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Dow Jones, Murdoch Agree On Shield for Wall St. Journal
Editorial Board To Protect Paper's Independence

By Frank Ahrens
Washington Post Staff Writer
Wednesday, June 27, 2007

Rupert Murdoch was one big step closer to owning Dow Jones and the Wall Street Journal yesterday. And then he wasn't.

Murdoch's News Corp. and Dow Jones cleared a big hurdle yesterday morning, agreeing in principle to editorial protections for the Journal, according to sources close to the situation who spoke on the condition of anonymity because talks are ongoing.

The protections, in the form of an editorial board that would oversee the hiring of some top Journal editors and work to keep Murdoch from meddling in the newsroom, were the key concern for the Bancrofts, the family that controls Dow Jones. If a suitable system of safeguards could be agreed upon, the Bancrofts said last week, they would give the go-ahead to the Dow Jones board to begin negotiating a sale price with Murdoch.

But now, the Bancrofts have decided they will not approve the editorial board only. Instead, they will not cast their up-or-down vote until a complete deal, including price, is put together, according to another source close to the situation.

Despite holding only 24 percent of all Dow Jones stock, the 35-member, three-generation Bancroft family controls 64 percent of company voting power, enabling it to block any deal.

It was unclear when News Corp. and Dow Jones would begin negotiating for the sale of the company, which includes the Journal, the Dow Jones Newswires, Barron's weekly, the MarketWatch Web site, the Ottaway community newspapers, Factiva news search and several market-news publications.

The two sides conducted a strenuous weekend of negotiations. Yesterday's agreement on an editorial board came three days after Murdoch, upset with Dow Jones's efforts, hinted that he might retract his bid, sources said.

The proposed editorial board that emerged from negotiations yesterday would oversee the appointment of the Journal's managing editor and editorial page editor and have a say in the hiring of the editor of the Dow Jones Newswires, the sources said.

The proposal also would place former Journal managing editor Paul E. Steiger on the News Corp. board of directors as a representative of the Bancroft family, to be the Journal's voice in Murdoch's boardroom.

Dow Jones's negotiating team includes company Chairman M. Peter McPherson; directors Lewis B. Campbell, Michael B. Elefante and Harvey Golub; and chief executive Richard F. Zannino.

It was unclear yesterday why the Bancrofts, whose ancestors founded the modern Journal, reversed their position. It followed last week's action by the Dow Jones board to take control of the negotiations from the Bancrofts, who were seen as dragging their feet.

The Bancrofts initially opposed Murdoch's unsolicited bid for Dow Jones, which became public May 1, because they feared that he would interfere in the Journal's newsroom and use the prestigious paper to further his political and business interests.

Murdoch has offered $60 a share for Dow Jones, or about $5 billion, well over the company's value before his bid.

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