It's Official: Dow Jones and News Corp. Boards Back Deal

By: E&P Staff Reporters Sarah Ellison and Matthew Karnitschnig put it succinctly, if a bit sadly, in their front-page Wall Street Journal article for Wednesday: "A century of Bancroft-family ownership at Dow Jones & Co. is over.

"Rupert Murdoch's News Corp. sealed a $5 billion agreement to purchase the publisher of The Wall Street Journal after three months of drama in the controlling family and public debate about journalistic values."

Murdoch, perhaps to mollify outside and inside critics, announced he would add four pages of news coverage to the Journal, according to the paper.

Still, a veteran unnamed reporter at the Journal told The New York Times, ?It?s sad. We held a wake. We stood around a pile of Journals and drank whiskey.?

After reports predicting the outcome all day, the deal was approved by the boards of both companies, meeting separately. The two companies then set out to sign a merger agreement right away. Then it will be put to shareholders, who now have signaled acceptance.

?It?s a bad thing for Dow Jones and American journalism that the Bancroft family could not resist Rupert Murdoch?s generous offer,? James H. Ottaway Jr., the former Dow Jones executive and a major shareholder, said.

It will likely take three to four months for the transition to take effect. Murdoch has said that he probably will pump a good deal of money into the operation at the outset, posing a challenge to the Financial Times and The New York Times.

"At the family?s insistence, the News Corporation has agreed to retain the top editors at Dow Jones, including Marcus W. Brauchli, the managing editor of The Journal and Paul Gigot, The Journal?s editorial page editor, and has accepted limits on its ability to remove or replace people in those posts," The New York Times points out.

"The Bancrofts hope the arrangement, which they negotiated before the final deal, will restrict Mr. Murdoch?s ability to influence content, particularly in The Journal, but many media experts have said he has circumvented similar agreements in the past."

An excerpt from the Journal article follows. It is available in full form at

"On the one hand it is quite sad, but on the other it was the only reasonable thing to do," said Elisabeth Goth Chelberg, a Bancroft family member who unsuccessfully tried a decade ago to get the family more involved in management. "Now I look forward to a better Dow Jones. It's going to have more money and a world presence and all of the things that it could have and should have had but didn't."

Opponents of the deal called it a dark day for journalism. Leslie Hill, a family member who opposed the deal, resigned as a Dow Jones director late yesterday afternoon. In a letter to the board, she conceded the deal was a good one in financial terms, but added, "[I]t is not enough to outweigh the potential ramifications of the loss of an independent global news organization with unmatched credibility and integrity."

In an increasingly pinched landscape for newspaper companies, the alternative to selling was a future fraught with risk -- in particular, that deep cost cuts would be needed to prop up the stock price and make up for dwindling advertising....

As News Corp.'s board met yesterday evening to sign off on the deal, the company's offer had received support from Bancroft family members holding 37.4% of Dow Jones' voting power, more than half of the family's total voting stake of 64.2%. When added to the 29% of Dow Jones' voting stock held by public shareholders -- most of which is expected to go in News Corp.'s favor -- that support gives Mr. Murdoch enough to win a full shareholder vote comfortably. The vote is likely to be held later this year.


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