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
Rupert Murdoch
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.
Rupert Murdoch has just left the CBS building. Earlier today we sent our a spy—summer intern Scott Bressler—up to the dark tower in which the Bancrofts were negotiating the surrender of Dow Jones & Company to Murdoch. After being in the offices of Bancroft lawyers since around 1 PM, Murdoch just now left. His entrance this morning covered by umbrellas due to the rainfall in NYC went almost unnoticed by the reporters, photographers and camera men camped on 52nd street. But his exit was made under clear skies.
No word yet on what may have been discussed.
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]
This much is certain. One way or another, the $5 billion offer from News Corp to buy the Dow Jones company will not be outstanding forever. At some point News Corp will offer more money for the company, the controlling shareholders will accept an offer, a new bidder will emerge or News Corp will withdraw its offer. Jeff Greenfield, an analyst at Pali Research, is telling his firm’s clients that the last possibility—a withdrawal of the offer—is most likely.
”We suspect News Corp. will officially announce the termination of its acquisition announcement over the course of the next couple of weeks and leave Dow Jones to fend for itself,” Greenfield writes in a note to clients (quoted in the Associated Press).
Greenfield does not appear to have any inside information about the plans of News Corp or its chairman, Rupert Murdoch. Instead, the note relies on something more like common sense to make the call that the company will walk away from the bid. The Bancroft family, which controls Dow Jones through its super-voting class B shares, has twice indicated it won’t accept the offer. Greenfield describes waiting for them to change their mind as “silly.”
The note reflects the widespread impression that News Corp and Murdoch are growing frustrated with the refusal of the Bancroft’s to enter into a deal. So far, the Bancroft’s have refused to even meet with Murdoch.
Reuters quotes from the note: “We believe News Corp. is increasingly frustrated with the Bancroft family,” said Pali Capital analyst Greenfield . “Given no apparent desire by Dow Jones’s controlling shareholders to negotiate, News Corp. is left with little choice other than to walk away from Dow Jones [for now].”
Greenfield’s prediction that News Corp will withdraw its bid seems to rest on his view that the acquisition of Dow Jones is not a “must-have” for the company.
Murdoch may lose interest in Dow Jones bid [Reuters via CNNMoney.com]
Analyst Expects Murdoch to Drop Bid [Associated Press via Forbes.com]
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