Media Mogul Rupert Murdoch's News Corp. has made a surprise unsolicited $5 billion takeover bid for Dow Jones and Co, which owns the Wall Street Journal, but the first indications were that Bancrofts, the family which has controlling stock in Dow Jones, is likely to reject the deal.
News Corp made a bid for $60 a share in cash or a combination of cash and stock which is 67 per cent above the prevailing price for the family-controlled media company. Analysts said News Crop bid could result in similar offers from other media giants.
Dow Jones confirmed the bid and said the Bancroft family, which owns controlling votes, is evaluating the bid but there is no guarantee that it would lead to any transaction. News Corp. also confirmed the offer but characterised the bid as 'friendly'.
The Wall Street Journal said the offer puts a large premium on the company at a time when most newspaper companies are losing readers and advertisers to the Internet. A recent auction of Tribune Co., which owns the Chicago Tribune, Los Angeles Times and television stations, failed to drum up much interest before Tribune was sold to a group led by investor Sam Zell.
The offer from News Corp., the Wall Street Journal said, faces obstacles. Dow Jones's controlling shareholders, the Bancroft family -- who own 24.7 per cent of shares outstanding but 64.2 per cent of the voting stock. The family first heard of the offer two and half weeks ago, and didn't immediately rebuff the offer as they have others in the past. However, a representative of the Bancrofts told Dow Jones that family members and their trusts "constituting slightly more than 50 per cent of the outstanding voting power of Dow Jones" would vote against the offer, Dow Jones announced.
The family, the Journal said, is far-flung and comprises at least 35 members. It isn't known how binding this preliminary vote could become, and its margin appears to be slim.
Murdoch, who turned 76 last month, has long coveted adding Dow Jones to his global media empire, which includes the Fox movie studio and TV networks, newspapers on three continents, as well as the MySpace Web site.
Founded in 1882, Dow Jones owns the weekly investment newspaper Barron's, Dow Jones Newswires, the Factiva news-information database service, WSJ.com and the MarketWatch Web site. It also owns a chain of community newspapers and 50 per cent of SmartMoney magazine.
The news, the New York Times said, had a ripple effect across the media industry on Wednesday. Shares of media companies rose broadly in trading, with stock of Reuters, Gannett and The New York Times Company all posting unusually high gains.
The acquisition of Dow Jones, the Times said, would broaden the reach of News Corp, into business reporting and American media in general. The Journal has the second biggest circulation of any American newspaper, more than 2 million, behind USA Today.
In addition, Dow Jones owns a widely circulated newswire service, other business news outlets like Barron's and the MarketWatch Web site. The company had $1.78 billion in revenue last year.
