Murdoch Meets With Bancroft Family

Rupert Murdoch met with Bancroft family members Monday in a five-hour meeting that he later told reporters was “constructive”, so at least he’s still in the ballgame to purchase Dow Jones. His bid on the table is $5 billion ($60 a share).

`We had a very long, constructive meeting,” Murdoch told reporters camped outside the CBS building in New York where the meeting was held at the law firm of the Bancroft’s legal advisers. He said each side was looking for ways to address the concerns of the other. A Bancroft spokesman said the two sides "had a constructive dialogue and have gone back to consider our positions."

Murdoch was accompanied by his son, James, who is the CEO of BskyB Television in the UK, and also by the NewCorp general counsel. They met with three Bancroft board members and their legal advisers. The Bancroft family own 64% of the voting power in Dow Jones since their B shares have 10 times the voting power of the A shares made available to the public.

Murdoch’s main goal was to convince the Bancrofts that he would protect the editorial independence of the Wall Street Journal.  Recent media reports have said Murdoch is amenable to a system currently used by Reuters that gives an independent board of trustees veto power over any conditions that would put Reuters editorial integrity at risk. The Bancroft family proposed a far stronger independent board that would prevent Murdoch from firing top editors.

Murdoch had said in a Journal article last week that we was willing to put in place tight controls for editorial independence, but he would not let the Bancrofts run the newspaper if he bought the company. "I can't put down $5 billion of my shareholders' money and not be able to run the business," Murdoch told the Journal. He has offered the Bancrofts one seat on the News Corp board.

Meanwhile the Independent Association of Publishers' Employees that represents some 2,000 Dow Jones employees says it is actively seeking via a third party bids for Dow Jones from elsewhere. That is going to be a difficult task – indeed no other bid has come in since Murdoch made his offer because Murdoch’s bid was so high to begin with that even venture capitalists would have a hard time stripping away at assets and costs to make a profit at such a cost.

The Bancrofts had originally said that 62% of the voting shares had opposed a Murdoch buyout that became public knowledge May 1. But since then it is thought some family members, with pressure from large non-family shareholders, thought the deal at a 65% premium could not be ignored, and the family said last week it was now open to offers, including from News Corp.

Dow Jones shares closed down 1.70% Monday at $60.16, just a shade above Murdoch’s $60 bid price representing some thought that Murdoch might sweeten his offer, but then again, maybe not. - June 5, 2007

Keywords:Dow Jones,media investment

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