Natalie Bancroft, a 27-year-old opera singer who lives in Europe and has little exposure to the worlds of journalism and commerce, is the hand-picked family representative for the Bancrofts on the board of News Corp (NYSE: NWS), according to the Wall Street Journal.
How did this happen? The family couldn't agree on someone who would take it and be acceptable to Rupert Murdoch. They missed the deadline, and Murdoch picked someone he knew didn't have a strong background to defend Dow Jones' (NYSE: DJ) interest when he gobbles it up.
I thought it was a dark day when the Bancroft family decided to sell Dow Jones to Murdoch, but this makes the situation even darker. It will be sad to watch the remaking of what is one of the world's greatest financial news empires in Murdoch's image. Murdoch's reputation for driving his newspapers toward yellow journalism so that he can sell more papers certainly will not be good for the solid reputation of the Wall Street Journal or any of Dow Jones' well-respected publications.
I was hoping the family would at least have some say about the Journal's future on the News Corp board, but this choice does not offer a strong voice for financial journalism. I still have my subscription, but I wonder how long I'll continue that once Murdoch does his thing. Will you keep your subscription?
Lita Epstein has written more than 20 books including "Trading for Dummies" and "Reading Financial Reports for Dummies."
Dow Jones & Co. (NYSE: DJ) expects to reach an agreement to sell itself to Rupert Murdoch's News Corp. (NYSE: NWS), ending a months-long soap opera that's tried the patience of media nerds like myself, according to CNBC's David Faber. No word on the final terms.
Looks like all of the chest pounding and teeth gnashing by Murdoch's many detractors, including members of the Bancroft family which owns Dow Jones, failed to stop the Australian media mogul just as I expected. The Bancrofts had no other choice. Saying "yes" to Murdoch, was much more lucrative and less potentially litigious than saying "no." There is no doubt that minority shareholders would have sued the Bancrofts for turning down Murdoch's $5 billion offer since the stock would have beeen sent into a tailspin from which it would never recover.
Worries about Murdoch are justified. You can expect the complaints about the tycoon's meddling in the Journal's editorial practices to surface in about six months to a year, perhaps sooner. It will be subtle and difficult for most readers to notice but it will happen. Though many Dow Jones journalists are cringing at the thought of working for Murdoch, they have little choice but to put up with him. Dow Jones pays well in an industry famous for paying poorly. Plus, most media companies aren't doing much hiring because of the current business conditions.
Dow Jones & Company, Inc. (NYSE: DJ)'s Wall Street Journal (a.k.a., The Towel) occupies a unique spot in the media firmament. As I pointed out earlier in the year, it changed its format and now looks to me like a Holiday Inn bath towel. Towel Talk offers a perspective on its news and views.
The soap opera within the Bancroft family continues about whether to sell The Towel to News Corp. (NYSE: NWS) -- Reuters reports that Rupert has given the Bancrofts until the end of today to decide. Meanwhile, I thought it would be interesting to imagine how the Towel would look under Rupert's control.
To that end, here are four headlines I imagine will run in a Towel landing on my driveway in the near future:
Hillary, Bin Laden conspired on false stories about poisoned Chinese pet food
China overtakes U.S. as world's largest economy
Democracy breaks out in Middle East, Bush's Iraq policy vindicated
Sources: Barack Obama revealed as leader of Al Qaeda in America
Incidentally, if Rupert does take control of The Towel, I plan to change the name of this column to Rupert's Rag. Given The Towel's stock price of $54.70 -- $5.30 below Rupert's $60 a share offer -- I think investors are as unsure as I am of the outcome.
Dow Jones & Company's (NYSE: DJ) Wall Street Journal (a.k.a., The Towel) occupies a unique spot in the media firmament. As I pointed out earlier in the year, it changed its format and now looks to me like a Holiday Inn bath towel. Towel Talk offers a perspective on its news and views.
Despite the best efforts of The New York Times to derail Rupert Murdoch's offer, it appears that News Corp. (NYSE: NWS) will end up being the only bidder for The Towel.
The Times article pointed out the many instances where Murdoch used his money to buy legislative outcomes that helped him expand his business empire. One new thing that came out of the article was that Murdoch's HarperCollins signed a $250,000 book contract with Senator Trent Lott. Lott helped pass legislation that raised the federal limit on broadcast ownership share from 35% to 39% -- enabling Murdoch to hold onto all his Fox affiliates rather than divesting some to comply with the 35% rule.
Dow Jones & Company's (NYSE: DJ) Wall Street Journal (a.k.a., The Towel) occupies a unique spot in the media firmament. As I pointed out earlier in the year, it changed its format and now looks to me like a Holiday Inn bath towel. Towel Talk offers a perspective on its news and views.
The New York Times [registration required] reports that Towel employees view the options for their new management as a choice between "slash" and "trash." By slash, they refer to the cost cutting of General Electric Co. (NYSE: GE) -- which may make participate in a bid for The Towel; whereas trash is their moniker for tabloid tyrant Rupert Murdoch.
Meanwhile there have been two interesting developments. Yesterday, The Towel's board decided it was time to grab decision-making power from the Bancroft family -- concluding that they were taking too long to make up their minds. And Brad Greenspan, the former head of MySpace parent, Intermix Media, is making a tender offer for 25% of The Towel at $60 a share -- the same price that Murdoch, who bought MySpace over Greenspan's objections, has offered.
First, the New York Times reported that the they rejected a plan crafted by their lawyers to protect The Wall Street Journal from meddling by Rupert Murdoch's News Corp (NYSE: NWS), which has made an unsolicited $5 billion offer for the media company. Reuters followed up with a story in which a Bancroft spokesman attacked the Times story as "a gross mischaracterization of the process" whatever that means.
This is more of the same nonsense. As I've argued before, the interest being shown by the Bancrofts in the Journal is really late in coming. Moreover, any committee pushed by the Bancrofts designed to "protect" the editorial integrity of the Journal is doomed to fail.
First of all, this system will create a bureaucracy that will lead to political infighting whose viciousness will be breathtaking to behold. It will be a disaster. Decisions will be made at glacial speed, something which Dow Jones can't afford in today's fast-paced digital age.
When I read Rupert Murdoch describe Monday's meeting with the Bancroft family that controls Dow Jones & Co. (NYSE: DJ) about his $5 billion offer for the company as "constructive," I immediately thought of North Korea. Every few months, some diplomat describes talks with the secretive communist country as "constructive." Then as now, I wonder what that actually means.
Does the News Corp (NYSE: NWS) CEO consider it a good sign that the Bancrofts politely listened to his promises not to interfere with the news-gathering process at the Wall Street Journal? I wonder if Murdoch sounds more credible the more times he makes the same point over and over again.
Murdoch is balking at the demands of the Bancrofts that would give the independent board set up to protect the Journal the power to hire and fire top editors, according to The New York Times, which said the meeting lasted more than five hours. Some sort of compromise will be worked out.
Though I share their skepticism of Murdoch's promises of non-interference, I do not have much sympathy for the Bancrofts.
The family watched passively as incompetent managers drove Dow Jones into the ground. The company's present CEO, Richard Zannino, is doing a good job with the bad cards he's been dealt, no thanks to the Bancrofts who supposedly are so concerned about protecting their beloved Journal from the evil Aussie media mogul. This interest in their family legacy is too little too late.
In a spectacular waste of money, the main union representing Dow Jones workers said late yesterday that it's hiring advisers to explore alternatives to the company selling itself to News Corp. As I've argued before, Murdoch's lust for power will trump any buyer's lust for profits.
Like in most other things, Murdoch will get what he wants. It's time to face reality.
The Bancrofts, the family that controls Dow Jones & Co. (NYSE: DJ), may have to take News Corp (NYSE: NWS) CEO Rupert Murdoch at his word that he won't interfere with the editorial policies of the Wall Street Journal.
Murdoch has meddled for years in the editorial affairs of his properties, firing editors who don't follow the company line, which makes people, including top reporters at the paper, suspect he would do the same thing at the Journal. It's a well-justified fear.
But what people seem to forget is that the Australian media mogul knows that everyone knows his reputation. If he buys the paper, he isn't going to order up a raft of stories promoting his personal and political agenda. Any manipulation of the news will be done quietly and behind the scenes. At his age Murdoch doesn't want to go down in history as the person who ruined a great newspaper.
Moreover, it's against his financial interest to allow the Journal's reputation to decline. Advertisers don't want their names associated with publications that are not credible. News Corp shareholders want there to be smooth sailing as well, so that the merger integration process doesn't become too big of a distraction for Murdoch.
Any system designed to protect the Journal's editorial integrity is bound to have loopholes that Murdoch will exploit. The media tycoon told the Journal that he wouldn't give the Bancrofts any editorial control over the new company. That, of course, is his right to do as the owner of the company.
The Bancrofts, though, are in a pickle. Turning down Murdoch's offer would open themselves up to lawsuits since the $5 billion price tag is so insanely high that no company in their right mind would try to match it. The family's desire to protect the paper is admirable but ultimately is beside the point.
Big money manager T Rowe Price thinks that the controlling shareholders of Dow Jones & Co. (NYSE:DJ) should take the money that News Corp (NYSE:NWS) has offered and call it a day.
In an interview with the Financial Times, Brian Rogers, the chairman and chief investment officer, said that the odds that Dow Jones management could get the stock price to $60 on their own was unlikely. T Rowe is the largest shareholder in DJ outside the founding family.
Large shareholders in the financial information company have been notably quiet about the offer. But, with a large shareholding speaking up, that could change. Earlier this year, a group of institutions, lead by Morgan Stanley (NYSE:MS) withheld proxies at New York Times Co. (NYSE:NYT) annual meeting, protesting that the controlling family was not doing anything to improve the share price.
T Rowe, by speaking with the Financial Times, gave its story to a direct competitor to the Dow Jones flagship Wall Street Journal. Whether there is any special message in that may never be known.
What is known is that Dow Jones has one, very large, unhappy shareholder.
Dow Jones & Company's (NYSE: DJ) Wall Street Journal (a.k.a., The Towel) occupies a unique spot in the media firmament. As I pointed out earlier in the year, it changed its format and now looks to me like a Holiday Inn bath towel. Towel Talk offers a perspective on its news and views.
Earlier this month, 52% of The Towel's controlling shareholders, an unknown faction of the Bancrofts, decided not to act on News Corp's (NYSE: NWS) $5 billion bid. But according to today's Towel [subscription], some of the Bancrofts are meeting to discuss what to do.
The Bancrofts own 24.7% of the Class B shares, which have 10 times the voting power of the Class A. This gives the Bancrofts 64% of The Towel's voting power. And with Murdoch's offer representing a 67% premium to where the stock had been trading, some Bancrofts are getting nervous that Murdoch will go away -- leaving a nice chunk of change on the table.
The powerful head of News Corp (NYSE: NWS.A), Rupert Murdoch, has been doggedly pursuingThe Wall Street Journal these past few weeks, but the Journal's controlling family, the Bancrofts, keep rebuffing his advances (that come in the form of a $5 billion takeover bid). In a letter Murdoch sent them last weekend, apparently one of the many assurances he made to the family was the vow to bolster The Wall Street Journal's presence in Europe. This would require bringing down the market share leader, the Financial Times, owned by Pearson PLC (ADR) (NYSE: PSO).
This UK-based education and information company publishes textbooks throughout the world, as well as books through the respected publishing imprint Penguin Group, among other imprints, and publishes the Financial Times, along with other business newspapers, magazines, and specialist information.
Rumor has it that the impressive and highly respected head of Pearson, Marjorie Scardino, has always insisted that the Financial Times isn't for sale. But if Murdoch indeed buys the WSJ, she might be tempted to sell the FT after all. When Murdoch promises to beat the competition, he often succeeds. The share price of Pearson has wavered on fears of what will happen to the Financial Times should the WSJ change hands.
Rupert Murdoch has upped the ante in his effort to buy Dow Jones & Co. (NYSE: DJ), offering the Bancroft family that controls the publisher a seat on the News Corp. (NYSE: NWS) board..
The move is a clever offer, given that the family has refused to meet with him after he offered $60 a share for the financial publisher.
But, the gesture is also meaningless. Murdoch controls his board much as the Bancrofts control theirs.
Going to News Corp board meeting is good for the directors' fee and a free lunch.The offer does make it apparent that Murdoch is still pushing hard to get the publisher of The Wall Street Journal.
The pressure on the board at Dow Jones is already extremely high. The stock has not traded above $60 since 2001
.Douglas A. McIntyre is a partner in 24/7 Wall Street
Rupert Murdoch has almost certainly lost in his bid to buy Dow Jones & Co. (NYSE :DJ) and merge the Wall Street Journal with the rest of the News Corp. (NYSE: NWS) media empire.
The Ottaway family, which sold its newspaper chain to Journal Dow Jones in 1970 and is still a major shareholder, has come out against the deal. This is the final nail in the coffin since the Ottaways have a seat on the board of the company and own about over 6% of Dow Jones Class B shares.
The Ottaways have a sort of moral authority at Dow Jones. They have been involved with the firm for over 35 years. They entrusted their papers to the company's philosophy of editorial excellence. They don't look for the easy buck. News franchises are a trust, given to media companies in large part by the public.
According to Reuters, one of the senior members of the Ottaways went after Rupert Murdoch directly: "he has for a long time expressed his personal, political and business biases through his newspapers and television channels."
Murdoch made a fatal mistake by not promising to keep Dow Jones properties such as The Journal completely editorially independent. It should have been the first thing out of his mouth.
The Wall Street Journaltook a look at what its staffers might expect under a Murdoch-controlled Dow Jones & Co. (NYSE: DJ). The lead in the piece sums it up: "Some owners of newspapers seldom, if ever, speak to their editors. Rupert Murdoch is not one of them." Murdoch regularly calls News Corp's (NYSE: NWS) newspapers to dole out tips on stories or complain about the paper's coverage.
While Murdoch downplays his history of meddling, saying that he is impressed with how the Bancroft family has run the paper with a hands-off approach ("we are the sort of people with the same traditions that I think will prove great guardians for this paper."), you have to wonder: What else was he going to say as he tries to get a deal done?
It appears that the Bancroft family may have to choose between its fiduciary duty to shareholders and its moral obligation to journalistic independence. Interesting, both of these are mentioned in the company's Principles of Corporate Governance.
If someone offers you $1 million in cash for your house that's only worth $450,000, would you take the money? Of course you would. That's the same situation that the Bancroft family was in yesterday with Rupert Murdoch's unsolicited $5 billion offer for Dow Jones & Co. (NYSE: DJ).
The Bancrofts, descendants of the founders of the New York-based publisher, turned Murdoch's incredibly generous offer down, proving that just because you're really rich it doesn't make you smart. The Wall Street Journal's Heard on the Street column points out that Murdoch's bid valued Dow Jones at a multiple of 40 times 2007 earnings. Google Inc. (NASDAQ: GOOG) currently trades at a multiple of 31.
That's right, the Australian-born tycoon gave Dow Jones a valuation BETTER than Google. He offered a 65% premium over Monday's closing price, which as the column points out, surpasses what the company could have gotten from private equity players.
An alliance between News Corp. (NYSE: NWS) and Dow Jones makes sense strategically. The Wall Street Journal would be a good fit alongside other Murdoch properties including Fox News Channel, The New York Post and the yet too be launched Fox Business Channel.
Though there's speculation about other potential buyers, I doubt that any would be willing to pay the price for Dow Jones that Murdoch offered. Murdoch is an especially motivated buyer, having coveted the Journal for years. This deal is more about gaining clout than creating shareholder value.
The Bancrofts seemed to be letting their pride in owning one of the best newspapers in America get in the way of common sense. They better get while the getting is good. Otherwise, they are going to be stuck in the same rut they've been in for years.
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