After many months of wrangling, Rupert Murdoch's News Corp. is finally set to buy Dow Jones & Co Inc. for $5.6 billion, adding the Wall Street Journal to his global media empire and ending a century of family ownership of one of the world’s best-known business journals.
The hard-fought deal which involved close argument within the Bancroft family - controlling shareholders in Dow Jones - means Murdoch has achieved his decades-old dream of running the venerable financial daily.
The Journal and other Dow Jones properties also add to Murdoch's sprawling media empire -- from the Fox television stations and MySpace online social network to the Times of London and HarperCollins Publishers -- and would aid the launch of a Fox business channel later this year.
In a joint statement, Dow Jones and News Corp. said Bancroft family members holding about 37 percent of Dow Jones's voting power agreed to support the deal. That level of support represents more than half of the 64 percent voting shares held by the family.
Dow Jones shareholders still must approve the buyout, an outcome that analysts have said is all but guaranteed, given the 65 percent premium Murdoch offered.
Dow Jones, which competes with Reuters Group Plc, also owns the Barron's financial weekly, the MarketWatch.com financial news Web site and Dow Jones Newswires.
Other News Corp. properties include the "American Idol" singing talent show on the Fox Network, and British tabloid newspaper The Sun, which features photographs of topless women on its "Page 3."
MERGER AGREEMENT
Under the terms of the agreement, which has been approved by the boards of both the companies, Dow Jones shareholders will receive $60 in cash for each share of common stock or Class B common stock that they own, the companies said.
Dow Jones reported in its most recent financial filing with the Securities and Exchange Commission that it had 85.4 million shares outstanding on a diluted, weighted average basis, valuing the deal at about $5.1 billion. It ended the second quarter with $392 million in debt, according to the filing. The companies did not provide detail about how they calculated the deal value.
One Bancroft family member or another "mutually acceptable person" will be appointed to the News Corp. board, the companies said.
They also agreed on a five-member committee to oversee the editorial independence of Dow Jones's news operations: retired Associated Press Chief Executive Louis Boccardi, Massachusetts Institute of Technology Media Lab co-founder Nicholas Negroponte, former Tribune Publishing President Jack Fuller, former Washington State Congresswoman Jennifer Dunn and former Detroit News editorial page editor Thomas Bray. Bray also is a writer for Dow Jones's OpinionJournal.com. The Journal reported that he will serve as chairman of the committee.
Dow Jones was also discussing a plan to have News Corp. cover the legal fees incurred by the Bancroft family, amounting to at least $30 million, a source familiar with the matter said.
The acquisition is expected to close in the fourth quarter, the companies said.
NEWSPAPER FAMILY
The Bancrofts are among a group of venerable newspaper families who includes the Sulzberger clan, who run The New York Times Co., and the Chandlers, who cashed out of Tribune Co. earlier this year.
Unlike their peers, the Bancrofts refrained from interfering with the Journal's news operations. But that remoteness amid sweeping changes in the way people get their news due to the Internet led to criticism that the family was neglecting the company.
In selling to Murdoch, the Bancrofts pass Dow Jones to a another media dynasty. Murdoch, who built News Corp from two Australian papers, also controls his global media empire and sees its future some day in the hands of his children.
The family initially rejected the 76-year-old mogul's bid over fears that he would tarnish the Journal's image and use Dow Jones's news operations to further his business interests. Many Journal reporters and some other Dow Jones employees also opposed the deal and sought to attract other buyers.
"It's a bad thing for Dow Jones and American journalism," said former Dow Jones board member and executive Jim Ottaway Jr., whose family controls 7 percent of Dow Jones voting shares. "It's a sad thing that the 105-year family tradition of protecting Dow Jones's independence as a public trust will end," he said in a statement.
In the end, the rich offer proved too attractive for many family members to resist, and it all but eliminated the possibility of competing proposals.
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