By: Mark Fitzgerald
In a last-minute appeal to thwart Rupert Murdoch’s $60-a-share, $5 billion bid for Dow Jones & Co., My Space founder Brad Greenspan proposed in an open letter late Friday a plan he said could drive stock in The Wall Street Journal publisher to more than $100 per share.
Greenspan’s plan involves shifting the Journal’s priorities from its print newspaper to a newly created financial news cable channel that would take on CNBC and an online video site. He also proposes shifting WSJ.com and MarketWatch.com from subscription-based sites to free sites on the same model as Yahoo Finance.
“I can assure you, News Corp. has similar designs on monetizing the Dow Jones digital media assets,” Greenspan wrote. “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?”
As a sweetener to the controlling Bancroft family shareholders — who have wavered between refusing Murdoch’s entreaties and accepting his bid, as Dow Jones board of directors now recommends — Greenspan said his Journal Investment Group would provide $400 million to $600 million in loans to buy Bancroft family shares at $60 a share.
Greenspan proposed that the company take on debt to buy back up to 50% of its shares at $60 per share.
Dow Jones would also take on an additional $500 million in debt to fund the digital initiatives.
“Our strategy centers around leaving the print publications of Dow Jones intact to continue serving as the gold standard of financial reporting, and creating additional earnings streams through digital media initiatives that can produce a stock price above $100 a share,” Greenspan wrote. “For too long, Dow Jones has limited its focus to the world of print media and allowed other, less established entities to generate millions of dollars in profits by developing financial reporting franchises on the Internet and cable television.
“The time has come for Dow Jones to break out of its slumber and extend its dominance into the lucrative arena of digital media.”
Dow Jones can succeed by hiring top talent to run the new cable, online video, and free WSJ.com site, Greenspan said.
“Fox Corp. doesn’t have a secret stash of top executives,” he wrote. “They will simply go out and hire top talent to execute. It’s not rocket science. Dow Jones can do the exact same thing and likely get even better talent at lower prices because of the prestige of the WSJ brand.”
The Bancrofts are expected to make a decision on whether to support the News Corp. bid by next week. At their request, the board negotiated a structure intended to preserve the editorial integrity of the Journal from what some of the Bancrofts fear will be Murdoch’s business interest and political meddling.