Dow Jones May Rise as Bancrofts Agree to Consider Murdoch Offer
By Leon Lazaroff
June 1 (Bloomberg) -- Shares of Dow Jones & Co. may rise after the controlling Bancroft family ended decades of resistance to a sale of the company and agreed to meet with Rupert Murdoch's News Corp. on his $5 billion bid.
``The family has reached consensus that the mission of Dow Jones may be better accomplished in combination or collaboration with another organization which may include News Corp.,'' the Bancrofts said today in a statement.
The decision to put the publisher of the Wall Street Journal up for sale follows a review of Dow Jones's prospects and conditions in the publishing industry, the family said. The Bancrofts hold about 64 percent of the voting power at Dow Jones, which also owns Barron's, and their agreement to consider Murdoch's offer sets the stage for the sale of the company.
``They'll be looking for some reassurance on the independence of the newspaper,'' Peter Kreisky, president of Kreisky Media Consultancy in Boston, said in an interview. Bancroft family members have ``realized they can only do a limited amount as an independent company.''
Shares of Dow Jones jumped $6.48, or 12 percent, to $59.79 in extended trading yesterday after the Bancroft statement was released. They rose 46 cents to $53.31 in regular New York Stock Exchange composite trading and have gained 40 percent this year.
Class A shares of New York-based News Corp., owner of Fox News and 170 newspapers, fell 34 cents to $22.09 in regular trading. They have climbed 2.8 percent this year.
Board Action
The Bancrofts will consider other bidders and options for the company, they said in the statement. The family previously said members amounting to 52 percent of the voting power opposed the sale of the company.
``We're grateful to the Bancroft family for agreeing to our suggestion of a meeting and we look forward to it,'' News Corp. spokesman Andrew Butcher said. He declined further comment.
A Dow Jones director will attend talks between the Bancrofts and News Corp., the New York-based company said today in a statement. The board will study strategic options for the company now that the Bancrofts have said they are willing to consider Murdoch's May 1 offer, Dow Jones said.
Murdoch, 76, offered a 65 percent premium to Dow Jones's April 30 closing stock price. Dow Jones news operations, including the Journal, Barron's and Dow Jones Newswires, would provide a source of business news for his publications and for the Fox Business Channel he plans to start this year.
Murdoch has sought to assuage concerns over the editorial independence of the Wall Street Journal by offering the Bancrofts a seat on News Corp.'s board and pledging to set up an autonomous panel to oversee the newspaper.
Editorial Integrity
Such a board, in place at News Corp.'s Times of London, would ensure the hiring and firing of Wall Street Journal's editor and managing editor would be made with the approval of the panel's directors. It would also ensure any dispute between management and editors is arbitrated.
The family's decision underscores the declining fortunes of the newspaper industry. Dow Jones said on May 8, one week after Murdoch's bid, that advertising sales dropped 12 percent and volume fell 13 percent in April.
The company may not get a higher offer than Murdoch's, said Michael Chren, managing director of Allegiant Asset Management Co. in Palm Beach Gardens, Florida. The Allegiant Large Cap Value Fund had 436,000 Dow Jones shares at the end of April.
``It's now an auction situation, and my sense is that Murdoch has them exactly where he wants them,'' Chren said. ``No one else is coming to this party. It seems very likely we're headed to a deal between News Corp. and Dow Jones.''
Valuation
Murdoch's offer prices Dow Jones at almost double the valuation McClatchy Co., publisher of the Miami Herald, put on Knight Ridder Inc. last year and that real estate billionaire Sam Zell is offering for Tribune Co., owner of the Los Angeles Times.
News Corp.'s bid represents about 17 times Dow Jones's projected 2007 profit before interest, taxes, depreciation and amortization, or Ebitda, based on estimates by Prudential Equity Group analyst Steven Barlow in New York.
McClatchy, based in Sacramento, California, paid 9.5 times projected profit on that basis for Knight Ridder last year, UBS Securities analyst Brian Shipman said.
``Dow Jones and the Wall Street Journal are probably two of the most valuable brand names throughout the entire world, and that's worth more money than you can justify based on their current level of earnings,'' said John Morton, an independent newspaper analyst based in Silver Spring, Maryland. ``I don't think a lot of private equity or other newspaper publishers recognize that. Rupert Murdoch recognizes it very well.''
Union Opposition
Bancroft family members cited concern over the Wall Street Journal's independence as a factor in their deliberations.
``The family has advised the company's board that it intends to meet with News Corp. to determine whether, in the context of the current or any modified News Corp. proposal, it will be possible to ensure the level of commitment to editorial independence, integrity and journalistic freedom that is the hallmark of Dow Jones,'' they said in the statement.
The union representing Dow Jones newsroom employees urged the Bancrofts to consider buyers other than News Corp.
``We don't believe the promises Mr. Murdoch has made can be trusted. Dow Jones must remain an independent company if it is to prosper both as business and a journalistic enterprise,'' Steven Yount, president of the Independent Association of Publishers' Employees, said in a statement.
By Leon Lazaroff
June 1 (Bloomberg) -- Shares of Dow Jones & Co. may rise after the controlling Bancroft family ended decades of resistance to a sale of the company and agreed to meet with Rupert Murdoch's News Corp. on his $5 billion bid.
``The family has reached consensus that the mission of Dow Jones may be better accomplished in combination or collaboration with another organization which may include News Corp.,'' the Bancrofts said today in a statement.
The decision to put the publisher of the Wall Street Journal up for sale follows a review of Dow Jones's prospects and conditions in the publishing industry, the family said. The Bancrofts hold about 64 percent of the voting power at Dow Jones, which also owns Barron's, and their agreement to consider Murdoch's offer sets the stage for the sale of the company.
``They'll be looking for some reassurance on the independence of the newspaper,'' Peter Kreisky, president of Kreisky Media Consultancy in Boston, said in an interview. Bancroft family members have ``realized they can only do a limited amount as an independent company.''
Shares of Dow Jones jumped $6.48, or 12 percent, to $59.79 in extended trading yesterday after the Bancroft statement was released. They rose 46 cents to $53.31 in regular New York Stock Exchange composite trading and have gained 40 percent this year.
Class A shares of New York-based News Corp., owner of Fox News and 170 newspapers, fell 34 cents to $22.09 in regular trading. They have climbed 2.8 percent this year.
Board Action
The Bancrofts will consider other bidders and options for the company, they said in the statement. The family previously said members amounting to 52 percent of the voting power opposed the sale of the company.
``We're grateful to the Bancroft family for agreeing to our suggestion of a meeting and we look forward to it,'' News Corp. spokesman Andrew Butcher said. He declined further comment.
A Dow Jones director will attend talks between the Bancrofts and News Corp., the New York-based company said today in a statement. The board will study strategic options for the company now that the Bancrofts have said they are willing to consider Murdoch's May 1 offer, Dow Jones said.
Murdoch, 76, offered a 65 percent premium to Dow Jones's April 30 closing stock price. Dow Jones news operations, including the Journal, Barron's and Dow Jones Newswires, would provide a source of business news for his publications and for the Fox Business Channel he plans to start this year.
Murdoch has sought to assuage concerns over the editorial independence of the Wall Street Journal by offering the Bancrofts a seat on News Corp.'s board and pledging to set up an autonomous panel to oversee the newspaper.
Editorial Integrity
Such a board, in place at News Corp.'s Times of London, would ensure the hiring and firing of Wall Street Journal's editor and managing editor would be made with the approval of the panel's directors. It would also ensure any dispute between management and editors is arbitrated.
The family's decision underscores the declining fortunes of the newspaper industry. Dow Jones said on May 8, one week after Murdoch's bid, that advertising sales dropped 12 percent and volume fell 13 percent in April.
The company may not get a higher offer than Murdoch's, said Michael Chren, managing director of Allegiant Asset Management Co. in Palm Beach Gardens, Florida. The Allegiant Large Cap Value Fund had 436,000 Dow Jones shares at the end of April.
``It's now an auction situation, and my sense is that Murdoch has them exactly where he wants them,'' Chren said. ``No one else is coming to this party. It seems very likely we're headed to a deal between News Corp. and Dow Jones.''
Valuation
Murdoch's offer prices Dow Jones at almost double the valuation McClatchy Co., publisher of the Miami Herald, put on Knight Ridder Inc. last year and that real estate billionaire Sam Zell is offering for Tribune Co., owner of the Los Angeles Times.
News Corp.'s bid represents about 17 times Dow Jones's projected 2007 profit before interest, taxes, depreciation and amortization, or Ebitda, based on estimates by Prudential Equity Group analyst Steven Barlow in New York.
McClatchy, based in Sacramento, California, paid 9.5 times projected profit on that basis for Knight Ridder last year, UBS Securities analyst Brian Shipman said.
``Dow Jones and the Wall Street Journal are probably two of the most valuable brand names throughout the entire world, and that's worth more money than you can justify based on their current level of earnings,'' said John Morton, an independent newspaper analyst based in Silver Spring, Maryland. ``I don't think a lot of private equity or other newspaper publishers recognize that. Rupert Murdoch recognizes it very well.''
Union Opposition
Bancroft family members cited concern over the Wall Street Journal's independence as a factor in their deliberations.
``The family has advised the company's board that it intends to meet with News Corp. to determine whether, in the context of the current or any modified News Corp. proposal, it will be possible to ensure the level of commitment to editorial independence, integrity and journalistic freedom that is the hallmark of Dow Jones,'' they said in the statement.
The union representing Dow Jones newsroom employees urged the Bancrofts to consider buyers other than News Corp.
``We don't believe the promises Mr. Murdoch has made can be trusted. Dow Jones must remain an independent company if it is to prosper both as business and a journalistic enterprise,'' Steven Yount, president of the Independent Association of Publishers' Employees, said in a statement.
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