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]

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]

Off to a slow start here this morning because of the rain in New York City. We had to wait for our interwebs to dry out. (Just like Alphaville, the deal blog at Financial Times, which has reportedly had trouble due to the flooding in England. Unless that’s just Brit-speak for, uhm, one too many pints on Sunday night.)

But it’s back to business now. And by “business” we mean, of course, the saga of Rupert Murdoch, the Bancroft family and the Wall Street Journal.

One of the things we’re sure has been absolutely frustrating to anyone who has been following the endless tape of this story has been the complete lack of information about which members of the Bancroft family and its representatives control exactly which shares and which percentage of the votes. It was only at the middle of last week that we learned that Michael Elefante, the partner at the Boston law firm Hemenway & Barnes who is a trustee for two of the largest trusts holding shares for the family, can deliver a little less than half of the family’s 64% voting stake. Let’s call that 30% of the total voting power of the company.

Today the New York Times reports that the leader of the opposition to Murdoch within the family, Christopher Bancroft, controls around 14.5 percent of the total Dow Jones shareholder vote as of January. And his cousin, Jane Cox MacElree, is running around with 14.8 percent. (Apparently no-one else has more than 4.3%.) But you have to read a bit between the lines of the Times—too often the stuff we really want to know apparently isn’t “fit to print”—to understand why they spend so much time talking about Chris and so little talking about Jane. It’s because Jane isn’t really involved with the Dow Jones stuff, and leaves the decision making to Chris. So you can count her shares as shares controlled by Chris. That gives him around a little more than 30% of the voting power of the company, or about what Elephante controls. To that you can add the “Never Murdoch” shares controlled by the Ottaway family to come up with a 36% opposed number.

In short, going into today’s big Boston Bancroft powwow, Murdoch is a bit behind. Probably at least 36% of the voting power of Dow Jones opposes him. He’s got 30% on his side. But Murdoch has a secret weapon: the 30% or so of the voting power vesting in shares that were once held by the general public and are now held by stock arbitrageurs, the Bancrofts, the Ottaways and a few people who aren’t paying any attention. Most of those shares will vote his way. To play it safe, let’s put that pro-Murdoch number at around 25%.

Which gives Murdoch right around 55% of the voting power of the company. Since he only needs 51%, that means he wins. But it’s close. And since we’ve been guestimating at a few of the crucial numbers, it’s possible that it’s even closer than this. If the numbers are shifted a couple points in the only direction—say, Elefante only has around 28% of the vote in his pocket and only 22% votes held by common shareholders go for Murdoch, he’s down to a losing 50%.

Which leaves us at the exciting possibility that we may be entering the rare situation where a very few amount of votes—perhaps those held by a small shareholder who doesn’t even remember he has the shares in his account (or his attic)—could swing the voting. In short, the Bancrofts may be meeting in Boston in 2008. But the voting may well be in Florida, 2000 territory.

A Family Meets Today to Hear the Complexities of a Bid for Dow Jones [New York Times]
Bancrofts To Consider Murdoch Bid, ‘Close Vote’ Predicted [New York Sun]
Know Your Bancrofts [New York Magazine]

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]

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]

The 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]

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]

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.]

The 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]

We touched on this story in Opening Bell so we won’t spill too many pixels on it now. Suffice to say, we’d all heard that General Electric was looking for a partner to buy Dow Jones and defend its CNBC property against the challenge of a Fox Business Network-Wall Street Journal combination. But we didn’t think much of it.

Sure, Microsoft was a natural partner, having built MSNBC with GE. And while Microsoft isn’t eager to become a newspaper publisher, maybe they’d want to get in on Dow Jones strong web presence. They used to have a taste for this sort thing, right? Until very recently, CNBC’s entire web presence was tucked away in a little corner of Microsoft’s MSN.

But that was then. This is web 2.0. The big players in the internet space aren’t so enthusiastic about creating content these days. And certainly not for paying people to create content. It’s all “user-generated” and “social networking” all the time—think MySpace, YouTube, and even Last.fm. Even CBS’s purchase of WallStrip might morph into something more sophisticated if they let a million WallStrips bloom and do for finance user-videos what FunnyOrDie is doing for comedy. Microsoft has the cash but not the desire to own Dow Jones.

The implausibility of all the “competing” deals that are currently “on the table”—none of which have actually gone through the trouble of being competitive with News Corp’s $5 billion bid and which are not actually on any tables—actually make Murdoch’s bid more likely to succeed. The Bancrofts, having very publicly declared a willingness to sell, must now look around and wonder: is that it? And, yes, it seems that it is. Last week we had Murdoch at 80%. At the start of this week, post-Microbalk, he’s reach 85%.

Rupert Murdoch has an unlikely—and probably unwitting—ally in his quest to acquire Dow Jones & Company: Democratic presidential front-runner Hillary Clinton. Last month Hillary spelled out some of her positions on taxes and economics, including a plan to increase capital gains taxes in a way that might penalize the family that controls Dow Jones if they held off selling now.

The Bancroft family, which owns around 16.4 million supervoting Class B shares that allow it to control Dow Jones, would face a large capital gains tax bill if they sold their shares for cash instead of exchanging them for shares in another company. But many political observers expect the capital gains tax rate—currently 15%—to go up if a Democratic candidate is elected president, meaning that the Bancrofts might face an even larger tax bill if they sold their shares of Dow Jones in the future. They would also face a higher tax bill if they exchanged their Dow Jones stock for stock in another company and sold those shares later. Selling to Murdoch now might be the last opportunity the family has to avoid higher taxes.

Clinton has promised to raise capital gains taxes, and other democratic presidential candidates have followed suit. It’s highly improbable that Clinton’s tax policies are intended to aid Murdoch in his bid for Dow Jones but there’s no escaping the fact that objectively-speaking, as the Communists used to say, Clinton is working for Murdoch’s interests.

This wouldn’t be the first time that Murdoch and Clinton have found themselves on the same side. Despite his reputation as a political conservative, Murdoch became a supporter of Clinton while she was a US Senator, even hosting a fund-raiser for her.

How small of a Bancroft minority could block a sale of Dow Jones & Company to Rupert Murdoch’s News Corporation? In this morning’s New York Times, “Market Place” columnist Floyd Norris sketched how the nature of the supervoting shares of Dow Jones make it possible for a minority of the family to veto an acquisition if Rupert Murdoch attempts to buy the outstanding shares of the company through a tender offer.

“Under Dow Jones rules, Class B shares have 10 votes a share, while Class A shares — those traded on the New York Stock Exchange — have but one vote a share. When Class B shares are sold, however, they become Class A shares and lose their special voting rights. That increases the relative weight of the remaining Class B shares,” Norris writes. “At least theoretically, investors owning just 9.1 percent of the stock, or less than 8 million shares, could control the company if those were the only Class B shares left outstanding after the other shares were sold to Mr. Murdoch,” Norris says.”

DealBreaker ran some back of the envelope calculations and discovered that a minority controlling just around a quarter of the family’s Class B shares could prevent a successful tender offer acquisition by News Corp.

[After the jump, how a small minority of Bancroft shares could block a takeover.]

Some of us around the DB HQs are very much into this Dow Jones, Rupert Murdoch story. Unfortunately, we melt when it rains (and don’t do mid-town), and were therefore unable to stake out yesterday’s meeting at the Wachtell offices. So we sent Intern Scott. His (wet) report here, his pictures after the lovely lady jump (let that one go).

By popular demand, I present to you my first entry for DB [small bow and preparation for disappointment]. Yesterday, Carney sent me to hang around outside the Wachtell offices in midtown to wait for Elvis Rupert Murdoch to leave the building. Our boy Rupes spent five hours in discussions with the Bancroft family, presumably in conference room 33F, notable for many famous transactions. I arrived at 52nd Street and 6th Avenue at the CBS building, where I met many of my “peers” — photographers, camera crews, bearded weirdos, and reporters. The media (and Carney because he’s part of the media circus) loved this story. So I waited for a bit and talked to some of the people in awkward footwear, learning that some of the more dedicated crews had been on-site since 10am. Most of them had a second crew waiting on 53rd Street to make sure to cover their bases, but here at DealBreaker we like to take our chances (but always get it right, of course).

Now, those of you familiar with 51 West 52nd Street know that there are two entrances, one on the north side and one on the south. Rupes entered on 53rd street covered by umbrellas around 1pm, but I had to gamble on from which door he would emerge. I checked out the scene on 53rd street, and decided to take my chances on 52nd, where I waited. Around 5:05pm everyone picked up their equipment and made for the door, but it was just some other old dude (they all look the same), not our boy. Finally, at 5:35pm, Rupey and a bunch of suits came out of the elevators and lingered near the elevator banks inside. He slowly made his way towards the 52nd street door (imagine my glee), as the assembled paparazzi outside got ready. He emerged, Burberry rain coat in hand, and was instantly hounded by reporters from CNBC and Bloomberg, as well as dozens of flashing cameras (including my own). You can see some of the shots I was able to take before he hopped in a black Escalade (too good for a Town Car but apparently not good enough for the many Maybachs that I saw hanging around) waiting on the corner and sped off under gray skies.

Quite an afternoon.

—Scott Bressler

The only news that really come out of yesterday’s big meeting between Rupert Murdoch and the Bancroft family was metaphorical: a storm was soaking New York as Rupert went into the black tower where the conference took place and the skies were merely overcast when emerged five hours later. We’re not sure if that means anything but it would be better if it did.

Perhaps more telling than the meteorological metaphors made possible by the passing precipitation was that the Bancroft’s emerged from the meeting sounding exactly like Murdoch.

“We had a very long, constructive meeting, and we’ve both gone away to consider both sides,” Murdoch said in a brief interview with Bloomberg.

Later, the Bancrofts issued a statement through spokesman Roy Winnick:“The parties had a constructive dialog and have gone back to consider our positions.”

In case you missed it—the message is that the meeting was constructive!

If the first step in a negotiation is learning to speak the same language, then it looks like there was a lot of progress yesterday. Both Murdoch and the Bancrofts are talking to the public using the same phrases, apparently agreed to in the meeting.

“It shows Murdoch’s strength as a deal maker,” an M&A specialist we spoke to said. “Agreeing to the language of a statement may be a prelude to an agreement about the sale of Dow Jones. The cliché is ‘getting to yes,’ and then staying there. Murdoch seems to have the Bancrofts saying yes already.”

A former private equity buyout professional had an even more colorful way of describing the process of turning a hostile counterpart in a negotiation into a willing partner. “We used to call this the process of ‘Stepfording’ the other side,” he said. The phrase referred to a movie in which wives were reprogrammed into being compliant housewives.

Investment bankers at one of the banks advising Rupert Murdoch’s News Corp on the bid for Dow Jones & Company celebrated last night when news broke that the Bancroft family had agreed to meet with Murdoch. The bankers had advised News Corp not to increase its offer for the company, defying speculation that Murdoch might attempt to buy-off the Bancroft’s reluctance to sell with more money. Last night’s announcement by the Bancrofts that they would meet with News Corp and consider offers for the company was taken as a vindication of the bankers advice, a source working at one of the advisors to News Corp said.

“It was big smiles all around. High-five time,” the banker told DealBreaker. “We told them not to offer a dime more. We always thought these people would cave.” According to the banker, it literally was ‘high-five’ time, with arms extended and hands slapping in celebration of the Bancroft move.

Instead of offering more money Murdoch has for weeks engaged in what some have called a “charm and promise” strategy—asking for a meeting to introduce his family to Bancrofts, praising the companies media properties, promising to invest money to grow the Journal’s international bureaus and offering assurances of editorial independence. Everything, that is, except a higher bid.

Murdoch’s $5 billion bid came in at a sixty-seven percent premium to where the company’s shares had traded just prior to the news of his unsolicited offer. Many observers thought the family was holding out for more money before they would agree to meet with representatives of News Corp. Investment bankers advising News Corp on its bid recommended against offering more money prior to a meeting.

“The first rule of deal club is you don’t negotiate with yourself. There were no other bidders, and they wouldn’t come to the table. Was Murdoch supposed to outbid his own offer?” the banker said

One danger of offering more money prior to the opening of negotiations was that the new offer might be looked at by the Bancroft’s as a starting price, setting expectations for an even higher final selling price. A sixty-five dollar second offer might set the stage for a seventy-dollar closing price, the banker said his firm warned News Corp.

The investment bankers believed that eventually the Bancrofts would negotiate with Murdoch without the prompting of a higher offer. The term they used was “over-determined” to describe what they viewed as the most likely result, the source said. The source cited several factors putting pressure on the Bancrofts to negotiate, including pressure from public shareholders and institutional investors, dissent within the family, the absence of a competing bidder, the lack of a credible internal business plan to raise the share price near Murdoch’s offer, fear the Murdoch could withdraw his offer, declining advertiser enthusiasm for newspapers and consolidation in the business news industry.

“This is a win for Murdoch and News Corp and we’re just glad we helped them get here,” the banker said.

The Bancroft family’s decision to meet with Rupert Murdoch means Dow Jones & Company is for sale, according to an employee of the company.

“If they meet, they sell,” said a Dow Jones employee familiar with the thinking of the Bancrofts.

Last night the family released a statement announcing their willingness to meet with News Corp, the media company run by Murdoch, while the board of directors of Dow Jones held a special meeting to discuss the bid. Earlier the family had rejected the $5 billion bid and refused to meet with Murdoch. During the meeting the statement was called “preliminary” but it was not changed after the meeting.

The reporting from the Wall Street Journal and the New York Times also conveyed the impression that the Bancrofts are ready to sell Dow Jones, which they control through their ownership of super-voting class b shares.

“Dow Jones & Co.’s 125-year history as an independent media company could be nearing an end,” the Wall Street Journal’s reporters wrote in the story that broke the news of the Bancroft family change of heart. DealBook, the deal blog of the New York Times, echoed that sentiment, asking “Is this the beginning of the end of an independent Dow Jones & Company?”

The Bancroft family’s statement also announced a willingness to consider offers from other bidders.

Rupert Murdoch’s bid for Dow Jones & Company is heating up again.

The family that controls Dow Jones agreed to meet with News Corporation, the media company headed by Murdoch . News Corp made an unsolicited bid for Dow Jones earlier this month. Until now the Bancroft family, which controls 64% of the voting power of Dow Jones largely through its super-voting class B shares, had refused to meet with Murdoch or representatives of Dow Jones to discuss the offer.

“Since first receiving the News Corporation proposal, the Family has carefully considered and discussed among ourselves and with our advisors how best to achieve that overarching objective, while serving the best interests of the Company’s various constituencies,” the family said in a preliminary statement first reported by the Wall Street Journal, which is owned by Dow Jones.

“After a detailed review of the business of Dow Jones and the evolving competitive environment in which it operates, the Family has reached consensus that the mission of Dow Jones may be better accomplished in combination or collaboration with another organization, which may include News Corporation,” the statement says.

In early May, News Corp offered $5 billion for Dow Jones, a sixty-seven percent premium over where the stock price trading before the bid. Through representatives on the board of directors of Dow Jones, members of the Bancroft family representing a majority of the voting power declined the offer. The board of directors has officially take no action on the offer. Since making the bid Murdoch has attempted to win support from the Bancroft family, but he has not increased his offer. In recent weeks some analysts began predicting that Murdoch would withdraw the offer if the family continued to refuse to negotiate.

The Wall Street Journal said the statement would be finalized after the conclusion of a meeting of the board of directors, which was underway tonight. At the time this was posted, no statement had been filed with the Securities and Exchange Commission on behalf of Dow Jones or the Bancrofts.

The statement may mean that the Bancrofts are willing to accept an offer from Rupert Murdoch. But by indicating a willingness to sell, they may also be hoping to attract other bidders. Tonight’s statement affirms that the family will also consider other bids.

Bancroft Family Plans to Discuss Dow Jones Bid With News Corp. [Wall Street Journal]
Bancrofts’ Statement on Dow Jones Bid [Wall Street Journal]