Rupert Murdoch's unsolicited $5 billion takeover bid for Dow Jones & Co. has been turned down by the family that controls the company. The Dow Jones board of directors, which takes its cues from the Bancroft family, says it will weigh their opinion carefully.
According to Bloomberg News, the Bancroft stake is valued at more than $1.2 billion; the family controls more than 60 percent of the company's voting stock.
Murdoch, owner of media conglomerate News Corp., stunned the publishing world with his offer to buy Dow Jones, the parent company of The Wall Street Journal .
The media mogul's bid of $60 a share is 67 percent above Dow Jones' recent market value.
Shares of Dow Jones soared on news of the deal. In afternoon trading, the stock was up by nearly 21 points, at $57.28 a share.
Murdoch is in the process of launching a rival to CNBC — the Fox Business Channel — which he'll add to his empire of newspapers in Australia and the U.K, along with his other properties, such as The New York Post and the Fox News and TV networks.
If a sale went through, viewers could expect to see reporters from the Journal and other Dow Jones holdings disappear from CNBC's programs and materialize instead on Fox Business Channel.
Murdoch and his family control about 30 percent of News Corp., the world's No. 3 media conglomerate behind Time Warner and Walt Disney.
Dow Jones is one of the most heralded names in American media. It owns business and financial news publications, including the financial weekly Barrons, and the monthly Far Eastern Economic Review as well as The Wall Street Journal.
The Bancroft family are the heirs of Clarence Barron.
The company's stock performance has been sluggish, reflecting job cuts stemming from declines in advertising sales. Those declines have become common to the newspaper industry as a result of shrinking circulation and migration to the Internet.
John Linehan of T Rowe Price says Dow Jones could pay a heavy price if its board rejects the News Corp. offer.
"If the Bancrofts aren't going to sell — to News Corp. or someone else today — they probably are never going to sell," Linehan says, "and at that point it's a very different game in terms of what your investment thesis is."
He foresees the potential of shareholder lawsuits against the company and of a sharp drop in the value of its stock.
The latest figures from the Audit Bureau of Circulations show The Wall Street Journal posted a 0.61 percent increase in daily circulation to 2.06 million for the six months ended March 31. That's second to Gannett-owned USA Today, which enjoyed a circulation bump of 0.23 percent to 2.28 million.
News Corp. has operations spanning film, television, and publishing. It produces and distributes movies through Fox Filmed Entertainment, while its FOX Broadcasting network has more than 200 affiliate stations in the U.S.
The company also owns and operates about 35 TV stations, as well as a portfolio of cable networks. Its publishing business includes HarperCollins, along with several newspapers and magazines. In addition, News Corp. owns almost 40 percent of satellite broadcasters DIRECTV and British Sky Broadcasting.