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Dow Jones may get new suitor

The Financial Times' owner is talking with GE about a joint offer.

June 16, 2007|Joseph Menn | Times Staff Writer

The owner of a competitor to the Wall Street Journal emerged Friday as a potential bidder for the newspaper's parent company, complicating Rupert Murdoch's quest for the crown jewel of financial news.

Pearson, the London-based parent of the Financial Times, recently approached General Electric Co. about making a joint bid for Dow Jones & Co., according to people familiar with the talks who declined to be named because the discussions are confidential.

GE had explored a joint bid with Microsoft Corp. but decided against it. The company is now studying the Pearson proposal, the people said.

The discussions are still in the early stages. Because Pearson's stock market value is less than $14 billion, coming up with half of a $5-billion bid that would match the offer by Murdoch's News Corp. would depress its earnings.

Nevertheless, the attention from rivals might prolong any sale process and give the Bancroft family that controls Dow Jones more power in negotiating with Murdoch.

"It gives them some leverage they didn't have before," newspaper analyst John Morton said.

Pearson, Dow Jones and News Corp. declined to comment.

After initially rejecting Murdoch's offer, the Bancrofts agreed to meet with the News Corp. chairman. The family is trying to come up with a board structure aimed at preventing the controlling News Corp. shareholder from using Dow Jones' media properties to advance his political and business agendas, as he has been accused of doing with his own assets. The Bancrofts want a deal on editorial independence before turning to the issue of price.

But the debate among the clan has dragged on.

A proposal by the family's advisors was rejected this week as too week.

According to a draft of that plan, a surviving Dow Jones board would have seven people appointed by News Corp., two appointed by the Bancrofts and three that would need joint approval, so Murdoch's influence would still have been deeply felt. The five nondirect appointments could reject the hiring or removal of four top editorial employees, the draft said.

Members of the Brancroft family who are less amenable to selling to Murdoch are taking some comfort from Pearson's interest, because they would rather sell to the publisher of the Financial Times than to the publisher of the New York Post.

"There would be far fewer worries about what happens to the Journal," Morton said.

Pearson, which also owns book publishers Penguin, Prentice Hall and Addison Wesley, introduced the salmon-colored Financial Times in the U.S. 10 years ago. It now sells 150,000 copies daily in this country, about one-third of the paper's total.

Pearson's shares have risen 50% in less than two years. But Chief Executive Marjorie Scardino, a Texas native, has been faulted by some for not making a major strategic move.

Her hand may have been forced by Murdoch's bid and Thomson Corp.'s plan to buy Reuters for $17.6 billion, creating another financial news force.

For GE, owning the Journal could help secure content for its CNBC business channel at a time when Murdoch plans to launch a rival. The Journal has a contract to supply CNBC with content through 2012.

An alliance of bidders may be necessary to match Murdoch's bid, people involved in the process said, because News Corp. is offering 65% more than Dow Jones was worth on the stock market before the bid emerged.

"That's the brilliance of Murdoch," one executive at another firm said. "He picked a number that he can live with that others can't live with."

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