By: Joe Strupp
In a memo to employees, Dow Jones CEO Richard Zannino sought to ease concerns over the board of directors Tuesday night vote authorizing a sale to Rupert Murdoch and the upcoming Bancroft family meeting to consider the sale, telling workers, “News Corp. sought us out because we have successful businesses and products to offer. Remember that. Also remember that we have a transformation plan that is beginning to pay meaningful dividends and we have a very bright future as an independent company should the News Corp. bid not come to pass.”
The entire memo is below:
Dear friends and colleagues,
Our board of directors has just made a significant recommendation regarding the future of Dow Jones. The press release, linked here, reflects the board’s decision late Tuesday to recommend a merger with News Corp. Board deliberations are private matters, so I can’t share with you everything that went on in the boardroom. I can tell you that the board was thorough in its examination of News Corp.’s offer. We weighed the offer’s value for shareholders and compared it against the potential offers of others who expressed interest in Dow Jones.
In the end, the board’s recommendation was for a merger with News Corp. The board’s view is that News Corp. brings the most value to Dow Jones and its shareholders.
Most of you know that a majority of the voting shares of Dow Jones is controlled by the Bancroft family. The Bancroft family is in a position to ratify or reject any change in control. So the next step in this process is to for them to provide their view on the proposed merger. If they agree with the board that the deal is in the best interest of the company and its shareholders, then all the company’s shareholders will be asked to vote on the merger. If the Bancrofts reject the offer, then the proposed transaction is terminated there.
In the past 18 months, we’ve made solid progress transforming this company. These recent improvements and a host of others contributed to financial results that surely are the envy of our industry. While others struggled, we reported a gain of 6% in revenue and 14.6% in operating EPS for 2006. In the 2007 first quarter, revenue was up 18% and profits were up 71%, excluding special items. We haven’t yet reported second-quarter results, but I believe our peers will envy our progress yet again.
The board took this into account. It recommended a merger with News Corp. not because this company’s future is not bright, but because our prospects might be even brighter in combination with the businesses of News Corp. News Corp. has promised to invest in our business. They’re also signing up to preserve what’s made the Journal and other Dow Jones products so important, agreeing to a structure that preserves the editorial integrity of our publications.
News Corp. sought us out because we have successful businesses and products to offer. Remember that. Also remember that we have a transformation plan that is beginning to pay meaningful dividends and we have a very bright future as an independent company should the News Corp. bid not come to pass. Whatever happens next, we’re going to build on the success of the past and make Dow Jones even better for the future.