WASHINGTON — Rupert Murdoch is poised to win the Wall Street Journal.
The boards of directors of Journal parent Dow Jones & Co. met tonight to give final approval to Murdoch’s unsolicited $5 billion bid for the company, having received more than enough support from the deeply split Bancroft family, Dow Jones’ controlling owners.
The deal would place America’s premier financial newspaper in the hands of a 76-year-old mogul who owns what may soon become the world’s largest media company. News Corp.’s properties include the Times of London, “American Idol,” “The Simpsons Movie,” Fox News Channel, MySpace, National Geographic television and a British tabloid that prints photos of topless women.
The colorful and controversial tabloid king faced strong opposition during his nearly three-month run at Dow Jones and whipped up worries that he would destroy the credibility of the august Journal. But in the end, his $60-a-share bid for the company — which also includes Barron’s financial weekly, Dow Jones Newswires and the Ottaway community papers, including The Standard-Times and The Cape Cod Times — proved too lucrative to resist. The bid represented an eye-popping 67 percent premium on the trading value of the stock before Murdoch’s offer.
After the takeover, estimated to take place by the end of the year, the Journal will join a global media conglomerate that already is second in size to only Time Warner. News Corp., valued at nearly $68 billion, dwarfs Dow Jones, which was worth a little more than $3 billion prior to Murdoch’s bid becoming public on May 1, which sent Dow Jones stock soaring.
Murdoch’s audacious offer kept potential rivals at bay; no other serious suitors emerged for Dow Jones.
Murdoch has promised to pour money into the Journal and its Web site and use his satellite television networks in Europe and Asia to spread Journal content to places where it has never been seen.
The sale of Dow Jones to Murdoch is the latest upheaval in the churning U.S. newspaper industry, as papers continue to lose readers and advertisers to other media. It also probably will change the landscape of financial news reporting. Rivals such as the Financial Times and CNBC must now ready for battle against a Murdoch-backed, more muscular Journal and the cable business news channel he plans to launch in October. Fox Business Network would be a rival to CNBC, and probably will use the Journal’s newsroom of 750 top-flight financial journalists to provide content to the channel.
Possibly complicating matters: CNBC has a content-sharing contract with the Journal that runs for five more years.
“CNBC expects the contract to be honored no matter who owns Dow Jones,” said Kevin Goldman, CNBC vice president of media relations. “CNBC remains the global leader in business news providing information that is fast, accurate, actionable and unbiased.” News Corp. had no comment on the possible dissolution of the deal with CNBC.
Murdoch’s acquisition of the Journal probably will force other financial news outlets to beef up as well.
British rival Pearson, which publishes the Financial Times and held some informal talks about teaming with General Electric to make a bid for Dow Jones, is exploring distribution options with a number of media outlets, Pearson chief executive Marjorie Scardino told the British press earlier this week.
Catherine Mathis, vice president of corporate communications at the New York Times Co., said, “We have a number of things in the works to ensure we remain competitive.”
There appear to be no regulatory hurdles to the deal. Though the Federal Communications Commission prohibits one company from owning a television station and local newspaper in the same city — News Corp. owns a station in New York — regulators consider the Journal a national newspaper.
The Securities and Exchange Commission is probing possible insider-trading violations related to the deal. Dow Jones director David K.P. Li could face civil charges for his alleged role in passing news of Murdoch’s bid to an acquaintance in Hong Kong, whose daughter bought more than 400,000 shares of Dow Jones stock before Murdoch’s offer became public. Li denies the allegations, and neither side thinks the investigation is material to the deal.
Dow Jones stock closed up $5.82 a share Tuesday at $57.38. News Corp. stock closed down by 18 cents per share at $22.66.
Murdoch’s bid was opposed by a number of members of the Bancroft family, some past and current Journal employees and media pundits. They feared that the naturalized American press lord would wreck the Journal or use it to further his political and business interests, as he has done with other properties he owns.
In a letter to Journal readers published in today’s editions, publisher L. Gordon Crovitz writes, “The same standards of accuracy, fairness and authority will apply to this publication, regardless of ownership.”
Murdoch proposed and Dow Jones eventually agreed to the creation of a five-member editorial board to act as a buffer between Murdoch and the Journal newsroom and have a say in the hiring and firing of two of the paper’s top editors. At least one of Murdoch’s past editors, however, former Times of London editor Harold Evans, has said Murdoch will shred such agreements when he deems necessary. News Corp., on the other hand, says Murdoch takes them seriously; Journal managing editor Marcus Brauchli approved the composition of the proposed editorial board for his paper.
Faced with the same problems as other newspapers, the Journal may have been forced to trim staff and reduce its budget if the Bancrofts had rejected the deal.
The descendants of the modern Journal’s founder were so bitterly split by Murdoch’s offer that some family members have publicly rebuked others and one, Leslie Hill, quit the board in protest tonight.
Hill, a retired airline pilot, was among those who fought Murdoch’s bid and sought rivals, saying the media mogul would meddle with the Journal.
“It’s a bad thing for the Journal and American journalism that the Bancroft family could not resist Rupert Murdoch’s generous offer,” former Dow Jones director Jim Ottaway Jr. said in a statement tonight. Ottaway voted his 7 percent of Dow Jones stock against the takeover. “I hope the Bancroft family, which has been torn apart by Murdoch’s poison pill offer, will enjoy family peace after so many years of patient and caring support for Dow Jones and its people.”
The Bancrofts hold 64 percent of Dow Jones controlling stock. Both sides estimated that Murdoch needed about half of that figure — combined with shares of common stock, which both sides assume will approve the buyout — to win Dow Jones. By tonight, nearly two-thirds of the Bancroft family had voted for the takeover, said sources close to the deal who spoke on condition of anonymity because the deal will not close until later this year.
Murdoch was able to exploit divisions within the Bancroft family. Some arms of the 35-member family wanted to take Murdoch’s money right away. Others opposed the offer at all costs. Others — such as Crawford Hill, who wrote a long letter to family members published on the Journal’s Web site last week — scolded the family, saying their passivity had made the sale to Murdoch, or anyone, inevitable.
Dow Jones now is the most recent family-controlled newspaper company to end a historic run.
Last year, the venerable Knight Ridder newspaper chain disintegrated, sold to rival McClatchy Co., also family owned, which kept some parts and sold off others. Earlier this year, the Tribune Co. chain agreed to go private in a deal that would turn over ownership to real estate billionaire Sam Zell and an employee-ownership plan.
Like Dow Jones, the New York Times Co. (run by the Sulzberger-Ochs family) and The Washington Post Co. (the Graham family) have dual-class stock ownership that restricts the majority of voting power to a small group of family members, allowing the company access to money in the public markets while retaining control of its publications.
Newspaper analyst John Morton said none of the other family-controlled newspaper chains are likely to go the same way.
“The McClatchys, Grahams and Sulzbergers are fairly cohesive,” Morton said. “We found out we couldn’t say that about the Bancrofts toward the end.”
Bancrofts OK $5B Murdoch deal (10:50 p.m.)
WASHINGTON — Rupert Murdoch is poised to win the Wall Street Journal.