Wednesday, August 1, 2007

WSJ, R.I.P.

Rupert Murdoch’s News Corp. won its $5 billion bid to acquire Dow Jones & Co. in after-hours negotiations yesterday (7/31/2007) following the defection of a key holdout from the controlling Bancroft family.

Eight family controlled trusts hold 64.2% of the shares in the 125-year-old company; the key holdout, known as the Denver Trust, holds just over 9%. The Trust had been holding out for a higher price, but apparently caved when Murdoch threatened to abandon the deal.
Murdoch offered $60-a-share for the company, a 67% premium over Dow Jones’ share price the day the deal was made public.

The Bancroft family had been deeply divided over the offer, with some family members publicly questioning Murdoch’s journalistic ethics and the impact the sale might have on the credibility of the company’s flagship product, The Wall Street Journal.

But in the end, the deal was simply too good to turn down and the financial interests of shareholders won out over any misgivings. Why let a little thing like journalistic ethics get in the way of making a quick buck, right?

“This decision has been difficult and emotional for a great many people because of the long history of this great institution,” said M. Peter McPherson, chairman of the board of Dow Jones. “The board has concluded, with a great deal of family support, that the proposal provides outstanding financial value and provides excellent opportunities to the extraordinary Dow Jones franchise.”

With the Murdoch acquisition of Dow Jones, The Wall Street Journal – which is perhaps one of the most recognizable brands in the print media – will join the growing stable of media products in the News Corp. fold. Murdoch has said he will respect the paper’s editorial independence.

Among other things, Murdoch has alluded to plans to launch a 24-hour financial news channel under the Dow Jones brand.

Dow Jones & Company was founded in 1882 when it began producing one-page, handwritten broadsheets known as "flimsies" for the financial district in New York. For the next 7 years the company published the "Customers' Afternoon Letter" -- a four-page broadsheet marketed to the Wall Street community. The first issue of The Wall Street Journal was published on July 8, 1889 and sold for 2 cents; advertising was 20 cents a line.

We can only hope that the united front of the WSJ editorial staff will manage to hold out against Murdoch's inevitable meddling; but in time, I fear Murdoch will no doubt entrench his own hand-picked staff into the WSJ machinery so that in years to come the paper will be a sorry reflection of what it once was.

Murdoch now needs to get shareholder and regulatory approval to proceed with the deal, both seen largely as a formality. Dow Jones said it expects the deal to close in the fourth quarter.