News Corp., Dow Jones Ease Closer to Deal

Rupert Murdoch's bumpy path to acquiring The Wall Street Journal may be getting smoother.

His News Corp. reached an agreement, in principle, Tuesday with the newspaper's parent company, Dow Jones & Co. Inc., which is intended to ease concerns that he would have a heavy hand in the news pages.

But if all of the details are ironed out, that just leaves the price to be negotiated.

The Bancroft family, which controls about 65 percent of the voting power of the company, is expected to ask for an increase over the $5 billion, or $60 per share, that Murdoch initially offered in April.

The deal is viewed as a hefty premium over the value of the stock, and stakeholders have signaled that the Bancroft family ought to seriously consider selling the company.

Shares of Dow Jones ended Tuesday at $58.77, up $1.27 or 2.21 percent. That compares with a $36-trading range before Murdoch's offer.

According to one person in each camp, Dow Jones and News Corp. have agreed to create a five-person board to resolve future conflicts between Murdoch and editors of The Wall Street Journal's top news and editorial pages.

The hope is that the venerable Wall Street Journal, and other Dow Jones publications, would retain editorial independence. Those entities are viewed as staid in comparison with Murdoch's sensationalist media products, which include Fox News, the New York Post, and British tabloid The Sun.

To varying degrees, the news coverage of Murdoch's properties reflects his conservative beliefs.

Some former news executives say Murdoch also twists coverage to promote his financial interests, especially in Asia.

Former Wall Street Journal editor Dennis Kneale asserts that Murdoch will interfere.

"Every media owner has an agenda," he said. "The New York Times (they're a controlling family) has an agenda — a liberal agenda — and they're allowed to."

Members of the board would be selected by News Corp. and the Bancrofts. The will be prominent figures who supposedly lack ties to either side. Murdoch and his team would have to consult that board before appointing top newsroom leaders.

James Ottoway Jr. is a former Dow Jones executive and board member who controls about 6.2 percent of the stock.

"I could not live for the rest of my life with the shame of having voted to sell the Dow Jones company to Rupert Murdoch," he said.

News Corp. executives say Murdoch has no intention of damaging the Journal by meddling in its coverage.

Ottoway said Murdoch's approach is completely at odds with the Journal's traditions.

"That sense of owning a public trust — stronger than gain or personal profit — would just be destroyed by selling to Murdoch," he said.

Some critics, such as former Journal editor Kneale, said the Bancrofts and Dow Jones executives failed to attract new subscribers and to improve the stock value for shareholders.

"Despite all the criticism Rupert Murdoch will endure," said Kneale, now managing editor of the financial magazine Forbes.

"The Journal will have a much longer life, a much more robust life, now because Rupert is taking it over than it would if it stayed in the hands of this precious family that insists it is protecting the integrity of a national treasure," he added.

Many of the Bancrofts originally didn't want to talk to Murdoch at all. It's not known yet whether enough will support the deal to make it happen.

The Wall Street Journal, among the most widely read newspapers in the country, is the flagship of Dow Jones publications. The company also publishes the financial magazine Barron's, a portfolio of community newspapers as well as stock market and other financial data. Its sales were $1.8 billion last year.

News Corp. is significantly bigger and wealthier with $25 billion in sales last year. It wants to buy Dow Jones to fortify its financial news operation.

That would catapult it ahead of the Reuters and Bloomberg news agencies that are known for providing real-time financial information. (Reuters has agreed to be purchased by global information provider The Thomson Corp. for some $17 billion to form Thomson-Reuters Plc.)

Many of the Bancrofts originally didn't want to talk to Murdoch at all. It's still not known yet whether the deal will garner enough support to be finalized.

Like several other newspaper publishers including The New York Times Co. and The Washington Post Co., Dow Jones is a public company but remains controlled by a family through a special class of shares with powerful voting rights.

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