NEW YORK (AP) – Media baron Rupert Murdoch cleared another hurdle on his way to owning The Wall Street Journal late Tuesday when the board of Dow Jones & Co., the Journal’s parent company, said it would sign off on a sale to Murdoch’s News Corp. for $5 billion.
Dow Jones said in a statement that its board was prepared to recommend approval of News Corp.’s proposal to acquire Dow Jones for $60 per share in cash, the price Murdoch has offered.
However the deal has yet to overcome its largest obstacle – approval by the mercurial Bancroft family, Dow Jones’ controlling shareholders. The family initially rebuffed Murdoch’s offer in early May, only to reconsider later.
The deal will next be presented to family members, most likely on Monday. The family, which has some three dozen adult members, has been deeply divided over whether to sell to Murdoch. The Bancroft family has controlled the storied newspaper publisher for more than a century.
and views it as a public trust. They insisted on, and received, a commitment to create an oversight board which must approve the hiring or firing of top editors at the Journal.
Dow Jones said in its statement that News Corp. was prepared to move ahead with a deal provided that a “satisfactory” level of votes controlled by the Bancrofts is committed to endorsing the deal “promptly,” but News Corp. didn’t indicate what level of voting it would consider sufficient, and a News Corp. spokesman declined to elaborate.
Even after the agreement on editorial independence was reached, signs of rifts in the Bancrofts’ ranks continued to emerge. Two Bancroft family members who are also Dow Jones directors have been seeking to thwart Murdoch’s efforts, the Journal reported, but neither appeared close to succeeding.
Christopher Bancroft has reached out to investors to buy enough shares of Dow Jones to block a sale, and Leslie Hill has been trying to find other buyers, according to the Journal. Bancroft didn’t return a call for comment, and no phone number was listed for Hill.
The Journal reported on its Web site that Bancroft left Tuesday night’s board meeting early and that Hill abstained from the vote, as did another board member, German publishing executive Dieter von Holtzbrinck. A Dow Jones spokeswoman declined to comment.
Together the family controls 64 percent of the shareholder vote, but so many different family members and trusts are involved that it was difficult to predict how the family dynamics would play out.
News Corp. issued a statement late Tuesday saying it was “grateful” to Dow Jones’ board for its “strong vote of support” in favor of its offer.
Last week, Dow Jones negotiators met with supermarket billionaire Ron Burkle and Web entrepreneur Brad Greenspan to explore a possible counteroffer to Murdoch, but so far no concrete offer has emerged.
Earlier, General Electric Co. and Pearson PLC abandoned exploratory talks to combine GE’s CNBC channel with Dow Jones and Pearson’s Financial Times newspaper. Many on Wall Street believe Murdoch’s price of $5 billion is too high to be beat.
Murdoch has said concerns he would meddle with the Journal’s coverage are unwarranted. He has been mainly silent about how the process is going but expressed frustration about the drawn-out negotiations last week, telling The Associated Press at a conference for media CEOs in Idaho that the Bancrofts “keep changing their minds.”
A union representing Journal reporters and other Dow Jones employees has objected to Murdoch’s bid, saying he would downgrade news coverage and interfere with newsroom independence for his own business interests.
Jim Ottaway Jr., a former Dow Jones board member, has also been a vocal opponent to the deal, saying he’s concerned about the Journal’s newsroom remaining independent. Ottaway said in an interview Tuesday that he and his brother David, who together control about 7 percent of Dow Jones’ vote, would oppose Murdoch.
“If the Bancroft family decides to sell Dow Jones, it should find a better buyer and a better home for one of the great journalistic institutions of our society,” Ottaway said.
Murdoch has long wanted to own the Journal, along with its clout on Wall Street and a history of outstanding journalism. Murdoch has said he would invest in the Journal’s online and overseas operations, and help build a business-themed cable news channel that would rival General Electric’s highly profitable CNBC network.
Even with the fate of Dow Jones undecided, News Corp. set a date last week for the new business channel to launch in October, apparently regardless of whether a sale of Dow Jones goes through.
Control of Dow Jones has rested for more than a century with the Bancroft family, the descendants of Clarence Barron, a Dow Jones correspondent who bought control of the company in 1902.
Over the years, family ties to Dow Jones have become more remote, and no Bancroft is involved in the day-to-day operations of the company.
The Bancrofts own one-quarter of Dow Jones but control 64 percent of the company’s shareholder vote through a special class of shares that have ten votes each versus one vote for every publicly held share.
Murdoch resisted pressure from Dow Jones to raise his initial $60 a share offer, which already represented a premium of about 65 percent over the mid-$30s level that Dow Jones stock was trading at before the proposal became public in early May.
Dow Jones shares had been trading close to $60 in late June, indicating that investors were confident a deal would likely go through at that price, but the shares have been slipping steadily since the July Fourth holiday, falling 50 cents Tuesday to close at $56.45, suggesting that that confidence is starting to wane.
Besides the Journal, Dow Jones also owns Dow Jones Newswires, the Factiva news database, Barron’s, a group of community newspapers and several well-known stock market indicators including the Dow Jones industrial average.
News Corp. owns the Fox broadcast network, Fox News Channel, newspapers in the United Kingdom, Murdoch’s native Australia and the New York Post, the Twentieth Century Fox movie and TV studio and MySpace, the online social networking site.
Despite its clout in the business world, Dow Jones remains a relatively small player among media companies and many have wondered whether it can remain independent.
Its electronic financial news service Dow Jones Newswires faces even tougher competition now that two of its main competitors, Reuters Group PLC and Thomson Corp., have agreed to combine. The first reports of that deal emerged just days after the Bancrofts initially turned down Murdoch’s approach.