Murdoch makes the move

He has been known to be lusting after Dow Jones for years and now Rupert Murdoch has struck: a $60 per share, $5 billion, 67-percent-premium bid for the company. Whether the price is smart, I have no idea. But if you’re going to go after an old newspaper company, I’d say this is the one because it’s really more of a data than a newspaper company and it’s national. It’ll be interesting hearing the chatter over drinks here (where I’m headed later this week). Says the Journal itself:

The bid comes at a critical time in the newspaper industry, when defections of readers and advertisers to the Internet has sharply eroded newspaper profits and raised doubts about the industry’s long term future. In the past year two newspaper empires, Knight Ridder Inc. and Tribune Co., have put themselves on the market after pressure from restive shareholders. Knight Ridder ended up being bought by McClatchy Co. while Tribune decided to go private in an $8.2 billion transaction backed by real estate magnate Sam Zell.

The mere possibility that News Corp. owner Rupert Murdoch could get control of The Wall Street Journal is almost certain to spark a firestorm of controversy. Critics are likely to see his potential acquisition of one of the nation’s most influential newspapers as an unacceptable extension of his already formidable media sway.

That last bit certainly seems to be the wishful thinking of the reporter. Hooey, in other words. Unacceptable to whom? There are no crossownership rules on cable channels, movie studios, and national newspapers. Nice try, Martin Peers.

The Times reports:

The news had a ripple effect across the media industry today. Shares of media companies rose broadly in trading today, with stock of Reuters, Gannett and The New York Times Company all posting unusually high gains.

I know some will say that the newspaper industry has been down for so long it finally looks like up. See the current cover of Worth witih coverboy Mark Cuban: “New Money Rediscovers Old Media.”

But I still think these properties are a difficult long-term play. There are lots and lots of short-term efficiencies to be found. But what then? If you don’t have an aggressive strategy and investment in turning these businesses completely inside-out, then what’s your aftermarket?

So what can Murdoch do with Dow Jones? He can start one helluva financial news channel now. He can build out an online powerhouse from a solid base. He can make it yet more international.

: Bloomberg recalls:

Murdoch has coveted Dow Jones in the past, though at a February conference organized by McGraw-Hill Cos. in New York, he said he was “cooling on it.”

“I worried about it,” Murdoch said. He said he would have done “something different” with the Wall Street Journal online version.

“The Journal’s opportunity — it’s got a wonderful brand — is to go after the New York Times nationally,” Murdoch said.

It was at that same conference that Murdoch first said he planned on launching the financial news channel this fall.

: CNNFN says there won’t be a rash of newspaper buying:

Benchmark’s Atorino said Tuesday’s rise in other newspaper stocks may be an example of short sellers, investors who bet a stock will go down, covering their positions in order to avoid losses since newspaper stocks are rallying on the takeover speculation. He is not predicting a wave of deals though.

Grimes agreed. He said a News Corp. purchase of Dow Jones is a unique situation since he thinks Murdoch is mainly interested in The Wall Street Journal – especially since News Corp. has already announced plans to launch a business news channel to rival CNBC.

“For Murdoch, this is an opportunity to develop an even greater worldwide brand. It just makes perfect sense,” Grimes said.

: From CNBC (which ought to be very nervous about this):

CNBC’s Jim Cramer said Murdoch has been interested in Dow Jones for at least a decade and believes he has a better chance of securing a deal now. Murdoch called Cramer in 1996 when Dow Jones was trading in the 40’s — higher than it’s trading now — and asked him whether he should make a $73 a share offer for the company, Cramer said on CNBC.

“I suggested at the time that the family would reject it,” Cramer said. But “ten years have passed and the stock is down substantially from when he wanted to make the bid…It’s clear to me that the pressure on newspaper is so great that this time, so much better than 1996, he has a shot of pulling it off.”

Cramer also said there has always been a sense that some of the Dow Jones board members are tired of the low stock price.

Mort Zuckerman, chairman of Boston Properties and publisher of the New York Daily News, called the News Corp.’s offer a “brilliant move.”

“He’s starting a business channel and he’ll be able marry this (proposed acquisition) to the business channel,” Zuckerman told CNBC. “And he offered a price, recognizing what capital gains rates are now, that’s hugely attractive for a lot of members of the Bancroft family who have been unhappy with the way the stock has performed.”

: Yes, The New York Times is vulnerable to attack and Murdoch would love to do the attacking.

: I forgot until an NPR producer reminded me that the Journal and CNBC have a long-term deal. But there’s still plenty of other assets in Dow Jones that could work with the Fox news channel. And there are always escape clauses.

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  • This offer makes more sense as a move in the cable TV business channel wars than in the newspaper wars. If Rupert Murdoch succeeds, the deal gives Fox Business Channel a brand that will trump possible negatives from its association with Fox News Channel.

    Financial news consumers may be politically conservative (and therefore potentially open to FNC’s ideology) but the last thing they want when receiving information about their investments is an outlet whose reputation is spin, talking points and bluster, and that is what FNC stands for.

    Offering high quality journalism about serious matters where major financial assets are at stake is the reason why the WSJ has the reputation it has. The brand offers such a value that its readership is willing to pay for its online content (a feat that almost no other journalistic outlet has pulled off).

    The value of reputation for these financial journalism brands is so great that, unlike many other news outlets, vertical integration across many media platforms–newspaper, online, database management, cable TV–is worth the effort.

    If FBC gets WSJ, then GE may have to buy FT for CNBC to compete platform-for-platform. What should Bloomberg do? And Reuters?

  • Murdoch’s bid for Wall Street Journal parent Dow Jones suggests that News Corp, perhaps alone, knows where news is headed.


  • Re: “Unacceptable to whom?”

    That would be the Bancroft family who own greater than 60% of the voting stock. Charlie Rose just finished an interview with Ken Auletta that I summarized on my blog:

    Ken has talked with the family members in the past, and they said Murdoch would be at the bottom of the list of buyers they would consider. They’d prefer Bloomberg or Gannett.

    Even though Murdoch is just as lustful for the NY Times (Rose quoted Murdoch: “I’d give up half my worth to get the NY Times.”), Dow Jones is financial news which people are willing to pay for. The WSJ premium online content can’t be compared to what the NY Times is charging for: opinion pieces.

    Auletta says it’s all about the power and not the money for Murdoch, just as he’s losing $40-50 million per year with the NY Post. With the Dow Jones purchase he’s getting in on the ground floor of a business information network that can be applied to his worldwide news distribution reach.

  • From the AP , which gives a different voting stock percentage that the Bancroft family holds:

    “However, Dow Jones said late Tuesday that the Bancroft family, the company’s controlling shareholders, said they would vote shares representing just over 50 percent of the company’s voting power against the deal.”

    Some cynics are saying that they’re just trying to bid up the price.

    There’s also union opposition:

    “The union representing Dow Jones employees, the Independent Association of Publishers’ Employees, was harshly critical of the prospect of being owned by Murdoch and issued a statement saying that the bid was opposed by the staff ‘from top to bottom.'”

  • R Rainey

    Jeff, please tell reporters covering stories about media takeovers to ease up on the whining about employee treatment and editorial control. It shows their incredible self-centeredness. Readers don’t care about those things and want to understand it as a business deal, like any other takeover.

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  • If Murdoch were to succeed in acquiring Dow Jones and the WSJ, and then allying it with his financial TV ambitions — a good guess — the result probably would be as thoroughly unsuccessful as MSNBC, dull with a newsy rather than a technology twist. It’s difficult to think of a publishing-TV hookup that has performed in any other than a mediocre fashion. National Geographic? The Discovery Channel, going the other way (TV to journalism)? Playboy? Each one is an also-ran in the field that it tried to colonize from its more established base. And no, Rupert is not a miracle worker. “Just give it time” won’t work this time.