Media Mogul Rupert Murdoch's News Corp took control of Dow Jones & Co and The Wall Street Journal newspaper in a $5 billion takeover, the US company confirmed on Wednesday.
The move ended the century-long ownership of the Bancroft family. Murdoch got support from the deeply divided Bancroft family to win the controlling interest in a vote by shareholders expected later this year.
The boards of both companies voted on Tuesday night to approve the deal.
The development came at the end of three-month drama during which Bancroft family dithered, sent mixed signals and debated whether the new owners will able to maintain journalistic values and editorial freedom.
One of the oldest and best-known franchises in the newspaper industry, beset in recent years by business pressures, will now enters a new era as part of a worldwide media conglomerate, the Journal said.
For Murdoch, the verdict represents the pinnacle of his long career building the News Corporation into a $28 billion media empire that already includes more than 100 newspapers worldwide, satellite broadcast operations, the Fox television network, the online social networking site MySpace and many other parts, the New York Times said.
The 76-year-old Murdoch negotiated hard to win the paper he long coveted. He has promised to invest more in Dow Jones journalism.
The Bancrofts were worried about protecting the reputation of the Journal, the nation's second-largest newspaper. They feared Murdoch would meddle in the paper's editorial affairs and import the brand of sensationalist journalism found in some of his properties such as the New York Post.
Some Bancrofts sought other buyers, the journal said.
But ultimately, Murdoch's $60-a-share bid -- a 67 per cent premium above Dow Jones's share price when it became public -- was the only serious offer on the table. Key family members, spurred by Dow Jones's board and advisers, decided they had no choice.
"On the one hand it is quite sad, but on the other it was the only reasonable thing to do," the Journal quoted Elisabeth Goth Chelberg, a Bancroft family member who unsuccessfully tried a decade ago to get the family more involved in management, as saying. "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 Monday afternoon, the Journal reported.
In a letter to the board, she conceded the deal was a good one in financial terms, but added, "it 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, the Journal said.
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 per cent of Dow Jones' voting power, more than half of the family's total voting stake of 64.2 per cent.
When added to the 29 per cent of Dow Jones 's voting stock held by public shareholders -- most of which is expected to go in News Corp.'s favour -- that support gives Murdoch enough to win a full shareholder vote comfortably. The vote is likely to be held later this year, the Journal said.
The Bancroft family has controlled Dow Jones since 1902.
While Dow Jones accounts for less than half the family's fortune of roughly $2.5 billion, the company had long been the Bancrofts' source of pride and prestige.
Dow Jones, the Journal said, was also the main glue holding together the family, which today consists of nearly three dozen adult members scattered across the globe.
The final decision, the Times reported, was in doubt well past the 5 p.m. Monday deadline set for the family. In a twist in already tortured negotiations, some family trustees demanded that the News Corporation pay the fees for the family's bankers and lawyers which could reach $40 million in return for their support. After an exhausting night of conferences calls, the deal was made, it added.
