Wall St. Journal Owners to Consider Sale

By Frank Ahrens
Washington Post Staff Writer
Friday, June 1, 2007

Dow Jones & Co., publisher of the Wall Street Journal, has effectively put the media company up for sale, saying last night that it would entertain purchase offers, including an unsolicited bid from Rupert Murdoch that was turned down one month ago.

In a statement released by the company last night, Dow Jones's controlling family owners, the Bancrofts, said the company's ownership structure may no longer be tenable.

The Bancroft family, which owns 24 percent of Dow Jones shares but holds 64 percent of voting power through a dual-class stock system, said: ". . . the mission of Dow Jones may be better accomplished in combination or collaboration with another organization which may include News Corporation," the media company controlled by Murdoch.

The Dow Jones board said last night it would "consider strategic alternatives," essentially putting the company on the block, but warned that a sale is not guaranteed. However, the company probably would not be in its current position were it not faced with Murdoch's substantial and surprise bid, which has excited shareholders and put pressure on the company to sell.

"We're very grateful that the Bancroft family has agreed to our suggestion of a meeting and we look forward to meeting them in the near future," News Corp. spokesman Andrew Butcher said last night.

Murdoch bid $5 billion for Dow Jones in April, a sum that was much more than the company's market value, saying he prized the Journal and wanted to add it to his global media conglomerate.

Almost instantly, Murdoch's offer was turned down by the Bancrofts, who feared that the media mogul, owner of Fox News Channel and the New York Post, would use the newspaper to further his political agenda and business interests.

The Bancrofts now appear to have relented to growing pressure from Dow Jones investors and have agreed to meet with Murdoch. The Dow Jones board said it would send a representative to the meeting, but did not specify when the meeting would take place.

On Wednesday, the chief investment officer of T. Rowe Price, the largest Dow Jones shareholder outside of the Bancrofts, urged the company to accept Murdoch's bid, saying Dow Jones has no plan to lift its share price to Murdoch's offer, the Financial Times reported.

Murdoch has not increased his initial bid, but has since offered to put one Bancroft family member on the board of Dow Jones, should he buy the company. He also promised to establish an editorial board that would work as a buffer between him and the Journal to ensure its editorial independence.

In its statement last night, the Bancroft family said: "The family has advised the company's board that it intends to meet with News Corporation to determine whether, in the context of the current or any modified News Corporation proposal, it will be possible to ensure the level of commitment to editorial independence, integrity and journalistic freedom that is the hallmark of Dow Jones."

The Bancrofts said they would be receptive to offers from other bidders that they may find more journalistically palatable than Murdoch. At least as of late last week, however, no such bidders have come forward and a hoped-for "white knight" has not materialized, according to a source close to the family who spoke on condition of anonymity because the process is ongoing.

Murdoch's bid of $60 per share for Dow Jones, a 67 percent premium from the $36 trading value at the time the bid was made, is unlikely to be matched by rival suitors, analysts said. The Bancrofts, however, may be willing to take a lower offer from another bidder they look more favorably upon, which would keep the company out of Murdoch's hands and still return a premium price to shareholders.

Shares of Dow Jones closed yesterday at $53.31 per share, up 46 cents. Shares jumped to $58.47 after Murdoch's bid became public May 2. Murdoch wrote the Dow Jones board in April, extending the takeover offer.

News Corp. is valued at $70 billion, substantially more than Dow Jones, which had a market value of less than $4 billion before Murdoch's bid.

The day that Murdoch's offer became public, the Bancrofts said that they had enough votes to block a sale, even if all other shareholders favored it.

A number of current and former Journal reporters and executives have publicly urged the Bancrofts to continue resisting Murdoch, and have offered up numerous examples that they believe demonstrate Murdoch's meddling in his other media properties.

The example most commonly cited is that Murdoch removed the BBC television channel from his satellite service to China because government officials complained about the BBC's tough coverage of human-rights abuses in China.

However, staffers at Murdoch's Times of London, the newspaper in his media empire most comparable to the Journal, say he does not interfere with the newspaper's coverage and have cited editorials criticizing what it calls the totalitarian Chinese government.

© 2007 The Washington Post Company