Rupert Murdoch Fights for the Wall Street Journal

The IHT reports that Rupert Murdoch has had his first face-to-face meeting with the Bancroft family that controls Dow Jones and Co., which Murdoch has offered to buy. The family previously rejected his bid outright over concerns that Murdoch would interfere in editorial decisions at the Wall Street Journal.

Rupert Murdoch has a long history of altering and even suppressing news reports critical of the Chinese government in order to curry favor with the Communist Party. Murdoch has yet to make a media fortune in China, but his ethnic Chinese wife is spearheading News Corp.'s expansion into China.

The meeting itself was inconclusive, but both party's have agreed in principle to additional talks. The Bancroft family presented a proposal that would prevent Murdoch from effectively controlling the editorial side of the Wall Street Journal, but Murdoch rejected that immediately. Mr. Murdoch's own proposal is a quasi-independent board with some of the members appointed by him.

The proposal was supposedly well received by the Bancrofts but the chairman of Dow Jones, M. Peter McPherson, voiced objections.

The proposal is eerily similar to the governing board that was set up when Murdoch purchased The Times of London. That board allowed Murdoch to force out editor Harry Evans without any serious objections.

Murdoch's proposal is clearly the most financially remunerative option available to the Bancroft family. Murdoch's bid is 60% higher than the previous market price and his other media properties offer obvious synergies.

If the Bancroft family decides that it values the editorial integrity of the nation's financial press more than cold, hard cash, the family would be well advised to solicit a competitive bid from GE/NBC. GE/NBC has a long history of media coverage that would be more in keeping with the Bancroft family's ideals. While many view NBC as the most widely leftist media giant, against the grain of the traditionally conservative Wall Street Journal editorial board, GE has long exhibited the ability to ignore editorial viewpoints as long as profits rise. Because NBC's CNBC property is the likely victim of any alliance between the Bancrofts and Murdoch, NBC's investment in Dow Jones would also offer great synergies.

Murdoch Bids for Dow Jones and the Wall Street Journal

Businessweek reports that Rupert Murdoch's News Corp. has offered a hostile bid for control of Dow Jones and Co., the financial information powerhouse, with a massive 66% premium. Most analysts covering Dow Jones business empire, which includes the Wall Street Journal, were previously under the impression that the company was fully valued at its old price of just $36 per share. That Murdoch was willing to offer $60 a share for a company firmly entrenched in the dwindling print media is astonishing.

Murdoch's high offer for the company will likely prevent most private equity companies from offering competing bids because even with the use of extensive leverage, it seems unlikely that the company could be flipped within a decade at a substantial profit. The beauty of Murdoch's bid is that the prospect of integrating the Wall Street Journal with his existing media assets at Fox and his upcoming Fox Business channel makes the company worth substantially more to him that to any other conceivable rival. The only competitor with the deep pockets necessary to fight back in a bidding war is GE/NBC which could engage in purely defensive bidding to try to protect its valuable CNBC franchise. Not very many people watch business news on CNBC, but the wealthy audience is an advertiser's dream and the resultant profits make it one of NBC's more valuable properties.

The only thing standing in the way of Rupert Murdoch is the family with a controlling share of ownership in Dow Jones and Co. The Bancroft family has made use of their two-tier ownership structure to resist many previous bids for control of the company. The company is structured in such a way that while the family does not own the majority of the company, their shares have extra voting power which makes their acceptance of any deal crucial. Nonetheless, not all of the Bancroft family is opposed to the bid and the prospect of an increased bid seems likely to convince enough younger family members to sell. The sale has provoked intense interest across the media because of its implications for the value of many other media properties. With print circulation in free-fall, if Murdoch can find a web-based strategy to leverage the "old media" into the future, he could save the fourth estate.

Of course, whether or not Murdoch succeeds in purchasing the Wall Street Journal is beside the point. The print media is dying as society simultaneously loses interest and moves online. The old subscription model of payment which enriched the newspaper business for so long must give way to a solely advertisement based system. In an era where information is free, eyeballs are still worth a fortune to advertisers.