Dow down on Murdoch
Rejects $5 bil offer from News Corp.For years, News Corp. chairman and CEO Rupert Murdoch has coveted the Wall Street Journal, only to be rebuffed by the Bancroft family that controls 62% of Journal parent Dow Jones & Co.
On Tuesday, Murdoch seemed to have been rejected again when a representative signaled that family members holding a slight majority of Dow Jones would vote against the $5 billion takeover offer by News Corp. that was revealed earlier in the day.
Many on Wall Street initially suggested that the Bancrofts wouldn't — or shouldn't — refuse. News Corp. offered $60 a share in cash for all outstanding stock in Dow Jones & Co. The stock closed at $36.33 on Monday.
Dow Jones shares finished Tuesday up 54.7% at $56.20 after going as high as $58.47 in intraday trading — well above the stock's previous 52-week high of $40.08. However, in news after the market closed, Dow Jones said that family members who control a bit more than 50% of the vote plan to reject the News Corp. bid. Dow Jones added that its board "would factor this information into its evaluation."
A News Corp. spokesman said late in the day that the company's offer still stands.
Murdoch's plans for Dow Jones seem to include making more money from running the Journal with an eye toward boosting its online audience and revenue, the News Corp. boss and sources signaled.
News of the News Corp. offer seeped out just ahead of the conglomerate's annual retreat for about 60 top executives in Monterey, Calif., which according to a source will focus on online opportunities for the company's newspapers, its Fox News Channel and its TV stations given that management sees growth in news Web sites.
The retreat, scheduled to run Thursday-Sunday, will feature guest speakers like eBay president and CEO Meg Whitman.
News Corp. confirmed the Dow Jones takeover offer midday Tuesday, emphasizing that it was a friendly one. Initially, Dow Jones said its board would evaluate it.
Some Wall Street observers and CNBC, which has a partnership with Dow Jones, said a rejection by the Bancroft family likely would be taken as a signal that the family will never sell and could therefore significantly drag the stock down.
Given recent interest by billionaires in big-name newspapers, such as David Geffen's interest in the Los Angeles Times and Jack Welch's in the Boston Globe, Street observers wondered if another billionaire could try to trump Murdoch, while others said the premium offered by News Corp. already was significant.
"This is such a credible offer" with "a huge premium," said Benchmark Co. analyst Edward Atorino, who covers newspaper stocks. "If they say no, they better have some pretty good reasons."
Appearing Tuesday on "Your World With Neil Cavuto" on the Fox News Channel, Murdoch called his company's bid "a big, generous offer," adding that he expects to have a meeting with Dow Jones representatives within the next two or three weeks.
Murdoch also praised the Bancroft family for their stewardship of the Journal, saying it "has done a fantastic job as the guardians of this newspaper and its editorial traditions." News Corp., which he said is also a family company, respects that, he added.
As far as his plans for the Journal go, Murdoch said, "We would hope with more resources (and) expanded coverage of many things that we would see that (sluggish) circulation increasing." He added that he would like to boost the paper's Web audience to potentially "millions of people around the world," saying people are willing to pay for financial news online.
Murdoch already owns a stable of newspapers in the U.S., the U.K. and Australia, including the New York Post, the Sun, the Times and the Australian.
News of the News Corp. bid comes about two months after Murdoch was asked at the McGraw-Hill Media Summit New York about his interest in Dow Jones, only to answer that he was "cooling on it" and didn't expect the company would be put up for sale anytime soon. He also suggested that a takeover might be a hard sell to shareholders given the sluggish newspaper industry.
However, he lauded the strong brand of the Wall Street Journal and said it has the potential to rival the New York Times as a national daily.
News Corp. voting shares fell 4.2% on Tuesday to $22.99.
Bear Stearns analyst Spencer Wang said News Corp. investors might be spooked by the proposed acquisition as it would add slower-growth newspaper assets to the conglomerate's empire and because the capital outlay could slow its aggressive stock buybacks.
"Investors could put News Corp. in the penalty box," he warned.
Alex Woodson contributed to this report.