Thanks to an unsolicited $5 billion bid, The Wall Street Journal, the nation’s gray-flannel ticker tracker, could become a corporate cousin to Bart Simpson, the New York Post and Bill O’Reilly.
Global media magnate Rupert Murdoch is trying to pry the Journal’s staid parent, Dow Jones & Co., from the Bancroft family that has controlled it for 105 years.
The Bancrofts say they don’t want to let go. Not now. Not to Murdoch’s News Corp., anyway.
But by the time they and their trusts, who hold slightly more than 50 percent of Dow Jones’ power through a class of supervoting stock, responded to Tuesday’s revelation of Murdoch’s interest by indicating they plan to reject his offer, the $60-per-share bid already had sent the stock into an orbit from which it may be tough to rein in.
Dow Jones shares, which ended Monday at $36.33, closed Tuesday at $56.20.
It wasn’t clear whether the Bancrofts were spurning all offers, Murdoch or simply trying to up the price. It’s worth noting the offer was made in a letter sent before Dow Jones’ April 18 annual meeting, and the family has been considering it since then as opposed to rejecting it out of hand, as it has to past offers.
“It’s the poor trustees faced with a guy with a big checkbook,” said Edward Atorino of Benchmark Co., a longtime industry analyst. “The Bancroft family could say no, and then they’re going to get sued by other shareholders. If the court says, ‘Bancrofts, it’s your company, you can turn down anything you want,’ it’s over. … [But] then the stock goes back to $35 real quick.”
For his part, Murdoch, who said in an interview with Neil Cavuto on News Corp.’s Fox News Channel that he hadn’t heard anything directly from the Bancrofts and expects to meet with them in the coming weeks, wasn’t terribly concerned.
“There is plenty of time,” Murdoch said. “We will take it calmly and hope that they take it calmly and will think about it. It’s a generous offer, and we are the sort of people with the same traditions that I think will prove great guardians for this paper.”
While there have been murmurs of interest in Dow Jones from others, such as the Washington Post Co. and the New York Times Co., a serious potential bidder, business media rival Bloomberg LP, already has counted itself out of contention.
“I guess it’d be difficult to buy [Dow Jones] and run for president at the same time,” Murdoch said, alluding to rumored ambitions of Bloomberg founder Michael Bloomberg, New York City’s mayor. “But it was a relief when they came out and said that.”
It is possible a dark horse, such as Internet giant Yahoo, could enter the fray, or some plan could emerge to allow the Bancrofts to insulate the company from Wall Street pressures. But there’s nothing to indicate it yet.
“This is the greatest newspaper in America, one of the greatest in the world,” Murdoch said of the Journal in the interview with Cavuto, a few hours after news of the Dow Jones offer broke on CNBC. “[The Journal has] great journalists. It’s got great management. But it’s got rather a confined capital; it needs to be part of a bigger organization to be taken further.”
It’s a multimedia play for Murdoch, whose News Corp. holdings range from the New York Post, MySpace.com and 20th Century Fox to the Times of London, News of the World and Fox Broadcasting.
But surely the Journal brand and infrastructure would be an asset as Cavuto and others are preparing for the cable launch this year of News Corp.’s Fox Business Channel. Never mind that would-be rival CNBC is contracted to have a business relationship with the paper through 2012.
“He’s not going to spend this much money on a whim, so he’s buying a strategy,” media guru Jeff Jarvis of BuzzMachine.com said. “He obviously believes in finance. He’s starting a finance news channel. CNBC has a relationship with the Wall Street Journal, but there’s plenty else here.
“He has the ability to make it international … in new ways across new media properties. I would not recommend to anyone to buy newspapers, but if you’re going to buy one, buy one that’s specialized and national.”
Dow Jones, Jarvis said, is “a company that’s based more on data than on a print product.”
Which is good, because these have been tough times for traditional media.
One needn’t look beyond the struggles of one-time newspaper giant Knight Ridder and this paper’s parent, Tribune Co., to generate interest once pushed by shareholders to put themselves up for auction.
Neither McClatchy’s resulting purchase of Knight Ridder nor Sam Zell’s recently accepted proposal to take Tribune private netted anywhere near the gains Murdoch is dangling for Dow Jones, which is higher than the company’s stock has traded at in more than five years.
UBS analyst Brian Shipman called Murdoch’s bid “a compelling offer, as [Dow Jones] is unlikely to reach that share price on fundamentals in the foreseeable future.”
“This has nothing to do with the newspaper or making a bet on the future of the newspaper business,” Atorino said. “He’s buying content, infrastructure, organization, people, brand name and the future.”
Murdoch acknowledged young people are reading papers online if they’re reading them at all, but he said he saw the Journal’s success at monetizing its online content as part of the answer to that.
“We have to adapt ourselves to that, not only to attract [readers] to the hard copy of that, but more and more [readers] to the online, and to commercialize that,” Murdoch said. “The great thing and the value of financial journalism and high-quality journalism is that you can charge for it.”
During Murdoch’s brief ownership of the Chicago Sun-Times in the 1980s, many journalists, including columnist Mike Royko, fled the paper. Already, the Independent Association of Publishers’ Employees, a union representing some Dow Jones workers, is protesting the possibility of a News Corp. acquisition.
“The staff, from top to bottom, opposes a Rupert Murdoch takeover,” the union said in a statement. “Mr. Murdoch has shown a willingness to crush quality and independence, and there is no reason to think he would handle Dow Jones or the Journal any differently. … Moreover, the massive premium Mr. Murdoch is offering suggests only one recourse to make the acquisition profitable: gutting the enterprise and slashing the staff that make it the leading financial news organization.”
But Jarvis, who worked for TV Guide when Murdoch owned it, said he got more management interference when at Time Inc.’s People and Entertainment Weekly.
“He already has his bully pulpit in the New York Post,” Jarvis said. “He’s smart. He’s not going to ruin the editorial credibility of a property by making people do certain things when it’s Dow Jones and the Wall Street Journal.”
The Journal, which is the nation’s second-largest paper in terms of circulation, behind Gannett’s USA Today, already has an op-ed page in sync politically with Murdoch’s conservative views.
Atorino notes Murdoch has made “some crazy bets” in the past, and it would be foolish to ever underestimate him.
“Think of when he started Fox Broadcasting,” he said. “He was the laughingstock of Hollywood. Now, they’re not laughing anymore.”
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philrosenthal@tribune.com
