The Washington Post
Dow Jones Board Takes Over Negotiations With News Corp.
The Dow Jones board of directors will take over negotiations of any sale of the company to Rupert Murdoch’s News Corp., the board said yesterday, pushing aside the company’s controlling family, which has done little since meeting with Murdoch more than two weeks ago.
News Corp. had no comment on the announcement, but inside the company it was seen as good news. News Corp. is eager to move forward with its $5 billion bid for Dow Jones and its crown jewel, the Wall Street Journal.
The Bancroft family has four seats on Dow Jones’s 16-member board and control of the company through ownership of supervoting stock. A majority of the 35 family members immediately opposed Murdoch’s unsolicited bid, which became public on May 1. Since then, however, Murdoch has wooed the family, and Wall Street pressure has built on the Bancrofts to accept his bid of $60 a share, well over the trading value of the stock before his offer.
Murdoch appeared to gain ground when Dow Jones effectively put the company on the block May 31 and the family agreed to meet with him. But momentum has since stalled, as the family failed to produce a proposed structure for an editorial board that would ensure the continued independence of the Journal — a document the family promised and Murdoch has expected for more than a week.
Frustration has built both at News Corp. and on the Dow Jones board, said sources close to the situation. Neither side saw the Bancroft-led dealings as very “efficient,” one source said yesterday. The sources spoke only on the condition of anonymity, because negotiations are continuing.
“Accordingly,” the Dow Jones board said in a statement yesterday, “the board of directors, including representatives of the Bancroft family, will conduct further discussions with News Corporation relating to the proposal and will oversee the exploration of strategic alternatives.” The board also said it would consider other bidders and the possibility of not selling the company.
A Bancroft family spokesman did not return a call seeking comment.
At the same time, a potential rival bid for Dow Jones from the British firm Pearson appears to be flagging, owing to internal disagreements over the wisdom of merging the Journal with the Financial Times, which is owned by Pearson.
Pearson chief executive Marjorie Scardino has championed a union between her firm and Dow Jones to unite two of the world’s great business newspapers and combining the companies’ other compatible interests. Scardino has sought U.S. partners in a possible bid, including General Electric, parent of NBC Universal, which owns the business news channel CNBC.
But Pearson Chairman Glen Moreno has not warmed to the idea of a merger with Dow Jones, said a source close to the situation.
Also yesterday, MySpace founder Brad Greenspan attempted to buy a piece of Dow Jones, telling the board in a letter that his investment group would offer $60 a share for a 25 percent stake in the company. The move is likely intended to block Murdoch, who bought MySpace in 2005, and would allow the Bancrofts to keep control of Dow Jones. The company had no comment on Greenspan’s proposal.
“Our proposal to take a noncontrolling stake in Dow Jones stands as an attractive alternative to the current options as a vehicle for maximizing shareholder value,” Greenspan said in a written statement.
Greenspan was ousted from MySpace management during a proxy battle in 2003 while the company was being investigated by the Securities and Exchange Commission because of accounting restatements. He contends that his successors sold MySpace (and its parent and related companies) too cheaply to Murdoch, who paid $650 million. Greenspan owned about 10 percent of MySpace and netted about $47 million in the sale.
Last year, a California court tossed out Greenspan’s challenge to the MySpace sale.