Dow deal would hurt CNBC

FBC could get instant credibility

While News Corp.'s uninvited cash offer to buy Dow Jones & Co. might satisfy Rupert Murdoch's long-standing desire to own the Wall Street Journal, the acquisition would immeasurably boost the future success of the Fox Business Channel.

The channel will launch this year in about 30 million homes through carriage deals with big MSOs, with much work going on behind the scenes to hire on-air talent and prepare studios and a newsroom in News Corp.'s headquarters in New York.

But while Fox News Channel CEO Roger Ailes will bring his considerable talents to bear on the production and distribution of the business channel, his main rival — CNBC — holds at least one significant card: the long-term deal with Dow Jones & Co. that gives CNBC access to the financial news giant's considerable data stream and on-air talents of journalists.

However, analysts said things could change should News Corp. prevail in its bid to buy Dow Jones.

Late Tuesday, Dow Jones said that family members who control a bit more than 50% of the vote would reject the News Corp. bid and that the board "would factor this information into its evaluation."

It isn't clear how News Corp. could or would change the contract, which was signed in 1997 and runs through 2012. An NBC Universal executive said Tuesday that the CNBC-Dow Jones deal would not be affected by a change in ownership at Dow Jones.

CNBC declined comment Tuesday, but the channel, which broke the news of the bid earlier in the day, spent much of its airtime discussing Murdoch's move and didn't shy away from analyzing its impact on Dow Jones, News Corp. and CNBC itself.

"It's a bold and brilliant move. … They'll get the most important asset in financial journalism, they'll launch the Fox Business Channel with a real bang and they'll deny their competitor, CNBC, of talent," said Michael Robinson, senior vp at Levick Strategic Communications in Washington.

"This is an enormous threat to CNBC. I see in this the hand of Roger Ailes. Rupert Murdoch didn't do this without Ailes. Roger Ailes is known for one thing: winning. He doesn't lose. And this has all of Roger's earmarks on this."

Ailes presided over the business channel until he left NBC in the mid-1990s to found the Fox News Channel.

"Buying Dow Jones gives them instant credibility and puts them in business," Benchmark Co. analyst Edward Atorino said.

Analysts suggested there might be ways for News Corp. to break the deal. "Dow Jones does have an agreement with CNBC, but it only takes money to extract themselves from it," Prudential Equity Group analyst Steven Barlow said.

"I don't think that's a big deal," Atorino said. "Murdoch can find a few lawyers to figure that out."

In an appearance Tuesday on Fox News Channel's "Your World With Neil Cavuto," Murdoch said that News Corp.'s purchase of Dow Jones would help the business channel.

"We want to have a business channel that lives up to the quality and traditions of the Wall Street Journal," he said.