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Murdoch's bid to buy Dow Jones accepted

August 01, 2007|Joseph Menn, James Bates and Thomas S. Mulligan | Times Staff Writers

In locking up Dow Jones & Co. for $5 billion late Tuesday, Rupert Murdoch ensured that his vast influence would be felt in the business world for years to come -- as it is now by hundreds of millions of global TV viewers, moviegoers and Internet users.

News Corp.'s pending purchase of the parent of the Wall Street Journal puts Murdoch, its chairman, closer to fulfilling a years-long personal ambition: leveraging the most trusted name in business news into the world's premier television, print and online provider of financial information.

Murdoch claimed his prize after separate board meetings of News Corp. and Dow Jones directors late Tuesday. The deal must still be approved by shareholders of both companies and by federal antitrust regulators.

In recent days, Murdoch swayed enough members of the Bancroft family, which has 64% of the voting power, to cede ownership of a company they have controlled since 1928.

Murdoch intends to use the Journal brand, its stories and its editorial talent in new ways, most urgently to fill a new cable channel he is launching this fall to rival CNBC. He promises to beef up the Journal's editions in Asia and Europe. He wants the publication to cover more general and political news, positioning it as a head-to-head rival of the nationally circulated New York Times. He also plans to expand the Journal's money-earning website.

Already, teenagers are among the 115 million global MySpace.com users whom Murdoch counts as his customers. So are the tens of millions of moviegoers worldwide who watched "The Simpsons Movie" in cinemas last weekend, the more than 30 million viewers who tuned in for last season's "American Idol" finale on the Fox network and some 300 million viewers who subscribe to Star TV in Asia. His empire has secured the rights to sporting events worldwide, using such properties as the NFL in the U.S. and soccer overseas to garner audiences and popularize his TV channels.

"He owns more than 100 newspapers, an international empire in television, print and the Internet," Boston University journalism expert Louis Ureneck said. "He's everywhere."

Veteran newspaper industry analyst John Morton called Murdoch a modern equivalent of William Randolph Hearst because of the extent to which News Corp. carries the 76-year-old billionaire's imprint.

"Seldom do you see a businessman so closely identified with his empire," Morton said.

For those who disdain the native Australian's conservative politics, and for journalists who fear his potential meddling in editorial decisions, the news that Murdoch had finally completed the deal after nearly three months of public wrangling was greeted with resignation and dismay.

Recently, Murdoch has suggested that Journal stories should be shorter and less esoteric. In scores of letters to the Bancrofts, reporters portrayed Murdoch as someone with a history of selecting editors who would use their power to help advance Murdoch's corporate interests.

"Dow Jones and the Wall Street Journal are just feathers in Murdoch's cap -- but signal a disturbing trend for consumers who rely on media to be independent and diverse sources for news and information," Gene Kimmelman, a vice president at Consumers Union, said in a statement Tuesday.

Officials from the Independent Assn. of Publishers' Employees, which represents Journal employees, also expressed disappointment.

But analyst Josh Bernoff of Forrester Research in Boston said he didn't expect Murdoch to meddle with the Journal's news operations because its reputation is its most valuable asset.

"You don't buy a Bentley and then go off-roading with it," he said.

From the start, Murdoch's checkbook and patience gave him the advantage in winning Dow Jones. His pursuit started informally earlier in the year when he got wind that the Bancrofts might be willing to sell for $60 a share, a price not seen in more than five years.

The News Corp. chairman asked Dow Jones Chief Executive Richard Zannino to breakfast in March. His first approach was rebuffed, but the margin of resistance grew smaller after Murdoch's proposed terms leaked and the stock soared. Murdoch then met with the Bancrofts and agreed in writing not to fire the Journal's top editors without the approval of an independent board.

By offering a 65% premium above what Dow Jones shares had been trading at before News Corp.'s bid became public, Murdoch all but eliminated any serious rivals and also made it virtually impossible for the Bancrofts to pass up his proposal. And, despite suggesting at times that he was frustrated and might walk away, it seemed clear Murdoch wasn't going anywhere.

Dow Jones enjoys a rich history dating to 1882, when it was founded by three journalists. The Wall Street Journal first appeared in 1889, with the Dow Jones industrial average stock index debuting seven years later. In 1928, Hugh Bancroft became president and, with his wife, Jane, began the dynasty that has controlled the company to this day.

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