Dow Jones & Company, Inc. (NYSE: DJ)'s Wall Street Journal (a.k.a., Rupert's Rag, 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. And since News Corp (NYSE: NWS) has finally won over enough Bancrofts to take control, I have officially changed this column's name from Towel Talk to Rupert's Rag, which will continue to offer a perspective on its news and views.
Slate suggests that Rupert Murdoch was forced to pay 34% more than the typical premium for control of his Rag because its sellers found his brand of management distasteful.
Slate's research indicated that the typical premium that an acquirer needs to pay over a target's stock market value ranges between 20% and 24%. Since Dow Jones traded for $36 a share prior to Murdoch's offer, that equates to a purchase price of $44.64. But Murdoch paid $60 -- a 34% premium above that level to win the deal.
I suppose there are other possible explanations for why Murdoch paid 34% more. Maybe he thought this price would deter other bidders. Maybe he just wanted the world to know how much he wanted to own the company. Or maybe Slate is right -- Murdoch is a jerk. What do you think?
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 has no financial interest in Dow Jones or News Corp.
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