UPDATE: Murdoch Calls Meeting Today 'Constructive'

By: E&P Staff Rupert Murdoch sat down with representatives of the Bancroft family today to discuss his bid for Dow Jones & Co., but a major roadblock remains.

Murdoch said afterward that he had a "constructive" meeting with the Bancrofts. Reuters reported: "Murdoch and his son James, met key members of the Bancroft family, which in total holds 64 percent of the voting power in Dow Jones, for the first time in New York. 'We had a very long and constructive meeting,' Murdoch told reporters as he left the meeting at the offices of the Bancroft family advisers.

"Crews of reporters drenched from the rain flanked both entrances to the CBS Corp.'s imposing 'Black Rock' building, catching only a moment with the 76-year-old year old media mogul as he left."

The Wall Street Journal had reported this morning that the News Corps chief made it clear in an interview that while he is willing to offer some editorial independence "he isn't willing to yield to what may be a key demand from the Bancroft family, Dow Jones's controlling shareholder: that the family control any editorial-oversight board created to protect Dow Jones's editorial independence in the event of a deal."

That kind of board should comprise "people with absolutely no business connections to me nor the family," Murdoch said, according to the Journal. He added the family "can't sell [Dow Jones] and keep it" by joining a newly created board. "I can't put down $5 billion of my shareholders' money and not be able to run the business.

But he repeated that he has "no plans to change anything" on the news side of the paper. He is already pretty much aligned with its editorial page.

In his own account, The New York Times' media columnist David Carr writes today of a "makeover of Mr. Murdoch. A coarse, self-seeking tabloid king has become a potential savior, a man with journalism in his blood and money in his wallet who will rescue Dow Jones from being blown away by forces beyond its control.

"Mr. Murdoch will pass the horns-and-tail test with ease. Anybody who has met him can testify to his easy and substantial personal charm. (Wouldn?t you just kill to watch Mr. Murdoch put on the hula skirt and coconuts and dance his way into the hearts of the Bancrofts?)

"Mr. Murdoch will reiterate his love of newspapers, perhaps not mentioning that it ranks a bit behind his lust for power. Trust one of the world?s most artful deal makers to evince a wholesale grasp of the newspaper?s importance and a retail grasp of individual family concerns. As the head of a diversified media concern, he will speak with a great deal of insight and portentousness about the challenge posed by the Thomson/Reuters merger."

An excerpt from the Wall Street Journal article follows. It can be found in its entirety at wsj.com.
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The issue of editorial independence for Dow Jones and its flagship title, The Wall Street Journal, will be paramount when Mr. Murdoch and his second-oldest son, James Murdoch, the CEO of News Corp. affiliate company British Sky Broadcasting, meet Monday with three members of the Bancroft family. The meeting is the first since News Corp. submitted an offer of $60 a share, or $5 billion, for Dow Jones in April. A majority of the family initially said they weren't interested but Thursday shifted position, acknowledging a willingness to talk to News Corp. and consider any other suitors as well.

Mr. Murdoch's guarantees of editorial independence are meant to convince the Bancrofts to sell the company without feeling they have betrayed the family's generations-old commitment to the integrity of the journalistic enterprise. Some family members have made clear they don't approve of Mr. Murdoch's approach to newspapers; they are considering a sale only because they feel Dow Jones can't operate effectively on its own, and no third parties have appeared to compete with Mr. Murdoch's bid.

Mr. Murdoch has suggested creating an independent board like that which is supposed to guarantee the editorial independence of the Times of London and the Sunday Times, which he acquired in 1981. That board must approve appointment of editors. Some critics have said the board has proved ineffective, failing to stop Mr. Murdoch from forcing out editors he didn't like -- most famously Harold Evans in 1982. The Bancroft family isn't expected to try to re-create the Times board, according to people familiar with the discussions. Among Mr. Murdoch and his advisers -- JPMorgan Chase, Centerview Partners, Allen & Co. and law firm Skadden, Arps, Slate, Meagher & Flom LLP -- there is a growing view that the "Times of London" structure won't be adequate to convince the Bancrofts to sell.

News Corp. would be willing to explore a structure similar to that historically used by Reuters PLC, according to people close to News Corp. This arrangement gave the Reuters trustees veto power over any deal, something they will maintain in the newly combined Thomson-Reuters company. The arrangement also granted trustees broad rights and privileges. No shareholder could own more than 15% of the company's shares without the trustees' consent. As part of the deal with Thomson Corp., Reuters trustees must be "consulted" before any editor-in-chief of Reuters is appointed or removed.

The meeting, which will be held at the offices of family legal adviser Wachtell, Lipton, Rosen & Katz, is designed as part social gathering and part business meeting, according to people familiar with the plans.