Other Bidders Could Emerge for Dow Jones

By: The Bancroft family, which controls Dow Jones & Co., publisher of The Wall Street Journal, says they don't want to sell the company to Rupert Murdoch at $60 a share. But would they sell at a higher price, or to someone else?

Those are the questions racing through Wall Street and the newspaper industry on Wednesday, a day after Murdoch announced his unsolicited bid, only to have it spurned hours later.

Even though the Bancrofts said Tuesday after markets closed that they would quash the deal -- which they have the power to do since they control the company's shareholder vote through a special class of shares -- investors were still holding out hope that some kind of deal would emerge.

Dow Jones shares gave up hardly any ground on Wednesday, shedding just 31 cents to $55.89, still far above their closing value of $36.33 on Monday, the day before the news came out of the offer, and not far off the $60 per share proposal that Murdoch's News Corp. media conglomerate made.

The Bancrofts have been unwilling to sell in the past, and reportedly rebuffed an overture from the Sulzberger family, which controls The New York Times Co., in 2002. Many other companies have been believed to have an interest in acquiring Dow Jones as well.

But at $60 a share, a premium of more than 65 percent over Dow Jones' recent stock price, many Wall Street analysts feel Murdoch's offer is too compelling to pass up -- and could lead to others considering their own bids.

Murdoch is attracted to Dow Jones for the prestige and power that would come with owning The Wall Street Journal, one of the largest papers in the country and by far the most influential in the U.S. business world.

Dow Jones also holds a special appeal to Murdoch since his News Corp. conglomerate is about to launch a business news cable channel. The company already owns Fox News Channel, the Fox broadcast network, MySpace and the Twentieth Century Fox movie studio.

The new business channel would benefit greatly from the expertise and strong brand name of the Journal and Dow Jones' other holdings, including Dow Jones Newswires, Barron's and its part-ownership of SmartMoney magazine. Dow Jones currently has a content-sharing deal that goes through 2012 with General Electric Co.'s CNBC, which would rival the new business channel.

Of the many names usually mentioned as potentially interested in acquiring Dow Jones, most were silent Wednesday about what their intentions might be.

Gannett Co., the largest newspaper company in the country and publisher of USA Today -- the only newspaper with higher circulation than The Wall Street Journal -- declined to comment, as did The Washington Post Co.

Judith Czelusniak, a spokeswoman for Bloomberg LP, a major supplier of financial news, said that company would not be interested, but she declined to elaborate.

An assistant to billionaire Warren Buffett said he wasn't doing any interviews ahead of Berkshire Hathaway Inc.'s annual shareholder meeting on Saturday.

However, Buffett, who owns the Buffalo News, warned in his latest annual shareholder letter that "fundamentals are definitely eroding in the newspaper industry," raising doubts about whether he would step up.

While any number of companies would love to own Dow Jones, it's not clear how many besides Murdoch would be able to afford the $5 billion price tag as easily, or to justify the strategic fit.

Morgan Stanley analyst Lisa Monaco told investors in a note that a joining of forces between Murdoch and Dow Jones was a "unique combination of content and distribution that few in the media business could replicate."

Newspapers all through the country are struggling with competition for readers and advertisers with other media, such as cable, satellite TV and the Internet, and as a result their stocks have suffered.

That doesn't mean that no one at all wants to buy newspapers any more. The businesses still remain profitable, and late last year private-equity investors bought the Minneapolis Star Tribune newspaper from McClatchy Co., albeit for far less than McClatchy had paid for it. Last month, Tribune Co. agreed to be taken private in a $8.2 billion deal led by real-estate investor Sam Zell.

The determining factor for the future of Dow Jones is the Bancroft family, which has long protected the independence of the Journal. Still, they have trimmed their holdings over time and now own just 24.7 percent of the company, while still holding 64.2 percent of the shareholder vote.

Shareholders, management and staff of Dow Jones have also long been frustrated with the prolonged slump in the company's share price, which last touched the $60 level in April 2002, before the current downturn in advertising began. They closed as high as $76.75 on June 20, 2000.


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