According to the New York Times [registration required], this fear was further stoked by a presentation by the chief marketing officer for Macy's stores, in which she explained why Macy's was moving ad dollars to other media like TV, magazines and the internet while she questioned the relevance of newspapers. Furthermore, the $17.2 billion merger between ThomsonCorp. (NYSE: TOC) and Reuters Group plc (NASDAQ: RTRSY) seems to have convinced the Bancrofts that this competition would only intensify.

I think the Bancrofts will definitely sell The Towel but not to Murdoch. Instead, they will pick the buyer which they perceive is most likely to offer editorial independence and the highest price.

Who else is likely to join the bidding? According to the Times potential bidders for The Towel include Bloomberg L.P., the General Electric Company (NYSE: GE) or the former head of the American International Group, Inc. (NYSE: AIG), Maurice R. Greenberg. But my hunch is that a private equity firm would best suit the Bancrofts' criteria.

Given his track record of editorial intervention, Murdoch cannot satisfy the first test. So I think the Bancroft's decision to meet with him simply sets the bidding process in motion.

Since the news of this meeting leaked last night on The Towel's web site, private equity firms are no doubt sharpening their spreadsheets. With DJ up 14% -- above Murdochs' $60 a share offer -- I would guess that the final offer could go as high as $80 and that the winner will be a private equity firm.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He owns shares of AIG and GE, has consulted to News Corp.'s CEO and has no financial interest in the other securities mentioned in this post.