News Corporation launched a $5-billion bid on Tuesday for Dow Jones in a bold move to add the prestigious Wall Street Journal business daily to Rupert Murdoch’s vast media empire.
The move for the storied publishing firm sparked a rally in other newspaper stocks and offered hints of a further shake-up in an industry in turmoil.
News Corporation said in a statement it made ”a friendly offer” to acquire all of the outstanding shares of Dow Jones for $60 each in cash, or in a combination of cash and stock.
Murdoch, who is chairperson and chief executive of News Corporation, said in an interview on his Fox News channel he wants the prize of the Wall Street Journal: ”We feel this is the greatest newspaper in America. One of the greatest in the world.”
He added: ”It has great journalists which deserve, I think, a much wider audience. We feel that with coming online and offline, there is a great deal to be done here.”
The Australian-born media baron who is now a United States citizen and has reincorporated the group in the US said the bid represents ”a big, generous offer”, but it remains unclear whether the family that controls Dow Jones will sell.
Dow Jones said its board of directors and trustees of the Bancroft family ”are evaluating the proposal”.
However, the Wall Street Journal reported that members of the Bancroft family and their allies, who together hold a more than 50% stake, will oppose the deal. Widely spread out, the family holds 24% of the capital but more than 62% of the vote.
The bid would be a 63% premium to the most recent share price for the company that publishes the Wall Street Journal and its international and online editions and has other media interests worldwide.
Dow Jones shares surged by 55% to close at $56,20, even though the closing price was below the takeover offer of $60 per share.
Shares in the New York Times Company, meanwhile, rallied 6,5% to $24,93 and McClatchy Newspapers added 2% to $29,48. As the potential acquirer, News Corporation shares fell $1,01 to $22,99.
Media mogul
With his News Corporation umbrella, Murdoch controls the Fox television and film studios, and BSkyB in Britain. In newspapers, the company owns British-based dailies including the Sun and the Times, as well as the New York Post and the Australian. In 2005, he also bought the MySpace social networking website.
Rick Edmonds, a media business analyst at the Poynter Institute, said the Journal is ”a trophy property and he [Murdoch] likes to have those things”.
Edmonds said the acquisition of the Journal would also mesh well with Murdoch’s plans to launch a TV business channel.
The Journal reported that the offer ”is almost certain to spark controversy” because Murdoch is best known in the US for his control of the tabloid New York Post and Fox News.
But Edmonds said similar concerns raised when Murdoch acquired the Times of London proved to be unfounded. ”When he bought the Times in London there was a concern it would go downmarket and trashy,” he said. ”Neither of those things happened.”
Edmonds said that the offer is ”eyecatching” because of its size. ”It may not be an offer they can’t refuse, but it is hard to resist.”
The move comes at a time of turmoil in the US newspaper industry, with circulation slipping as more consumers turn to the internet and other media. A survey this week showed US daily newspaper circulation is down 2,1% from a year ago. Fewer than half of all US adults currently read a daily newspaper, a far cry from 80,8% in 1964.
The Wall Street Journal is the second-biggest US daily, and its circulation edged up slightly over the past year to just more than two million.
Dow Jones traces its history back to 1882 when Charles Henry Dow and others started producing hand-written news bulletins in the Wall Street area. It has long been under the control of the Bancrofts, the descendants of Charles Barron, who bought the company in 1902.
The company created the first Dow Jones stock index in 1884, which remains a key benchmark for Wall Street.
Another big news media group, Tribune, announced last month it would go private in a deal giving control of the publisher of the Chicago Tribune to real-estate mogul Sam Zell.
Last year, Knight-Ridder Newspapers was bought out and broken into several pieces, placing prestigious dailies such as the Miami Herald and Philadelphia Inquirer under new ownership. — Sapa-AFP