Murdoch wins votes to get Dow Jones By SETH SUTEL, AP Business Writer

Murdoch wins votes to get Dow Jones By SETH SUTEL, AP Business Writer
17 minutes ago



NEW YORK - After four months of campaigning, Rupert Murdoch has prevailed, winning over enough of the controlling shareholders of Dow Jones & Co. to ensure success for his $5 billion takeover bid of The Wall Street Journal's publisher.

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The storied newspaper, whose legacy reaches back more than a century to the beginnings of business journalism, will become part of Murdoch's global media conglomerate News Corp., which is also home to Twentieth Century Fox, the Fox broadcast network, Fox News Channel, MySpace, satellite TV broadcasters, and newspapers in Australia and the United Kingdom as well as the New York Post.

The Bancroft family, descended over several generations from an early owner of Dow Jones, Clarence Barron, was deeply divided over selling to Murdoch, with several members saying they feared the quality and independence of the paper would suffer under his watch.

Some family members actively sought viable alternatives to Murdoch — without success. One of them, Leslie Hill, quit Dow Jones' board Tuesday as the deal edged toward completion, the Journal reported. Two weeks ago, another director quit in protest, German publishing executive Dieter von Holtzbrinck.

The boards of both companies approved the deal Tuesday, according to a person with knowledge of the matter who requested anonymity because a formal announcement had yet to be made. That opened the way for a shareholder vote on the proposal, which would likely be held later this year.

The outcome of the vote is now largely assured since Bancroft family members and trusts representing 37 percent of the Dow Jones shareholder vote are in favor of a deal. That's more than half of the family's voting block of 64 percent.

Together with the 29 percent of the company's vote held by public shareholders, who are expected to overwhelmingly approve the deal's rich price, Murdoch now has a comfortable margin of safety for getting the deal approved.

The Bancroft family initially rebuffed Murdoch in early May, but then agreed to reconsider. Last week they heard exhaustive presentations on Murdoch's plans but remained divided.

Wrangling continued past a Monday deadline for them to signal their intentions, and on Tuesday the break came when a holdout trust agreed to support the deal, apparently after Dow Jones agreed to pay the family's advisers' fees, the Journal reported.

Murdoch had long been interested in owning Dow Jones, but it was widely assumed that the Bancroft family wouldn't sell. In the end, his price of $60 per share — a good 65 percent over the level of Dow Jones' shares before his offer became public — proved too rich to turn down.

Murdoch has said he would invest in the Journal's Washington bureau and digital operations and expand its domestic readership, taking on the two other national U.S. newspapers, The New York Times and Gannett Co.'s USA Today. He has also said he would expand the Journal's presence overseas, where it would go up against other business publications including Pearson PLC's Financial Times.

Murdoch also plans to launch a business-themed cable news channel in the United States later this year to rival General Electric Co.'s highly profitable CNBC network. Murdoch hopes Dow Jones' news resources and brand name help jump-start that channel, but he would have to negotiate out of a deal CNBC has to use Dow Jones news through 2012.

Over the years, the Bancrofts' ties to Dow Jones have become more remote, and none of them work in the company's day-to-day affairs. Spread out across the country, the family's three dozen adults include a former airline pilot, investment bankers and philanthropists.

The Bancrofts agonized over their decision, and initially rebuffed Murdoch's offer on May 1. Long proud of their tradition of keeping The Wall Street Journal independent and free from short-term pressures from investors, the family's older members considered themselves stewards of a great American journalistic institution.

However, they also had differences over the future direction of the company, and a decade ago two younger family members publicly agitated for change at Dow Jones and were sidelined.

The Bancrofts had angered Dow Jones shareholders in 2005 when the company passed provisions that would allow the Bancrofts to maintain their voting control even if they reduced their ownership stake.

Dow Jones, like several other newspaper companies, is controlled by a family through a special class of shares with powerful voting rights. Despite owning just 25 percent of the company, the Bancrofts exercise 64 percent of the shareholder vote through the more powerful Class B shares, which aren't traded publicly.

Long though to be an insulation against outside pressure or unexpected takeover offers, the two-class share structure didn't prove to be an impediment to Murdoch, who knew of the family's persistent unrest with Dow Jones' lagging share price.

Even though it was a pioneer in providing financial news and data, Dow Jones has fallen behind rivals such as Reuters Group PLC and Bloomberg LP in the business of providing real-time financial information. Its venture into the data delivery business, Telerate, turned into a bust, and it sold the business in 1998 for $510 million after paying $1.6 billion for it a decade earlier.

The Journal turned out to be particularly vulnerable to a slump in technology and financial advertising, categories on which it has traditionally had a heavy reliance. In recent years, the paper has attempted to broaden its range of advertising revenues by expanding its coverage of non-business topics such as leisure and lifestyle topics.

Nonetheless, its stock has continued to struggle. Dow Jones shares fell steadily over the past three years, from a high of just over $52 in early 2004 to the mid-$30s in the early months of 2007.

A union representing Journal reporters and other Dow Jones employees has objected to Murdoch's bid, saying he would downgrade the quality of the paper's coverage and tilt its stories to suit his business interests. Former board member James Ottaway Jr. also opposed ownership by Murdoch.

Murdoch countered with a promise not to interfere with the paper's newsroom and has agreed to set up a five-member board, whose initial members would be jointly chosen by both News Corp. and Dow Jones, with the power to approve the hiring or fire top editorial officials.

In a letter to readers published in Wednesday editions, Journal publisher Gordon Crovitz sought to allay concerns about the transition.

"Readers can rely on this: The same standards of accuracy, fairness and authority will apply to this publication, regardless of ownership," Crovitz wrote, adding later on: "My colleagues and I hope that as part of a larger company we can extend our journalism more broadly, to serve more readers better."