NEW YORK (AP) – Wall Street became increasingly skittish about Rupert Murdoch’s prospects for clinching a deal to buy Dow Jones & Co., sending the stock of The Wall Street Journal publisher down more than 5 percent Monday as a deadline arrived for the Journal’s controlling shareholders to make a decision.
Members of the Bancroft family, which has controlled Dow Jones for a century, had a 5 p.m. deadline Monday to tell the family’s lead trustee how they would vote on Murdoch’s $5 billion offer to buy the company. A Bancroft family spokesman declined to comment on the vote’s outcome late Monday.
The next expected step is for News Corp., Murdoch’s media conglomerate, to be informed of how many Bancroft family members were in favor of the offer and decide whether it has enough support to proceed.
On Monday a News Corp. spokesman said the company was “highly unlikely” to go ahead with the deal if the level of support among the Bancrofts remained at just 28 percent of the shareholder vote, which The Wall Street Journal reported was the level of commitment as of Sunday.
The News Corp. spokesman asked not to be named due to the sensitive nature of the discussions. News Corp. has said it wants sufficient support from the Bancrofts to avoid a potential messy showdown later.
The Bancrofts collectively control 64 percent of the shareholder vote of Dow Jones through a special class of stock, but only about half of them need to support the deal for it to succeed. The Bancrofts are a diverse clan and their voting interest in the company is held through a complex series of privately held trusts, making the outcome difficult to predict.
Over the past few weeks investors have been steadily pushing Dow Jones shares below the $60 price that Murdoch has offered, reflecting increasing doubts about the deal going through.
The shares took another tumble Monday after the Journal first reported that News Corp. was displeased with the level of support among the Bancrofts. The shares initially dropped as much as 9 percent but recovered some of their losses, ending the day down $2.89 or 5.3 percent at $51.56, well below Murdoch’s price.
Many of Dow Jones’ public shareholders are expected to support the deal, which represents a rich premium over the mid-$30s price Dow Jones shares had before the offer became public in early May.
The Bancroft family has been deeply divided over whether to sell to Murdoch, largely over concerns that his management style could affect the papers’ coverage.
Murdoch says any concerns about corporate meddling in the Journal’s news coverage are unwarranted. News Corp. has agreed to create a committee that would have to sign off on any decision to hire or fire top editors at the paper.
In a lengthy letter to fellow family members last week, Bancroft descendant Crawford Hill urged them to vote for a sale, saying the family hadn’t taken an active enough role in overseeing Dow Jones and was now “paying the price for our passivity over the past 25 years.”
Dow Jones’ board has tentatively approved the deal, and the final decision now rests with the Bancrofts. Besides several Bancroft family members, including Dow Jones director Christopher Bancroft, Murdoch’s bid is also being opposed by former board member Jim Ottaway Jr., whose family controls 7 percent of the shareholder vote.