By: Seth Sutel, The Associated Press Shares of Dow Jones & Co., the publisher of The Wall Street Journal, soared Friday after its controlling shareholder, the Bancroft family, put the company on the auction block.
After initially rebuffing an offer from Rupert Murdoch's News Corp., the Bancroft family said late Thursday that it is ready to meet with the media mogul to discuss his interest in buying Dow Jones.
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.
?We don't believe the promises Mr. Murdoch has made can be trusted,? union leader Steven Yount said in a statement late Thursday. ?Dow Jones must remain an independent company if it is to prosper both as business and a journalistic enterprise,? adding that the union would do ?everything in its power? to ensure Dow Jones remains an independent and trusted source of information.
The Bancrofts said in a statement that after reviewing Dow Jones and the rapidly changing arena of business news and information in which it operates, ?the mission of Dow Jones may be better accomplished in combination or collaboration with another organization, which may include News Corporation.?
The news pushed company shares up $7.69, more than 14 percent, to $61 in pre-market trading Friday.
The family said it remained committed to preserving the Journal's independence and integrity and were willing to meet with Murdoch to determine whether they could be assured those qualities would continue under his ownership. They also said they would consider other offers.
Despite the Journal's prestige and tremendous clout in the business world, Dow Jones remains a relatively small company compared with large media operators such as Murdoch's News Corp. Reuters Group PLC and Bloomberg LP have made huge inroads in the business of providing real-time financial news and information to investors.
Murdoch started out as a newspaper owner in Australia, and today his News Corp. media conglomerate has operations across the globe including Twentieth Century Fox, Fox News Channel, the New York Post, satellite TV broadcasting and the social networking Web site MySpace. 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 and employees of Dow Jones say is paramount to the company's mission.
Like several other newspaper publishers including The New York Times Co. and The Washington Post Co., Dow Jones is a public company but remains controlled by a family through a special class of shares with powerful voting rights.
Family control, its advocates say, is intended to insulate newspapers from short-term financial demands from shareholders and to safeguard their independence and protect their mission of public service.
Murdoch, for his part, has said he also understands the importance of family stewardship as his own company is controlled by him and family trusts, albeit to a lesser degree than the control exercised by the Bancrofts of Dow Jones, the New York Times' Sulzbergers and the Grahams of The Washington Post.
Also, Dow Jones has an important difference from the Times and The Washington Post in that no family members are currently involved with the company's day-to-day management. The Bancrofts are also numerous and geographically diverse, with some three dozen adult family members spread out over the country.
From the beginning of Murdoch's overture to Dow Jones, it was clear that the Bancrofts were divided. While they control 64 percent of the shareholder vote of the company, they had said earlier that just 52 percent of the voting power was lined up against Murdoch.
And with Murdoch's offer of $60 per share representing a huge premium of about 65 percent over the company's share price before the bid became public, the approval by purely financial investors seems all but assured. Dow Jones shares rose 46 cents to $53.31 Thursday, then gained more than 12 percent to $59.79 in extended trading on news of the Bancrofts' statement.
It remains far from certain, however, that Murdoch will wind up winning Dow Jones, a company he has long been interested in owning. In meeting with Murdoch and expressing a willingness to consider other bids, the Bancrofts may be trying to encourage other suitors to step forward.
Dow Jones said in a statement that its board would consider the Murdoch bid as well as other potential alternatives, and it would have a board representative present at the Bancroft family's discussions with News Corp. and Murdoch.
A longtime newspaper owner with many papers in England and Australia, Murdoch has sought to allay the Bancrofts' concerns in a recent letter, saying he would take a series of steps to ensure the Journal's integrity, including setting up an independent oversight board.
Murdoch has also said he wants to expand the Journal's reach overseas and online, as well as tap its resources for a new business-oriented cable news channel he plans to launch.
Within Dow Jones, however, opposition to Murdoch remains strong. Writers in the Journal's China bureau have expressed staunch opposition to his bid, and Ottaway and others say they're concerned he might soften coverage of China in particular, where Murdoch has business interests.
News Corp. spokesman Andrew Butcher said the company was ?grateful to the Bancroft family for agreeing to our suggestion to have a meeting? and dismissed any concerns about the Journal's China reporting weakening under Murdoch as ?nonsensical,? pointing to ?the strong China coverage in a paper like The (London) Times,? which is also owned by Murdoch.
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