Dow Jones, Murdoch Near Agreement on Journal Board

The Dow Jones board of directors is seeking a buffer between the Wall Street Journal and Rupert Murdoch to mediate any possible editorial disputes. (By Chip East -- Bloomberg News)

An announcement could come as early as today that Rupert Murdoch's News Corp. and the Dow Jones board of directors have agreed on editorial protections for the Wall Street Journal, allowing the two sides to start discussing Murdoch's bid for the company and its high-profile newspaper.

The Dow Jones directors seek the creation of a board that would serve as a buffer between the Journal and Murdoch. Such a board, which exists at Murdoch's Times of London, would mediate differences between Murdoch and the newsroom editors of the Journal, should they arise. Such editorial boards are generally empowered to issue binding decisions.

The two sides met all weekend and into last night on the details of an editorial board, according to sources close to the situation who spoke on condition of anonymity because discussions are ongoing.

If the makeup of an editorial board overseeing the Journal can be agreed upon, it would be passed for approval to the Bancroft family -- the controlling owners of Dow Jones, most of whom had opposed Murdoch's unsolicited $5 billion bid for the company after it became public May 1.

The Bancrofts, a 35-member, three-generation clan whose predecessors built the modern Journal, have now warmed to Murdoch and have been represented during the talks with News Corp. over the weekend, making new opposition unlikely, the sources said.

If the family approves the structure of an editorial board, the Dow Jones directors would begin moving forward on talks to sell the company to Murdoch.

Murdoch wants to add the Journal to his global media empire, which includes the Fox television network, Fox News Channel, 20th Century Fox movie studios and the MySpace social-networking site in the United States; and extensive satellite television and publishing businesses in Europe, Asia and Australia.

News Corp. is worth $70 billion, bigger than the Walt Disney Co. but smaller than Time Warner.

Murdoch plans to launch a cable-TV business-news channel this year, a rival to CNBC, and would like to draw on the expertise of the Pulitzer Prize-winning Journal, seen by many as the newspaper of record on the U.S. economy. Murdoch is also interested in expanding his Internet holdings -- he has talked to Yahoo about gaining an ownership stake in the Internet portal in exchange for MySpace. He is impressed, too, by the moneymaking capability of the Journal's Web site, one of the few newspaper sites that charges for content.

The British company Pearson, which owns the Financial Times, tried to find a funding partner to mount a rival bid to Murdoch's for Dow Jones. Pearson's most promising candidate, General Electric, which owns NBC Universal and CNBC, said last week that it was not interested in bidding for Dow Jones.

The GE withdrawal and Pearson's inability to find another partner has cleared the field for Murdoch and his offer of $60 per share, which was more than the trading value of Dow Jones stock before his bid.

Dow Jones closed yesterday at $57.50 a share, down $1.30. News Corp. closed at $21.80, up 20 cents.

The sticking point between News Corp. and Dow Jones has been the makeup of the proposed seven-member editorial board. In a four-page letter to News Corp. delivered Friday, Dow Jones offered a board that would include two members of the Bancroft family, two members selected by News Corp. and three independent directors nominated by the Bancrofts and approved by News Corp.

Such a board was unacceptable to News Corp., the sources said, because it would effectively give the Bancrofts more control over the Journal than they now have.