Rupert Murdoch moved closer to his dream of owning Dow Jones & Co. Tuesday as an initial agreement was reached on measures to ensure the editorial independence of The Wall Street Journal, a person familiar with the matter said Tuesday.
It still wasn’t clear whether the deal on the issue — a key sticking point in the talks over Murdoch’s $5 billion offer — would pass the approval of Dow Jones’ controlling shareholders, the Bancroft family, who initially rebuffed Murdoch’s offer in early May.
Murdoch’s media conglomerate News Corp. and Dow Jones’ board have agreed in principle on ways to ensure the Journal’s independence, with some items yet to be decided, according to a person speaking on condition that he not be named because the agreement was not yet public.
Dow Jones and News Corp. both declined to comment.
Dow Jones’s board took over the discussions from the Bancrofts last week. The talks had been in slow gear for several weeks as the family worked on proposals for editorial safeguards for the Journal.
Dow Jones’s board includes four representatives of the family, but the family overall has about three dozen adult members, and differences among them have emerged in recent weeks. In all, they control 64 percent of Dow Jones’s shareholder vote through a special class of privately held stock that has ten votes per share, versus one per share for Dow Jones’ publicly traded stock.
Murdoch has offered $60 a share for Dow Jones, a massive premium of about 65 percent over the mid-$30s price that Dow Jones stock had been trading at prior to his offer becoming public. Many on Wall Street believe the price is too high to be matched by other bidders.
Dow Jones’ shares rose $1.59 or 2.8 percent, to $59.09, to $59 in afternoon trading.
So far no other serious bidders have emerged, meaning that Murdoch could clinch ownership of Dow Jones if he satisfies the concerns held by the board and the Bancroft family that the Journal remain free from corporate interference.
A union that represents Dow Jones employees as well as Jim Ottaway Jr., a former Dow Jones director who controls about 5 percent of the company’s shareholder vote, have said they’re concerned that the Journal’s quality and independence would suffer under Murdoch, concerns that Murdoch say are not justified.
Murdoch has long wanted to own the Journal, which has tremendous clout in the business world and wins many prizes for editorial excellence. Murdoch has said he would invest in the Journal’s online and overseas operations, and tap its resources to help build a business-themed cable news channel that would rival General Electric Co.’s highly profitable CNBC network.
Despite the Journal’s prestige and influence in the business world, Dow Jones has lagged Reuters Group PLC and Bloomberg LP in providing real-time financial data and news to investors. In early May Reuters agreed to be acquired by Thomson Corp., another major financial information provider, creating an even larger rival in financial market information.