The board of Dow Jones & Co. announced late Wednesday that it would not move on Rupert Murdoch's audacious $5-billion buyout offer after the company's controlling Bancroft family rejected the media baron's proposal for the second time in two days.
But analysts viewed the company's newly robust stock price and the somewhat muted rejection as signs that Murdoch, or a competitor, would eventually buy the company that owns the Wall Street Journal.
"I've got to believe that there's lots of little Bancrofts out there who don't mind selling," said Edward Atorino, publishing analyst for Benchmark Co. in New York.
"The Bancrofts have hardly slammed the door in Rupert Murdoch's face," agreed Alan D. Mutter, an analyst who writes the Reflections of a Newsosaur blog. "If the board adamantly didn't want to sell, they would say, 'Leave us alone. Go away, it's not for sale.' This appears to be not rejecting it, just tabling it for now."
Investors also appear to anticipate a deal. Dow Jones stock basically held the huge run-up that began Tuesday on news of Murdoch's offer.
Shares fell 20 cents to $56 a share Wednesday, not much below the $60-a-share Murdoch's News Corp. offered and more than 50% above the price where Dow Jones languished before the bid became public. The market closed before the latest statements from the Bancrofts and Dow Jones.
News Corp. shares gained 44 cents, or 1.9%, to $23.43.
Murdoch associates said the media titan had been determined to buy the venerable financial media firm and its flagship Wall Street Journal for years. They said he would use the Journal to bolster his current newspaper and television holdings -- providing content and talent, in particular, for a cable television business channel that is supposed to debut this year.
But the Bancrofts, who have controlled Dow Jones for more than a century, stand solidly opposed to Murdoch's offer. Despite holding a minority equity interest, they have maintained a hold on the company through a two-tier stock system that gives them control through super-voting shares.
A similar structure has allowed families to maintain control of other top U.S. newspapers. Morton Pierce, chairman of the merger and acquisition practice at the New York law firm of Dewey Ballantine, said nothing could legally force the Bancrofts to sell.
"What they're signaling you is that if they were free to proceed, they might at least investigate the offer, but since a majority of the family is opposed, it would be futile," Pierce said. "Nothing's over until it's over, and the family could still change its mind."
But such two-tier systems have proved difficult to maintain over the long term and other family-controlled newspapers, including the Los Angeles Times and Louisville Courier-Journal, shifted to new owners as later generations became more preoccupied with financial returns.
Alex S. Jones, director of Harvard's Shorenstein Center on the Press, Politics and Public Policy, noted that the once-uniform Bancroft ownership had shown cracks in recent years, in contrast to the families that own the Washington Post Co. and New York Times Co.
"Unlike the Grahams [of the Washington Post] and the Sulzbergers [of the New York Times], they are not of one mind," said Jones, who has written extensively about family newspaper dynasties. "We don't know if they'll have the stomach to turn this [offer] down."
Jones said the family was likely to face increased pressure from a newly energized and reconstituted group of common shareholders. Many institutional money managers and other long-term holders sold and cheerfully took their profits this week, while hedge funds and risk arbitrageurs bought Dow Jones stock.
The newcomers won't hesitate to turn up the pressure on the Bancrofts to try to make their resistance crack. "These people made a big bet," Jones said, "and they play rough."
After a meeting of directors Wednesday, the company disclosed that roughly 80% of the family's voting power remained opposed to Murdoch's offer. That translates into about 52% of the voting power of the full company.
"Accordingly, the Dow Jones board of directors has determined to take no action with respect to the proposal," the company announced.
But one outside newspaper executive said the position of both the Bancrofts and Dow Jones seemed less than ironclad.
"If they were positively not going to sell, wouldn't they be using Churchillian language. You know: 'We will fight them in the skies and on the beaches?' " said the executive, who asked not to be named out of fear of alienating business associates. "It sounds like they are positioning themselves" for a sale.
Other observers said the family's determination to fend off outsiders should not be underestimated. They noted that the family took pride in the award-winning Journal and would hesitate to put it in the hands of Murdoch, who made much of his fortune with splashy tabloids.
The family "has been resolute through the years in protecting the independence of Dow Jones and particularly the Wall Street Journal," said John Morton, president of newspaper-consulting firm Morton Research Inc. in Silver Spring, Md. "Clearly the Bancroft family is not as together as it had been before, but apparently it's together enough to fend off News Corp."
But $60 a share could be hard to ignore.
Said Charles Wrubel, managing director of AdMedia Partners, a New York-based investment bank specializing in the media industry: "Would they ever get this kind of offer again?"
Mulligan reported from New York and Rainey from Los Angeles.
Times staff writer Walter Hamilton contributed to this report.