Murdoch May Seal 'Wall Street Journal' Deal

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Dow Jones & Co., owner of The Wall Street Journal, agreed in principle to accept Rupert Murdoch's $5 billion offer first proposed in mid-April. The board of directors will vote on the deal. But the paper is majority-owned by the Bancroft family, which still has to agree to the deal.

STEVE INSKEEP, host:

Rupert Murdoch may have - may have - prevailed in his effort to buy the Wall Street Journal and the company that owns it. The Journal's Web site reports that its CEO, Robert Zannino, met with Murdoch yesterday and they agreed in principle to accept Murdoch's $5 billion offer made back in April. Later today, the full Dow Jones board will vote on it. Dow Jones is the company that owns the Wall Street Journal.

And we're going to talk about this with NPR's David Folkenflik. David, good morning.

DAVID FOLKENFLIK: Good morning.

INSKEEP: So if the CEO agrees to the deal, does that mean there is a deal?

FOLKENFLIK: Getting close, Steve. Getting awfully close. The Dow Jones board, as you say, is going to meet later today, according to the Journal's own report, to consider this. And it seems quite likely that that will be accepted by the board. But the real question is the Bancroft family, sort of the descendants - three dozen folks represent the descendants of the guy who took over the journal a century ago.

They control about 64 percent of the voting stock, and this is very key because their shareholders get to vote in a marketplace democracy and figure out what they want. They have been very resistant - there are schisms within the family - but very resistant to the idea of Rupert Murdoch owning the Wall Street Journal as well as its sister publications.

INSKEEP: I assume price is not the issue here.

FOLKENFLIK: Well, Murdoch offered, you know, a tremendous premium over what the company was valued at before he came along. It was in the mid-30s, dollars per-share. He offered $60 per-share. Five billion bucks - that's an incredible premium. So you had a lot of investors who are raring to go. Even so, there was some effort by Mr. Zannino and others to try to eek out a little bit of an additional bump on the price, but Murdoch held firm. He said, hey, this is my offer. I'm sticking to it.

INSKEEP: So that hasn't changed. The big issue, though - the bigger issue, perhaps, was editorial control, whether Rupert Murdoch was going to get to hire and fire editors at the Wall Street Journal, whether or not he was going to change the content of that paper, of which the Bancroft family is very proud.

FOLKENFLIK: That's right. I mean, the Wall Street Journal is obviously one of the exemplars of American journalism and there's been a strong, proud history of editorial independence. Rupert Murdoch comes from an Australian and British tradition where there's more of a tradition of editorial dependence. In his prestigious papers he's been willing to give a little more leeway to places like the Times of London. But even so, it's been at times charged with strong support that he has meddled both to support his political-ideological conservative beliefs but also his financial interests in both Britain and the U.S.

INSKEEP: Well, okay, what's changed here? He made this initial offer, the family said, no way. Or a number of family members said, no way, never to Rupert Murdoch. The price hasn't changed a lot. What has changed, if anything, in this offer that would make it possible for the family to accept it now?

FOLKENFLIK: Well, what's changed is time and momentum. The non-Bancroft family investors almost uniformly are in favor of this deal. After all, Dow Jones stock has languished. It's been suffering a lot of the same problems as the rest of the newspaper industry. And Dow Jones management itself has not enabled the company to lift up above the rest of that sector.

The second thing is Murdoch has made very clear - hey, this offer isn't indefinite. It's not going to go on forever. You either have to take my $5 billion or I'm going to walk away. And the rest of the investors are wondering are we ever going to get a premium for our investments.

INSKEEP: How do the Journal's reporters and editors feel about the prospect of Rupert Murdoch owning them? Well, let's not say owning them, owning the newspaper where they work.

FOLKENFLIK: And owning their parent company. You know there's a deep streak of cynicism, skepticism and concern among many of the reporters and editors to whom I've spoken about this. At the same time, Murdoch has promised he would invest in the Wall Street Journal rather than slash it. A lot of other possible corporate owners might do the reverse, given the difficulties of the industry.

INSKEEP: David, thanks for coming in.

FOLKENFLIK: You bet.

INSKEEP: That's NPR's David Folkenflik speaking with us on this morning after we have learned that there's an agreement in principle to sell the Wall Street Journal to Rupert Murdoch.

This is NPR News.

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News Corp. Strikes Tentative Deal For Dow Jones

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Chairman and CEO of News Corporation Rupert Murdoch delivers a speech during the General Session. i

Chairman and CEO of News Corporation Rupert Murdoch delivers a speech during the General Session at the 2007 Global Conference Sessions in Beverly Hills, California on April 24, 2007. Hector Mata/Getty Images hide caption

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Chairman and CEO of News Corporation Rupert Murdoch delivers a speech during the General Session.

Chairman and CEO of News Corporation Rupert Murdoch delivers a speech during the General Session at the 2007 Global Conference Sessions in Beverly Hills, California on April 24, 2007.

Hector Mata/Getty Images
The Wall Street Journal is shown on sale at Hudson News in Grand Central Terminal in New York. i

The Wall Street Journal is shown on sale at Hudson News in Grand Central Terminal in New York. Stan Honda/AFP/Getty Images hide caption

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The Wall Street Journal is shown on sale at Hudson News in Grand Central Terminal in New York.

The Wall Street Journal is shown on sale at Hudson News in Grand Central Terminal in New York.

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Tabloid tycoon Rupert Murdoch's News Corp. has agreed to a tentative pact to buy Dow Jones & Co., publisher of The Wall Street Journal, the financial newspaper reported on its Web site.

After weeks of negotiations, the two companies reached an agreement in principle for the original $5 billion that Murdoch had offered. The proposal will go to Dow Jones' board of directors Tuesday evening for approval, the Journal said, citing unnamed people familiar with the situation.

The deal would still require an all-important nod from Dow Jones' controlling shareholders, the Bancroft family, which has been divided on a sale to News Corp. over concerns that Murdoch could compromise the Journal's editorial independence.

Christopher Bancroft, a Dow Jones director, recently has been approaching major stockholders in an attempt to buy enough shares of Dow Jones to block a sale.

Michael B. Elefante, the Bancroft family's lead trustee, has scheduled a meeting for Thursday to present the agreement to the family and is expected to give the family members several days to make a decision, the Journal reported.

Murdoch, News Corp.'s chairman, resisted pressure from Dow Jones to raise his initial offer of $60 a share, which represented a premium of about 65 percent over the mid-$30s level that Dow Jones stock was trading at before the proposal became public in early May.

Dow Jones shares were down 40 cents to $56.55 at noon Tuesday, after closing Monday at $56.95, down 54 cents.

The Wall Street Journal, among the most widely read newspapers in the country, is the flagship of the 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., significantly bigger and wealthier with $25 billion in sales last year, owns media products that include Fox News, the New York Post, and British tabloid The Sun.

Murdoch has long wanted to own The Wall Street Journal, which has tremendous clout in the business world and wins many prizes for editorial excellence. Murdoch has said he would invest in the newspaper's online and overseas operations, and tap its resources to help build a business-themed cable news channel that would rival General Electric Co.'s highly profitable CNBC network.

A union representing Journal reporters and other Dow Jones employees has objected to Murdoch's bid, saying he would downgrade the quality of the paper's coverage and tilt its stories to suit his business interests.

The Bancrofts originally rebuffed Murdoch's approach but then reversed themselves and agreed to meet with him in early June to discuss their concerns about keeping the Journal's coverage free from corporate interference. The talks led to an agreement to create a committee that would have to approve the hiring or firing of top editors at the Journal.

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.

From NPR reports and The Associated Press

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