Net entrepreneur details Dow Jones proposal


NEW YORK -- Internet entrepreneur Brad Greenspan outlined a new proposal on Friday to keep Dow Jones & Co Inc. out of Rupert Murdoch's hands, saying his plan could help boost the stock price to above $100.

Urging shareholders to reject Murdoch's $5 billion takeover bid, Greenspan offered to lend members of the Bancroft family, which controls Dow Jones, $400 million to $600 million to buy out other Bancrofts who want to cash out at $60 per share -- the price Murdoch's News Corp. has offered.

In exchange, Greenspan said he would get two board seats and the rights to all value created in the stock above $60 per share.

"It's an oddball proposal," said Ken Doctor, a media analyst at Outsell Inc. "It's very late in the game."

The plan comes days before a Bancroft family meeting on Monday in Boston to consider Murdoch's bid. The Bancrofts control the publisher of the Wall Street Journal newspaper by holding 64% of the company's voting stock.

Family members are expected to signal whether they support the deal on Monday, but the outcome is uncertain as an undetermined number of Bancrofts worry Murdoch would meddle with Dow Jones's news operations in an attempt to further his business interests.

Experts said the proposal by Greenspan, an early investor in MySpace, could gain traction among the Bancrofts.

"Having a financial alternative for those who are feeling price pressure to sell to someone they perhaps don't approve of is going to put a lot of pressure on the deal as a whole," said Gordon Kaiser, head of the corporate practice at law firm Sanders, Squires & Dempsey.

Newspaper analyst John Morton agreed, "assuming it's real and he's got the money to back it up."

"If what is left are Bancrofts who are either adamantly opposed to Murdoch or fairly opposed to him, it could be the end of this whole saga," he added.

Greenspan said his proposal triggered interest among several unidentified Bancrofts, according to the Wall Street Journal.

Greenspan's vehicle for the deal is Journal Investment Group, but it was unclear if he had partners. A spokesman for Greenspan's entity could not elaborate. Greenspan could not immediately be reached.

Greenspan also called for Dow Jones to take on an estimated $2.5 billion in debt to buy back 50% of its outstanding shares at $60 per share and to take on another $500 million in debt to fund a digital expansion.

In a letter to Dow Jones shareholders, he talked about creating a cable and satellite financial news channel to rival CNBC and News Corp's planned Fox business channel, and a new online video venture.

He said these two strategies would generate $288 million in incremental operating profit in 2009 and help more than double 2009 earnings per share to $3.91, assuming existing businesses are stable.

He said his plans would help Dow Jones earnings grow at a compound annual rate of 60% from 2007 to 2010 and forecast the stock would be worth more than $100 a share.

"I can assure you, News Corp. has similar designs on monetizing the Dow Jones digital media assets. Why let Fox Corp's shareholders reap the benefits while Dow Jones shareholders down the road will question why they only received $60 a share?" the letter said.

The proposal revises an offer Greenspan made in June to buy a 25% stake in Dow Jones at $60 per share in what he described as a partial buyout, for a total of $1.25 billion.

Dow Jones, News Corp. and a Bancroft family spokesman declined to comment. Christopher Bancroft, who had been seeking alternate proposals, and the Dow Jones employee's union did not return telephone calls.

Dow Jones shares closed 40 cents lower at $55 on the New York Stock Exchange on Friday.