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 at 12:16 PM | Print | Comments (0)
Search giant Google, parent of YouTube, yesterday answered Viacom’s lawsuit, which contends that YouTube is infringing on the copyrights of Viacom-owned content. (News.com has posted the entire answer here in PDF form.) The interesting part is not Google’s response but it’s choice of legal strategy.
As expected, Google basically denied all of Viacom’s allegations, saying that it hasn’t infringed on the rights of the entertainment company and that the DMCA’s safe harbor provisions protect it from liability. In an interesting rhetorical twist, Google is also trying to elevate this dispute to a fight over the future of the Internet itself. In the opening paragraphs of its filing, the company says
By seeking to make carriers and hosting providers liable for internet communications, Viacom’s complaint threatens the way hundreds of millions of people legitimately exchange information, news, entertainment, and political and artistic expression.
Other than that, Google’s response is literally an “answer” to Viacom’s complaint, a point-by-point, paragraph-by-paragraph, admit-or-deny retort to the allegations raised in Viacom’s original complaint, yielding no deep insight into the detailed arguments and evidence that Google might produce at trial (and Google has asked for a jury trial in lieu of a decision by a judge.)
Google’s attorneys, the very high-powered law firms of Wilson Sonsini Goodrich & Rosati and Bartlit Beck Herman Palenchar & Scott, could have attempted to kick up a lot of dust and cause some amount of pain and cost to Viacom by not merely “answering” the lawsuit. They could have, for example, filed a motion to dismiss some or all parts of the lawsuit, which would have triggered an intensive round of legal filings and preliminary court decisions, delaying the prospect of an actual trial for an additional year, at least. As it stands now, a trial in this case won’t take place for years.
Moreover, with a motion to dismiss, Google stood a chance of dispensing with major parts of the lawsuit or even the entire complaint, although the chances of knocking out the entire suit were small — judges tend to let complainants have their day in court.
Still, if Google thought it might lose to Viacom, a motion to dismiss would have bought some time while the Mountain View giant weighed options. A motion to dismiss (usually accompanied by a request for summary judgment at the outset) would have also forced Viacom to spend millions more than it would otherwise have spent in legal fees, softening up the media conglomerate for settlement negotiations.
But Google chose the fastest option by directly answering the complaint. In essence, Google is saying to Viacom: bring it on. Not only will this strategic choice produce the quickest legal resolution, it has the added benefit of dampening the fireworks surrounding this litigation, and these days the last thing Google wants is a big legal spectacle. Michael Kwun, managing counsel for litigation at Google is quoted as saying at a press briefing “We’re not going to let this lawsuit distract us.”
Posted by Cynthia Brumfield at 8:29 AM | Print | Comments (0)
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