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A representative of the Bancrofts - the family that controls 62 percent of Wall Street Journal parent Dow Jones & Co. - has apparently told Rupert Murdoch, the head of News Corporation, that his $5 billion offer to buy Dow Jones would be voted down by family members, writes Adweek.
A News Corp. representative has said that the bid - what Murdoch has called a “big, generous” offer - still stands.
The timing of the offer could hardly be better, according to Norman G. Pearlstine, a former managing editor of the Journal who is now an executive with the Carlyle Group, a private equity firm. None of the Bancroft family is in management, and it isn’t clear whether the new managers have great ties to the family, reports the New York Times.
While The Independent Association of Publishers’ Employees, which represents the Journal newsroom and other employees, issued a statement saying that “the staff, from top to bottom, opposes” the bid, some Wall Street observers, along with CNBC, have said that a rejection by the Bancroft family may well be taken as a signal that it would never sell; a refusal could therefore pull stock prices down significantly.
Murdoch has said in a TV interview that bringing The Wall Street Journal under his umbrella would give it the resources and global reach it needs to succeed. According to an executive close to the situation, Murdoch commissioned a study on the online potential of the Journal, which runs the largest paid web site of any newspaper. Murdoch’s plan is to use Dow Jones’s online unit as the backbone for a financial news portal that would draw resources from News Corp.’s extensive news outlets, the executive said.
Dow Jones could generate as much as two-thirds of its cash flow from its electronic properties, which include Factiva, Marketwatch and Journal.com, says Larry Haverty, an associate portfolio manager of the Gabelli Global Multimedia Trust, which holds both Dow Jones and News Corporation shares.
Murdoch’s bid may also be motivated by his plans to start a Fox business news channel on cable this fall. However, the likelihood that he could integrate content from The Journal into the new channel’s programming is unclear, because CNBC’s financial channel has an arrangement with the Journal to use its business content until 2012.
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