Murdoch’s Bid Faces Resistance

NEW YORK For years, News Corp. chairman and CEO Rupert Murdoch has coveted The Wall Street Journal, only to be rebuffed by the Bancroft family that controls 62 percent of WSJ parent Dow Jones & Co.

On Tuesday, Murdoch was apparently rejected again when a representative signaled that family members holding a slight majority of Dow Jones stock would vote against the proposed $5 billion takeover offer by News Corp.

Many on Wall Street initially suggested that the Bancrofts wouldn’t, or shouldn’t, refuse. News Corp. offered $60 a share in cash for all outstanding stock in Dow Jones & Co. The stock closed at $36.33 on Monday.

Dow Jones shares finished Tuesday up 54.7 percent at $56.20 after going as high as $58.47 in intraday trading, well above the stock’s previous 52-week high of $40.08. However, in news after the market closed, Dow Jones said that family members who control a bit more than 50 percent of the vote plan to reject the News Corp. bid. Dow Jones added that its board “would factor this information into its evaluation.”

A News Corp. representative late in the day said the company’s offer still stands.

Murdoch’s plans for Dow Jones seem to include making more money from running the WSJ with an eye toward boosting its online audience and revenue, the News Corp. boss and sources signaled.

Word of the News Corp. offer seeped out just ahead of the conglomerate’s annual retreat for about 60 top executives in Monterey, Calif., which according to a source would focus on online opportunities for the company’s newspapers, its Fox News Channel and its TV stations, given that management sees growth in news Web sites.

The retreat, scheduled to run from Thursday through Sunday, will feature guest speakers such as eBay president and CEO Meg Whitman.

News Corp. confirmed the Dow Jones takeover offer, emphasizing that it was a friendly overture. Initially, Dow Jones said its board would evaluate it.

Some Wall Street observers and CNBC, which has a partnership with Dow Jones, said a rejection by the Bancroft family likely would be taken as a signal that it would never sell and could therefore significantly drag the stock down.

Given recent interest by billionaires in big-name newspapers, such as David Geffen’s eyeing the Los Angeles Times and Jack Welch’s in The Boston Globe, observers wondered if another billionaire could try to trump Murdoch, while others said the premium offered by News Corp. already was significant.

“This is such a credible offer” with “a huge premium,” said Benchmark Co. analyst Edward Atorino, who covers newspaper stocks. “If they say no, they better have some pretty good reasons.”

Appearing Tuesday on Your World With Neil Cavuto on the Fox News Channel, Murdoch called his company’s bid “a big, generous offer,” adding that he expects to have a meeting with Dow Jones reps within the next two or three weeks.

Murdoch also praised the Bancroft family for their stewardship of the WSJ, saying it “has done a fantastic job as the guardians of this newspaper and its editorial traditions.” News Corp., which he said is also a family company, respects that, he added.

As far as his plans for the paper go, Murdoch said, “We would hope with more resources (and) expanded coverage of many things that we would see that (sluggish) circulation increasing.” He added that he would like to boost the paper’s Web audience to potentially “millions of people around the world,” saying people are willing to pay for financial news online.

Murdoch already owns a stable of newspapers in the U.S., the U.K. and Australia.

News Corp. voting shares fell 4.2 percent on Tuesday to $22.99.

Bear Stearns analyst Spencer Wang said News Corp. investors might be spooked by the proposed acquisition as it would add slower-growth newspaper assets to the conglomerate’s empire and because the capital outlay could slow its aggressive stock buybacks.

“Investors could put News Corp. in the penalty box,” he warned.

—Alex Woodson contributed to this report.