their holdings. According to Dow Jones’ most recent proxy statement, the family owns 24.7 percent of the economic interest in the firm and controls 64.2 percent of the shareholder vote.
In his interview Tuesday on Fox News Channel, Murdoch said he thought the Journal would be better off as part of a larger media company and could do more to increase its circulation and presence online.
The offer from Murdoch comes during an unprecedented level of acquisition activity in the industry. Earlier this month, Tribune Co. agreed to go private in an $8 billion deal led by real-estate investor Sam Zell.
