News Corp. and Dow Jones: No Match?

Rupert Murdoch. Credit: ANDREW STUART/AFP/Getty Images. i i

Media tycoon Rupert Murdoch leaves 10 Downing Street in London on March 14, 2006. Andrew Stuart/AFP/Getty Images hide caption

itoggle caption Andrew Stuart/AFP/Getty Images
Rupert Murdoch. Credit: ANDREW STUART/AFP/Getty Images.

Media tycoon Rupert Murdoch leaves 10 Downing Street in London on March 14, 2006.

Andrew Stuart/AFP/Getty Images

Rupert Murdoch has always wanted to own The Wall Street Journal. But the Bancroft family, which owns a controlling interest in the newspaper's parent, Dow Jones & Co., does not want Murdoch to take control. New Yorker columnist Ken Auletta offers his insights in a conversation with Steve Inskeep.

How big is Rupert Murdoch's News Corp.?

News Corp. is a $70 billion company. It's probably the fourth-largest media company in the world. It began as a small newspaper company in Australia, under Rupert Murdoch's father. He expanded that dramatically and it's now the largest owner of newspapers in the world, with about 170 newspapers.

And now he wants a controlling share in a gigantic newspaper that's been owned by the same family for decades?

He's always wanted to own The Wall Street Journal. He told me that years ago. And when I was doing a piece two years ago on Dow Jones, and the family that owns, or controls, Dow Jones, they made it clear to me that the last person in the world they wanted to own that paper was Rupert Murdoch.

Why?

What they said to me was that they worry that his politics would spill not just on to the editorial page, which is close to his views, but on to the news pages. And they didn't want politics to bleed into the news pages.

The Bancrofts were saying that they didn't trust Murdoch to maintain the integrity of the newspaper?

That is correct. And that becomes a big issue. And that's one of the reasons, I think, that they rejected this incredibly lavish offer of $60 a share that he made yesterday.

What is it that makes a newspaper in this era so attractive to a giant media company like News Corp.?

What makes it attractive to News Corp. are several things. One, Mr. Murdoch hopes to begin his new business cable channel in the fall. And The Wall Street Journal would provide, potentially, the reporting for that channel, the content for that channel. It's the most respected name in business news.

Second, it would provide business news for his worldwide empire. He's the only person in the world who has a worldwide distribution system.

Third, [to] a man who ... now owns MySpace, and has pushed ahead into online, The Wall Street Journal is pretty advanced in that area. [So] the online component becomes a very attractive component for Rupert Murdoch.

Are there other possible buyers who might have a chance to get The Wall Street Journal?

When I was doing my piece two years ago, the family made it clear they were not sellers. But if the Graham family that owns The Washington Post were to make a bid, they would be interested in that. And the second choice at the time was Bloomberg. They thought they were two people that respected good journalism.

The Graham family tends to be low-ballers. So that offer never materialized, at least one that would be attractive to the family.

As this goes on, there might be other bidders. But it's hard to imagine that other bidders would bid $60 a share, which is a very rich price.

And what happens then is the Bancroft family, which only owns a quarter of the stock, nevertheless owns two-thirds of the voting stock. So the family, if they stay united, can reject this offer.

Given that all kinds of newspaper stocks went up yesterday, is there suddenly a sense that newspapers have been undervalued?

No. I think what will happen here is if this bid is rejected by the family, that newspaper stocks will again plummet.

Because the perception on Wall Street, as crazy as this sometimes seems since newspapers are very profitable, is that newspapers don't have a bright future. Wall Street tends to look for growth. They don't see growth in newspapers, therefore they punish the stocks, even though these are very profitable businesses.

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