Rupert Murdoch’s bid for Dow Jones, once a sure thing, then “too close to call,” is now “highly unlikely” unless the Bancroft family increases its support of the deal by 5 p.m. today, the Wall Street Journal reports.
At the moment, 28% of Dow Jones’ voting power supports the deal, although it is unclear what percentage of Bancrofts voted affirmatively; 30% of the family needs to support Murdoch for his $5bn bid to go through. If this is not met, “News Corp likely wouldn’t take the deal to a full Dow Jones shareholder vote.”
After all the mud-slinging and Rupe’s cryptic commentary, this summer’s saga could come to a close tonight, in which case I will have no idea what to write about.
News Corp. Says It’s ‘Highly Unlikely’ To Buy Dow Jones at Current Count [Wall Street Journal]
Bancroft
Two days after the contentious Bancroft family powwow in Boston, the Denver branch of the family announced it will vote against News Corp’s $5bn bid for Dow Jones, insisting that Rupert Murdoch raise his offer by $120-240mn. The Denver trust controls 9.1% of the Bancroft’s voting power, but has been watched closely by News Corp and Dow Jones management. “The outcome has been seen as too close to call, although the Denver trust’s decision increases doubts about the deal’s prospects,” The Wall Street Journal reports.
The Colorado Bancrofts want a 10-20% premium on compensation for super-voting B class shareholders (The Bancrofts) although News Corp spokespeople insist that the Murdoch will not raise the bid and that a two tiered compensation is not tenable.
Key Bancroft Family Trust to Vote Against News Corp. Bid for Dow Jones [Wall Street Journal]
A Bancroft wrangle over NewsCorp’s bid for Dow Jones ended in stalemate yesterday after emotional harangues from opposing factions, the Wall Street Journal reports. The meeting, in the Boston Hilton was so grueling that, “after four hours of discussion, family members were so hungry that they made do with a tray of stale danishes.”
Interviews with more than a dozen family members, outside advisers, lawyers and others involved in the process suggest that the outcome remains too close to call. What has seemed to many analysts like a logical move — accepting a $60-a-share bid for a company whose shares previously had been trading in the mid-30s — is still in question amid the deep emotions the bid has stirred. Participants said more doubts about a News Corp. deal were apparent at the end of the six-hour session than at the beginning.
On several occasions Bancrofts “held back tears” as they extolled the merits of an independent editorial board. One prominent Rupe resister, Jane Cox MacElree, seemed even to make the distressing “Daniel-Pearle-would-have-wanted-it-this-way” argument. Another opposing force claimed that the company was worth more than Murdoch’s offer of $60-a-share and that the family shouldn’t accept anything below $66.
Although only 30% of the Bancrofts’ voting power must endorse Murdoch’s proposal for it to go through, investors are becoming increasingly unsure that the deal is a sure thing, Dow stock is currently trading at $54.01, down from as high as $61.20 in June.
It looks like the interminable saga will continue for now, maybe even into August.
Relative Uncertainty [Wall Street Journal]
The sentiments of the commentariat have decisively turned against the family that controls Dow Jones, reports Rachel Sklar at the Huffington Post. Although the Bancroft family’s hesitation to sell to Rupert Murdoch’s News Corp is often dressed up as a concern for the editorial integrity of the Wall Street Journal, it’s also been described by a source familiar with the family’s thinking as a form of status anxiety. Controlling the company that owns the Wall Street journal has conveyed heightened prestige on the family, a prestige they are being asked to surrender in exchange for Murdoch coin (and probably some News Corp stock).
“Without the paper, they are simply another rich family from Boston,” the source explained.
Sklar’s reporting shows that the worst fears of a loss of prestige seem to becoming reality. Sklar quotes from various media commentators who more or less accuse the Bancrofts of selling out.
“The various deals to retain editorial control through promises and pledges, boards of graybeards and watchdog committees seem pathetic, really. It’s the roilings of a genteel poor family needing to sell its beloved estate to the parvenus* but not wanting to allow the unwashed to decorate their homestead… If you’re so outraged by Murdoch, then don’t sell,” Matt Cooper has written.
New York media maven Tina Brown says: “The fact is, they’re cashing out, and they should just get on with it if that’s what they’re going to do.”
Others seem even more dissatisfied with the Bancroft family, comparing it unfavorably with the Corleone family of the Godfather movies.
Tina Brown on the Bancroft Family: “Why Don’t They Just Cash Their Check And Shut Up” [Huffington Post]
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Bancroft
Burkle and Greenspan Meet With Dow Jones: Murdoch Meter Doesn’t Flinch
By Dealbreaker
Although a NewsCorp deal will likely may be announced this week, Ron Burkle and Brad Greenspan, two renegade investors no one takes seriously had a meeting with the Dow Jones board yesterday. The pair, who did not present an offer and have few, if any commitments from other investors, want to “buy out only those members of the Bancroft family who wanted to sell,” the New York Times Reports.
The primary Dow Jones union recruited Burkle, who owns the private equity firm Yucaipa Companies, to partner with Greenspan and block Rupert Murdoch’s bid in what seems to be another effort to protect the journal’s editorial independence. The New York Observer details the lunch between Greenspan and a union leader in which the plans were discussed.
“I think it’s clear the family does not want to sell to Rupert Murdoch. If they did, they would have taken the $5 billion a long time ago. We would much rather have the family continue its stewardship of this company. I believe that working with Burkle and a number of other people, we have alternatives, if the family wants an alternative,” union leader Steve Yount tells the Observer.
But does this make any sense? Does the addition of Burkle make Greenspan’s half-baked bid less crazy or twice as crazy? We would side with the latter, but don’t take our word for it. Take the word of the former chief executive of Dow Jones, Peter Kann, who the Journal describes as “outspoken in his support for the independence of Dow Jones”
“If the family is going to sell I see no point in pursuing industrial conglomerates, Internet entrepreneurs, supermarket magnates and real-estate developers. None know anything at all about journalism. As to Mr. Murdoch, at least he loves newspapers, presumably would invest in the WSJ and Dow Jones, and would seem to have little incentive to tarnish a trophy he has coveted for so long,” Kahn says in today’s Journal story on the item.
Also, see Gary Weiss for what happens when amateur investors buy newspapers. A serious question for Dow Jones employees who may be invited to join some sort of leveraged Employee Stock Ownership Plan rival buyout bid is whether they want to spend part of their paycheck buying the company from the bondholders for the next decade or so. Because that’s the best-case proposal from a Burkle-Greenspan partnership.
Shares of Dow Jones traded slightly lower today, bringing our technical arbitrage measurement down to 90%. But we’re exercising our own editorial independence here and refusing to move the meter. It remains unchanged at 95%.
Burkle and Greenspan Gather Journal Kiddies for ESOP Fable [New York Observer]
Dow Jones Hears Alternative Proposals [Wall Street Journal]
2 Investors Discuss Partial Purchase With Dow Jones Board [New York Times]
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Who Are You Going To Believe? A Bunch of People Who Are In The Hamptons or A Guy Who’s Drunk Right Now?
By Bess LevinThe co-author of the fabricated tale from Friday about News Corp. having bought Dow Jones is sticking by his story. Andrew Neil, who wrote the article with James Forsyt, and is “credible” because (in light of?) he edited Murdoch’s Sunday Times of London for 11 years, took issue with the fact that Dow Jones representatives called him out for lying. His take? “[The protestations] are rubbish…They’re all swearing at us because, I assume, they’re all out in the Hamptons.” Mr. Neil, the Times reports, was drinking at the Ritz at the time.
Earlier: Rupert Murdoch Does Not Own Dow Jones…Yet!
Interminable Dow Jones Saga Possibly Over?
Expert on Murdoch Insisted the Dow Jones Deal Was Done [NYT]
It’s only been reported in one British paper (so let’s remain skeptical, because those publications have a tendency to lie) but according to The Business Rupert Murdoch has “succeed with his $5 billion bid for Dow Jones.”
Allegedly, negotiations have been completed (less, “we want more money,” more “editorial independence, don’t make this the Post, you can only hire and fire the top editors and publishers, etc”), the board says the deal will be accepted by the Bancrofts over the next few days and a formal announcement is expected net week. News Corp will apparently pay $60/share, a 67% premium on the $36/share price in April.
Like we said, no one else has this story, though one of the writers, Andrew Neil, is a former “Murdoch lieutenant,” so perhaps that adds a miniscule amount of plausibility. According to CNBC’s David Faber no deal has been reached, despite news to the contrary from “some rag in a far away place.” Anyone else care to comment?
EXCLUSIVE: Rupert Murdoch buys Dow Jones, owners of the Wall Street Journal [The Business via Gawker]
‘Murdoch buys Dow Jones’ report [The Guardian]
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Bancroft
(Update) Breaking News: Rupert Murdoch and Dow Jones Agree On WSJ Editorial Structure
By Dealbreaker
News Corp. and Dow Jones have agreed on a plan to protect the editorial independence of the Wall Street Journal, Reuters is reporting. The Bancroft family, which controls 64% of Dow Jones shares, is currently being briefed on the agreement and has yet to approve.
The Financial Times reported last night that a Dow-Murdoch deal was close at hand after contentious bargaining by both sides yesterday and over the weekend.
The content of the agreement has not been released, but will likely fall somewhere between Murdoch’s arrangement with the Times of London and the initial proposal from Dow Jones that sought to create an autonomous, Bancroft-appointed board to hire the Journal’s publisher, executive editors and wire chiefs.
If this agreement is accepted by the Bancrofts, the talks will likely move to pricing. Currently, Murdoch is offering $60 per share ($5bn) with conflicting reports as to his willingness to increase the offer. If NewsCorp. and the Bancrofts can agree, it is likely that a deal will not be announced until at least next week.
Dow Jones, News Corp. Agree on Editorial Structure: Reuters [Reuters via CNBC]
Murdoch makes progress on WSJ [Financial Times]
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Bancroft
Pearson Mulls Offer For Dow Jones
But The Journal’s Newsroom Isn’t Crazy About This So-Called ‘White Knight’
By John Carney
Although Pearson PLC is being called a possible ‘white knight’ bidder for Dow Jones & Co, many in the newsroom of the Wall Street Journal are not enthusiastic about being bought by the publisher of the Financial Times. Reporters at the Wall Street Journal, many of whom regard the Financial Times as an inferior paper with low-quality “Brit journo” standards of fact-checking and sourcing, are worried that ownership by Pearson will deteriorate journalistic standards at the paper, a source at the Journal told DealBreaker.
“I took a straw poll around the office. A lot of people are worried about what this will do to the Journal’s reporting,” the source said.
Word began to circulate late on Friday afternoon that General Electric and Financial Times publisher Pearson were “in talks” about a potential joint offer for Dow Jones & Co. Over the weekend, the story ran in the Financial Times, the Wall Street Journal and the New York Times. A decision on whether or not to make a bid is expected to come within days.
A news of a possible bid from Pearson and General Electric may have the ironic effect of making the bid from News Corp more attractive. While News Corp chairman Rupert Murdoch has promised to spend more on the Wall Street Journal, expand its international presence and has announced plans to launch a new cable news network for financial news that may give Journal reporters more outlets for their reporting, a bid from Pearson and General Electric would likely involve mostly cost-cutting synergies.
[After the jump, the not-exactly-surprising news that Journal reporters aren't totally psyched about working for the publishers of the Financial Times.]
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Bancroft
Bancrofts Still Trying To Think Up Ways To Control The WSJ After Selling It
By John CarneyThe Bancroft family has reportedly rejected a proposal prepared by its lawyers. The proposal was intended to protect the editorial independence of the Wall Street Journal and it was widely expected that it would be submitted to Rupert Murdoch this week. After debating the proposal, however, the family has apparently decided that it did not offer adequate protection for the paper.
To grasp the most striking thing about the rejection of the proposal you have to know something about the folks who prepared it. One of the law firms representing the family is Wachtell, Lipton, Rosen & Katz (they are also represented by Boston law firm Hemenway & Barnes), which is legendary for its defense of corporate boards and management against unsolicited takeover offers. Name plate lawyer Marty Lipton is often credited with inventing the so-called ‘poison pill’—a controversial tactic that prevents hostile takeovers by creating new shares of stock to dilute the ownership of the would-be acquirer. If Lipton—or the top-of-the-class, Ivy-league trained lawyers who work for him—has drawn up a plan to defend your interest in a company and you conclude it’s too weak, you might not quite be operating according to a map that has a lot of overlap with a territory called reality.
[More on the Bancroft Family follies after the jump]
It looks like the Bancroft family blinked first, issuing a proposal on editorial independence to NewsCorp today. Murdoch’s not likely to agreed to the proposal, however. Even the Bancroft’s don’t sound too hopeful, noting that “This is not a done deal.”
Reporting on itself, the Journal said that negotiations between Murdoch and the Bancrofts would only continue if family is convinced that it has safeguarded. But it’s safe to say that Murdoch acquisition ambitions moved one step closer to reality with this move by the Bancrofts. One rule of negotiating deals it that the side that comes back to the table first certainly isn’t looking to walk away altogether.
Also, last week Dow Jones granted 135 managers eligibility for severance pay in the event of new ownership. As part of this move, Dow Jones CEO Richard Zannino’s current golden parachute, which is worth $19.5 million would increase by 20%-30%. Nothing like promising management a payday to get them behind the deal.
Both these events would have moved the needle on the Murdoch meter if not for the ominous sign that arose yesterday: Jim Cramer started giving unsolicited advice to Murdoch. This clearly spells trouble. Any progress from the Bancroft move and the new golden parachutes was completely erased by the entrance of the first citizen of Cramerica.
[This report filed by Senior Rupert Murdoch correspondent Peter Ribic.]
Bancrofts Set Revised Safeguard Proposals [Wall Street Journal]
Dow Jones Expands Its Golden Parachute [Slate.com]
Rupert’s Eleven-Year Hunt [New York Magazine]
