News Corp. closes in on Journal

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NEW YORK -- Rupert Murdoch's News Corp. and Dow Jones & Co. were close to an agreement Monday night on how to safeguard the editorial independence of the Wall Street Journal and other Dow Jones assets, widely seen as the main hurdle for a takeover deal, according to a source.

However, it remained unclear whether the Bancroft family that controls Dow Jones would approve of the negotiated compromise, which could be finalized as early as today(Tuesday), according to sources.

The family is then expected to consider the accord-in-principle, with its approval being vital. The Bancroft clan has signaled their keen interest in making sure Murdoch couldn't control the flagship newspaper's editorial voice after a deal. And without the family's green light, negotiations couldn't move on to the next stage of takeover price.

Sources said Monday that once an editorial arrangement to the family's liking is approved, a broader deal most likely could be reached swiftly.

Given the lack of credible competing takeover bids so far and the high proposed price tag, Wall Street observers have suggested that News Corp.'s $60 per share, or $5 billion, offer for Dow Jones could get accepted with zero to little sweetening.

News Corp. has in recent weeks announced potential asset sales to keep its balance sheet healthy, even though it has more than $7 billion in cash on hand; a Dow Jones acquisition is expected to take the form of a cash-and-stock deal.

During the weekend, talks about the independence policy for the Journal heated up and included some dramatic posturing, with Murdoch early on threatening to drop his bid because of strict demands proposed by representatives of the Dow Jones board, the Wall Street Journal and the New York Times reported Monday. The board last week took the lead role from the Bancrofts in the deal negotiations.

The two sides have since traded amended versions of the proposal, with Dow Jones being understood to keep members of the Bancroft family in the loop. However, it was not clear whether Dow Jones representatives had received clear guidance on what would be acceptable to the family.

Dow Jones shares on Monday declined 2.2% to $57.50, but in after-hours trading rose close to $60. News Corp. voting shares ended up 0.8% at $23.50.

A News Corp. spokesman declined comment Monday on the situation. Dow Jones officials couldn't be reached for comment.
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