May 1 (Bloomberg) -- Dow Jones & Co. said Bancroft family members who control more than 50 percent of the company's voting shares will reject a $5 billion takeover bid by Rupert Murdoch's News Corp.

Director Michael B. Elefante told the board of the family's decision, New York-based Dow Jones said today in a statement. News Corp., the third-largest U.S. media company, announced its $60-a-share bid today. The offer was 65 percent above Dow Jones's closing price yesterday and the shares jumped to $57.88.

News Corp.'s proposal, though rejected, may spur other bids, shareholders said. Dow Jones would give a buyer the Wall Street Journal, the second-biggest U.S. newspaper by circulation, the wsj.com Web site, Dow Jones Newswires and Barron's. Dow Jones would satisfy Murdoch's long-expressed desire to own the 125-year- old company and blend its assets with a worldwide empire of 170 newspapers, the Fox News network and 20th Century Fox studio.

``News Corp.'s bid might lead other bidders to recognize the potential value here,'' said Kara Cheseby, an analyst with T. Rowe Price Group Inc. in Baltimore. T. Rowe is Dow Jones' largest shareholder with 15 percent of Class A shares. ``These are attractive assets at Dow Jones.''

News Corp., built by Murdoch from a daily newspaper in Adelaide, Australia, described the offer as ``friendly'' in a separate statement and said the bid may be in cash or a combination of cash and shares.

In an interview on Fox before the Bancrofts rejected the offer, Murdoch said he hadn't spoken to family members directly, though he planned to in the next couple of weeks.

``There's plenty of time and we'll just take it calmly and hope that they will take it calmly,'' Murdoch said.

Bancroft Decision

Any sale hinges on the Bancroft family, which controls about 64 percent of shareholder votes through its ownership of Class A and Class B shares, while owning about 25 percent of the shares.

News Corp.'s bid values the Bancroft family's stake at about $1.23 billion. Christopher Bancroft, his cousin Elizabeth Steele and their cousin Leslie Hill, a retired airline pilot, are on the board. Bancroft and Steele didn't immediately return calls seeking comment.

The Bancrofts are descendants of Jane Bancroft, whose stepfather, Clarence Barron, acquired Dow Jones in 1902, 20 years after it was founded by Charles Dow, Edward Jones, and Charles Bergstresser. Dow Jones began by delivering handwritten bulletins of stock and bond trading news in New York. An afternoon newsletter started the next year and went on to become the Wall Street Journal.

Shares Rise

Dow Jones shares, which fell 4.4 percent this year before today, gained $19.87, or 55 percent, to $56.20 at 4 p.m. in New York Stock Exchange composite trading after News Corp.'s offer. The last time the shares traded above $60 a share was in 2001. Class A shares of New York-based News Corp., also owner of Fox News, Fox Television and Twentieth Century Fox, fell 94 cents to $21.45 on concern that the company would be buying an asset that isn't growing as fast as recent acquisitions such as MySpace.com.

``A $60 bid for Dow Jones has to be considered very seriously,'' said Michael Price, president of MFP Investors in Short Hills, New Jersey, which owns 351,000 Dow Jones shares. ``Murdoch sees the potential of tremendous economies of scale putting the news organizations together.''

Newspaper stocks surged. The Standard and Poor's 500 Publishing & Printing Index climbed 11 percent. Gannett Co., the largest newspaper publisher and owner of USA Today, rose $1.11, or 2 percent, to $58.17; New York Times Co. jumped 5 percent to $24.58; Washington Post Co. gained 2.9 percent to $765.30.

`Greatest Newspaper'

Murdoch, 76, has coveted Dow Jones in the past and today described the Wall Street Journal as ``the greatest newspaper in America.''

``This is a big, generous offer,'' Murdoch said in an interview on his Fox News Channel. Murdoch described the Bancrofts as ``great guardians'' of the Wall Street Journal and said News Corp. would help grow circulation by investing more and expanding the newspaper's coverage.

News Corp. is planning to start its Fox business channel by the end of this year. The network would compete with CNBC and Bloomberg Television.

``This is quintessential Rupert strategy,'' Lawrence J. Haverty Jr., associate portfolio manager at Gamco Investors Inc. in Rye, New York. Gamco had 825,000 Dow Jones shares as of December. ``This is a typical Rupert move. It's a very big idea as opposed to a very small idea. This is not a newspaper, Dow Jones. This is a financial electronic collection and dissemination system of news.''

That may appeal to other companies. General Electric Co., owner of financial news channel CNBC, may be a buyer, Haverty said. GE spokesman Russell Wilkerson declined to comment.

Precludes Some Bids

Murdoch's offer of $60 may put off some potential candidates. The offer is about 17 times Dow Jones' 2007 profit, said Prudential Equity Group analyst Steven Barlow. Newspaper assets, Barlow said, have been selling at 10 to 11 times earnings. Sam Zell's proposed acquisition of Tribune Co. was 9.2 times Tribune's 2006 earnings.

``Clearly, it's a property that News Corp. wants badly and badly enough that it would seem to preclude a lot of competing bids,'' said David Joy, chief market strategist at RiverSource Investments LLC, which owns News Corp. stock.

CNBC earlier reported that Murdoch made the offer in a letter to Dow Jones board members two weeks ago. JPMorgan Chase & Co., Allen & Co. and Centerview Partners are advising News Corp. The Bancroft family hired Merrill Lynch & Co. and Dow Jones retained Goldman Sachs Group Inc. The parties also have legal advisers.

Ad Sales

The newspaper industry is suffering from an exodus of readers and advertisers. U.S. newspaper circulation fell 2.1 percent in the six months through March 30, according to figures released yesterday.

Dow Jones last month said first-quarter profit fell 63 percent after revenue at the Wall Street Journal declined. Chief Executive Officer Richard Zannino has been buying assets such as database manager Factiva to help reduce the company's reliance on newspapers.

The Wall Street Journal's U.S. advertising sales were little changed last month from March 2006, an improvement from a 10 percent decline in February.

The decline shrank Dow Jones's market capitalization to $5 billion, or 7 percent of News Corp.'s value.

Bloomberg LP, the parent of Bloomberg News, competes with Dow Jones in providing financial news and information.

To contact the reporter on this story: Cecile Daurat in New York at cdaurat@bloomberg.netLeon Lazaroff in New York at llazaroff@bloomberg.net.

Last Updated: May 1, 2007 19:31 EDT