At The End Of The Day It Was This Simple: Dow Jones Just Isn’t Worth $60 A Share To Anyone Else And Rupert Murdoch Is The Smartest Media Business Guy Around

The Bancroft family apparently has seen the light – mostly with $ signs in their eyes – and Rupert Murdoch has won his $60 a share battle for Dow Jones. There are still “and” and “buts” that might cause last-minute problems, but it appears the deal is basically done.

With DJ and News Corp. board meetings going on Monday night, past our deadline, ftm will offer its full analysis in Thursday’s edition after the dust has fully cleared, but here are three thoughts:

• Murdoch’s bid was a masterpiece – so high that any other public company, or the huge equity bankers, who thought of muscling in just couldn’t do so because the numbers don’t make financial sense at that price no matter what cost cutting is employed later, so Murdoch kept the vultures at bay and financially he can afford to take a hit for a few years with an investment that ultimately will pay big dividends.
• For all of the pontification by the Bancrofts in the past about the family heirloom, Murdoch understood human nature only too well -- $60 is a lot more than $36 and with valuations of media companies being what they are today one just cannot envisage when Dow Jones on its own merits without a bid would ever get near to that Murdoch bid price. If ever there was a time to take the money and run this was it. And, with some kicking and screaming, that’s exactly what the Bancrofts did.
• The Bancrofts may have outsmarted themselves right into Murdoch’s pocket. They had run up at least $30 million worth of legal and financial fees from various advisers as they discussed the bid. At nearly the last moment it was brought to their attention that if they turned down the deal they were stuck with those professional charges – and that’s a lot of money some of them don’t have. If they accepted then either Dow Jones, or Murdoch or some combination of the two would probably pick up those financial pieces.  Just the right incentive to close the deal.

So, this family that has been in the business of financial journalism for so many years finally learned their ultimate lesson – money really does speak louder than words.  – July 31, 2007

Keywords: Dow Jones, Rupert Murdoch

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