Clinching ownership of The Wall Street Journal would mark a huge coup for the 76-year old media mogul, landing Murdoch the most authoritative voice in the world of business journalism as well as key know-how and personnel as News Corp. gears up to launch a business-oriented cable news channel to rival CNBC, which first broke news of the proposal earlier Tuesday.
The offer of $60 per share represents a huge premium of about 65 percent over Dow Jones' closing share price on Monday. However, Dow Jones said late Tuesday that the Bancroft family, the company's controlling shareholders, said they would vote shares representing just over 50 percent of the company's voting power against the deal.
That leaves Murdoch with the option of making a sweeter offer, or it could open the door to other potential bidders. When informed of the Bancrofts' opposition to his proposal during a live interview with Neil Cavuto on Fox News Channel, which is owned by News Corp., Murdoch said he hoped they would think about the offer, and that his company would be "great guardians" of the storied newspaper. "There's plenty of time," Murdoch said.
The union representing Dow Jones employees, the Independent Association of Publishers' Employees, was harshly critical of the prospect of being owned by Murdoch and issued a statement saying that the bid was opposed by the staff "from top to bottom."
"Mr. Murdoch has shown a willingness to crush quality and independence, and there is no reason to think he would handle Dow Jones or the Journal any differently," the union said.
"Despite our differences of opinion with current management, we strongly encourage the Bancrofts to continue to stand up for the institution's independence, and to walk away from this offer." Dow Jones' shares shot up $19.87, or 54.7 percent, to close at $56.20 in very heavy volume on the New York Stock Exchange after reaching as high as $58.47. They had traded in a 52-week range of $32.16 to $40.08 before Tuesday's news. News Corp. shares fell $1.01, or 4.2 percent, to $22.99. Like several other newspaper owners, Dow Jones is controlled by a family through a special class of stock. But unlike the Grahams at The Washington Post Co. or the Sulzbergers at the New York Times Co., the Bancrofts do not have an active hand in running the company. The company raised the ire of shareholder advocates two years ago by making changes to its rules that would allow the Bancroft family to maintain voting control even if they liquidate part of their holdings. According to Dow Jones' most recent proxy statement, the family owns 24.7 of the economic interest in the company and controls 64.2 percent of the shareholder vote. News Corp.'s main businesses are now in television and entertainment - including the Fox News Channel, the Fox broadcast network and the Twentieth Century Fox movie studio - but Murdoch, who is now 76, got his start in newspapers and still owns many of them in England and Australia, in addition to the New York Post. Murdoch has long been know to have an interest in owning Dow Jones, although he said in a public interview in February that he had been "cooling" on the idea and doubted that the Bancroft family would sell. However, he also said at the time that the Journal had a "wonderful brand" and could be doing more to go up against The New York Times. In his interview Tuesday on Fox News Channel, Murdoch said he thought the Journal would be better off as part of a larger media company and could do more to increase its circulation and presence online. Murdoch made a name for himself as a tough competitor in the newspaper world and recently ramped up the circulation of the gossip-heavy New York Post with a 25-cent cover price. The Post, which has lost tens of millions of dollars a year, raised its price to 50 cents Monday. Like other newspaper publishers, Dow Jones' shares have been beaten down over the past few years amid sluggish advertising and rapidly changing media consumption habits as more readers and advertising dollars move to the Internet. The offer from Murdoch comes during an unprecedented level of acquisition activity in the industry. Earlier this month, Tribune Co. agreed to go private in an $8 billion deal led by real estate investor Sam Zell, and last year, McClatchy Co. acquired what was then the second-largest newspaper publisher in the country, Knight Ridder Inc., following a shareholder revolt. At the same time, the New York Times Co. is facing investor unrest over its own sluggish financial performance. Last week, shareholders withheld 42 percent of their votes for directors, a public rebuke to the Sulzberger family, which controls the company. In addition to The Wall Street Journal, Dow Jones also publishes Dow Jones Newswires, Barron's, several leading market indicators including the Dow Jones industrial average and a group of community newspapers. News Corp. also owns the popular social networking site MySpace and satellite broadcasters in Europe and Asia. (AP) AP Business Writer Jeremy Herron contributed to this report. AP-CS-05-01-07 1840EDT