After what appeared to be an initial flat rejection, the family that controls Dow Jones (and the Wall Street Journal) has announced that it will consider the surprise offer of a buyout made by Rupert Murdoch.
NEW YORK – The family that controls Dow Jones & Co., publisher of The Wall Street Journal, said late Thursday that it would consider a bid from media mogul Rupert Murdoch to buy the company, as well as other potential offers.
The Bancrofts said in a statement that they would meet with Murdoch to discuss his bid, which became public in early May. The statement shows a softening of the position of the family members, who had previously indicated that they intended to block Murdoch's bid to buy the company.
The Bancrofts said the family "remains resolute in its commitment to preserve and protect the editorial independence and integrity of The Wall Street Journal," but had also concluded that "the mission of Dow Jones may be better accomplished in combination or collaboration with another organization, which may include News Corporation."
Despite the Journal's tremendous prestige and clout in the business world, Dow Jones remains a relatively small company compared with large media operators such as Murdoch's News Corp., whose operations such as Twentieth Century Fox, Fox News Channel and MySpace span the globe. The $5 billion offer that Murdoch made for Dow Jones could easily be paid out of News Corp.'s cash stockpile.
Murdoch has said he would invest in the Journal and ensure its editorial independence, something that the Bancroft family as well as employees of Dow Jones say is paramount to the company's mission.
However, the union representing Journal employees has been steadfastly opposed to Murdoch's overture, saying he would likely damage the paper's quality and compromise its independence. Jim Ottaway Jr., a former board member who controls 5 percent of the company's voting power, has said he is also opposed to Murdoch's bid.
I actually thought this was a dead deal when the initial rejections came out. But there is a lot of money in play here, too. Murdoch's tender represented a premium of about 65% over the nominal share price – that's a lot. And frankly, bigger operations are probably beginning to damage Dow Jones.
Side note: I once made a business trip to Boston (this must have been in the early-to-mid 1980's) and was in a hotel in downtown Boston for a full week. One night I went over to the Bull and Finch tavern – which was the pub used for exterior shots for the television series Cheers. Believe me, the interior bore no resemblance whatsoever to the television set they used. Basically, it was a dive. But I was having a beer and watching a football game there since it got me out of the hotel room. I started talking to a guy sitting next to me at the bar and ended up trying to explain the intricacies of American football to him. He was an Australian who worked for Rupert Murdoch and was in town to discuss a deal about something or other. He didn't go into details, obviously, since it was a business deal. But he really had a hard time with American football. When I left he was muttering something about turnovers and downs.