News Corp. (NYSE: NWS) Chief Executive Rupert Murdoch has coveted The Wall Street Journal for years. Now, he's trying to turn his dreams into reality.
CNBC is reporting that Murdoch has made a $5 billion bid for Journal parent Dow Jones & Co. (NYSE: DJ), sending the company's shares up into the stratosphere. Shares of other newspaper publishers including the New York Times Co. (NYSE: NYT) also surged on the news.
Murdoch isn't really interested in creating shareholder value with this deal though it probably will benefit shareholders. Owning the Journal would give him unbelievable influence to set the world's political agenda. That interests Murdoch almost as much as making money.
The Australian-born billionaire also loves to stick it to what he sees as the liberal-dominated media.
He owns the money-losing conservative New York Post to prove a point to the New York Times. Fox News Channel proves a point to CNN and the new Fox Business Channel proves a point to CNBC. The Wall Street Journal would be a good fit among these properties.
Murdoch wouldn't have dreamed of leaking his offer to CNBC unless he'd gotten some assurances from the Bancroft family, which controls Dow Jones, that they would listen to him. The Bancrofts have grumbled for years about the stock's poor performance but have insisted that Dow Jones remain independent.
The offer on the table, though, may be too good to refuse.
New York Times Chairman Arthur Sulzberger, who has brushed aside shareholder critics, is probably on the phone with is bankers right now.
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Reader Comments (Page 1 of 1)
5-01-2007 @ 2:30PM
NY living said...
The most recent news of Rupert Murdoch’s quest to purchase the Wall Street Journal fills my investing heart with dread. I do not feel I could trust the reporting of the Journal if it became part of his media empire. When I read the Journal I want news, not entertainment targeted at an ideological market segment.
Love or Hate the guy you know that his personal politics is always an issue with companies under his control and like it or not those generals who run Rupert’s empire make some very poor choices when it come down to their responsibility to report the news fairly and without undo bias.
Leaving all politics aside, the success of the Fox News phenomenon is in my humble opinion not repeatable. The company has aggressively marketed and tailored their news and entertainment programs after a narrow 20% of the US market. They have also been helped by another phenomenon called the “free show”, this is the same one that Howard Stern used to propel himself to the national media, and basically you get a bunch of people who tune in just to see what freakish thing is going to be said next. This kind of thing will not work for the consumers of the journal.
Now sure you can make a great company out of 20% of the US population, the only question is “what 20% is it”? If you look at the demographics of those who advertise with News Corp you see that they are lower to middle class Midwestern Americans age 40 to 60.
A marketing executive I know expertly pointed out that their target audience is not the target audience of the Journal. He also pointed out that, when you look at the rising backlash and corruption scandals both in the civil and corporate worlds surrounding the political movement that Rupert Murdoch’s success is based on you see a growing trend among corporate leadership to distance themselves from these groups; at least publicly. Embracing them as predictable would be expected of a Murdoch company will remove the legitimacy of the journal in business circles. He predicted that it will become one of those guilty pleasure publications that you have delivered to your home and you keep stashed in your briefcase; only to be pulled out in private and enjoyed.
While laughing about this idea and thinking of my own guilty pleasure publications it struck me that much of the problems Dow Jones is having also has its roots in the Fox News phenomenon. For a few years now there has been a growing trend to distrust news corporation of all stripe because of the much discussed “media bias” and while I personally never put much faith in such dismissive “Us V Them” concepts the story has been repeated too often for people to ignore. Now the creators of this meme intended this to bring down what they considered a “liberal bias” but just like Dr. Frankenstein their creation has come back to wreck havoc on them to.