Murdoch Makes a Play for Dow Jones

The media king's unsolicited offer of $5 billion for the publisher of The Wall Street Journal is contingent on board approval

By The Associated Press, with BW Staff

Media mogul Rupert Murdoch is offering $5 billion for the publisher of The Wall Street Journal, a potential crown jewel for his News Corp. (NWS) as it formulates a new cable business news channel and expands its lucrative MySpace social-networking property.

Dow Jones (DJ), which publishes the Journal and has the Dow Jones Newswires and MarketWatch news properties, said on May 1 it has received an unsolicited bid from News Corp. to buy the company for $60 per share, or $5 billion. (For a video discussion of the News Corp. bid between BusinessWeek media columnist Jon Fine and senior writer Tom Lowry, click here.)

Shares of the financial news publishing company soared after the cable news channel CNBC reported news of the offer. After opening at $37.12 the shares jumped $20.95, or 58%, to $57.28 before being halted on the New York Stock Exchange for news pending. They had traded in a 52-week range of $32.16 to $40.08 before Tuesday's news.

Evaluating the Proposal

Dow Jones said in a brief statement that its board had received the proposal from News Corp. to buy the company with either cash or a combination of cash and News Corp. stock.

Dow Jones is controlled by the Bancroft family through a special class of shares and cannot be taken over without the family's consent. The company said in its statement that its board and members of the Bancroft family were evaluating the proposal, and that there was no assurance it would lead to a transaction.

If the company signals interest in a sale, Murdoch is likely to confront rival bidders, ranging from media companies to private equity groups. News Corp. has been working to launch a cable TV channel as a rival to CNBC, which is owned by General Electric (GE). Murdoch has said the channel's programming will be generally more favorable to companies and executives than CNBC's.

A spokesman for Dow Jones said the company had no other comment beyond its statement. Spokesmen for News Corp. and the Bancroft family did not immediately return calls seeking additional comment.

News Corp. started out in the newspaper business and still owns a large number of papers, largely in Britain and Australia, including The Sun tabloid in England, The Times of London, and the New York Post. The company is now a major global media conglomerate and owns the Fox broadcast network, Fox News Channel, MySpace, the 20th Century Fox film studio, and satellite broadcasters in Europe and Asia.

Besides The Wall Street Journal, Dow Jones also publishes Dow Jones Newswires, Barron's, several leading market indicators including the Dow Jones industrial average, and a group of community newspapers.

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