IP Democracy: Holy Cow! News Corp. Lobs Hostile Bid for Dow Jones

In a move that seems unreal, News Corp. is engaging in a hostile takeover for Dow Jones, the prestigious publishing empire that encompasses respected print and online news and financial research outlets.

News Corp. has made an unsolicited offer of $5 billion for the Dow Jones empire, which includes the Wall Street Journal, extending around $60/share, 67% higher than where the publicly traded company’s stock has traded recently. News Corp., headed by naturalized U.S. citizen Rupert Murdoch, currently owns only one newspaper in the U.S., the somewhat disreputable New York Post, although the media giant is a major force in newspaper publishing in the UK and Australia and owns TV programming and motion picture production properties throughout the world, including Fox in the U.S.

The bid was purportedly sent two weeks ago and although Dow Jones, which is 62%-owned controlled by one family, the Bancroft family, is studying it, the clear sentiment is not favorable. The company issued a statement saying “there can be no assurance that this evaluation will lead to any transaction.”

Marketwatch (owned by Dow Jones) reports that shares of the company’s stock soared by $21 to $57.28 after news of the takeover was announced, rising so fast that trading was suspended.

For anybody who ever read Barbarians at the Gate, this development does not bode well for the future of Dow Jones. Despite News Corp.’s incredible savvy in the publishing, TV and entertainment businesses, not to mention its powerful presence in the Internet world, the company’s reputation in the newspaper arena is strictly downscale and not in keeping with the high-toned and widely praised nature of Dow Jones.

If News Corp. wins, it will no doubt sell off some of the company’s properties and, if history is any indication, inject the rest with a mass market, populist tilt in order to pump up profits (or, in the alternative, News Corp. may inject a more youth-oriented energy into Dow Jones’ staid stable). More importantly, News Corp.’s bid of $60/share invites other takeover rivals — Bloomberg is cited as the most likely candidate. In the macho world of corporate takeovers the bidding could get intense, so intense that the winner of any takeover war in effect becomes the loser because the price paid is too steep and Dow Jones subsequently crumples under the weight of too much debt.

Whatever the outcome, we’re all in for a wild ride.

Update: Apparently I’m the only one who finds this development unreal. Folks have been talking about News Corp.’s purchase of Dow Jones for quite some time. It seems that the news gathering outlets (WSJ, Barrons) make perfect content suppliers for News Corp.’s upcoming Fox Business Channel.

Update: The Bancroft family has decided they will vote shares that constitute slightly more than 50% of the voting power against the deal. The fact that some of the Bancroft family members didn’t join in this rejection of News Corp.’s (the 35+ family members that own the “super-voting” shares control 62% of the company) is probably going to spur News Corp. to up its price in the hopes of luring even more family members away from the rejecting pack. And did anyone think that Murdoch’s $5 billion offer was News Corp.’s final offer anyway?

Posted by Cynthia Brumfield on May 1, 2007 12:16 PM to IP Democracy