Murdoch's News Corp. bids $5b for Dow Jones

The conservative press baron who built an empire by shaking up the media business with cable TV and tabloid news has set his gaze on one of the most prestigious prizes in American publishing, Dow Jones & Co , publisher of The Wall Street Journal .

The bid yesterday by Rupert Murdoch's News Corp. , which offered $60 a share for Dow Jones, or about $5 billion, sent Dow Jones stock soaring 54.7 percent and triggered shudders through the beleaguered world of newspaper publishing.

There's more to the News Corp. bid than just business expansion. A successful bid would fuel Murdoch's personal and political ambitions.

"For years, he has coveted The Wall Street Journal. He has made no secret of the fact that he would like to own it," said Kenneth Chandler , former editor of the Boston Herald, once owned by Murdoch. "From a political viewpoint, it would be a strong counterweight to The New York Times as a national political force in this country."

Murdoch's bid represented a 61 percent premium over yesterday's Dow Jones' opening stock price of $37.12. Analysts said the generous offer was clearly intended to persuade the family that owns a controlling stake in Dow Jones -- the Bancrofts , a clan with deep roots in Boston and New England -- to sell.

A Dow Jones news release said Murdoch's $5 billion bid -- which came before the company's annual shareholder meeting April 18 -- was in cash or cash plus News Corp. stock. In an interview on Fox News, Murdoch said he hoped to meet with the Bancrofts, but later yesterday afternoon Dow Jones said in a separate statement that the family was inclined to reject Murdoch's take over bid.

Like the Sulzberger family, which controls The New York Times Co. , owner of The Boston Globe, the Bancrofts have "super shares" in two-tiered stock arrangements that allow them to maintain control of the companies' management and fortunes, even as shareholders have complained about stumbling stock prices and financial decision-making. In both cases, the stock has been carefully arranged to keep power in the families, said John Morton , a newspaper analyst at Morton Research Inc., in Silver Spring, Md.

Even an extraordinarily high premium or additional shareholder pressure will not make a difference, as long as family members do not want to sell, Morton said. "Until those families decide they want to do something different, nothing is going to happen," said Morton.

Dow Jones said its board would factor the Bancrofts' initial opposition into its evaluation of Murdoch's bid, but the stock remained strong in after-hours trading and analysts said that the drama was far from over. Dow Jones' 17-member board of directors includes three members of the Bancroft family. A fourth member of the board, Boston attorney Michael B. Elefante, is attorney to Bancroft family trusts.

"What we don't know is if they rejected it but will still look at a sweetened offer or will review other unsolicited offers," said Larry Grimes, president of W.B. Grimes & Co., a newspaper acquisition and mergers consulting firm in Gaithersburg, Md. "Now is the time to test those waters."

The Sulzbergers have resisted selling or diluting their control, most recently at an annual meeting where 42 percent of the shareholders of common stock withheld their votes for directors, signifying their dissatisfaction with Sulzberger leadership. The vote was symbolic, because the common stockholders can elect only 30 percent of the board.

Murdoch's bid augured a potentially big shift in the newspaper industry. Newspapers are suffering precipitous declines in advertising revenue and readership, and they are scrambling to find ways to make money by pushing content to the Internet. Publishers have been cutting staffs to save money, and publicly held newspapers have been under increasing stockholder pressure to sell to private investors such as Sam Zell , a Chicago real estate magnate who is buying Tribune Co.

In the case of Dow Jones, analysts said Murdoch was seeking to dramatically enhance News Corp.'s national penetration, prestige, and power in business reporting.

"It fits in News Corp.'s plans to become a multimedia player in financial media," said Louis Capital Markets' head of global research, Robbert Van Batenburg . Fox News, he said, plans to launch a cable channel devoted to business in what News Corp. estimates will be 30 million American homes in the fourth quarter of this year to compete with CNBC. Owning Dow Jones would give him instant access to trusted, high-quality content, Van Batenburg said.

Louis Ureneck , chairman of the journalism department at Boston University, also put the Murdoch bid in a different category from Zell's purchase of Tribune Co. The Wall Street Journal is the second-largest newspaper by circulation in the country, and its media services and Internet operation are highly valued by investors hunting for market information, Ureneck said.

"Murdoch has an instinct for valuable properties, and he is looking here to leverage this property across his other assets," he said. "It has to be taken seriously."

Murdoch's news operations in the United States are known for their tabloid style and a conservative viewpoint. But Murdoch also owns The Times of London , a relatively staid publication that has kept its reputation for quality.

"He does have an ability to keep his hands off some properties rather than take them down market," Ureneck said. "He would not seek to damage the credibility of Dow Jones and The Wall Street Journal, because that's where the value is."

Nonetheless, Ureneck and other newspaper specialists viewed the move as potentially negative for journalism, if Murdoch succeeds.

"If he were able to gain control of The Wall Street Journal, which has been protected by the Bancroft family over the years, it could mean a substantial degradation of the quality of the news operation of the paper," said Bryce Nelson , a journalism professor at the Annenberg School of Communication at the University of Southern California. "He hasn't show that he is highly committed to nonpartisan, in-depth news coverage in other publications."

The union representing Dow Jones employees, the Independent Association of Publishers' Employees, was harshly critical of the prospect of being owned by Murdoch, and issued a statement saying that Murdoch's bid was opposed by the staff from "top to bottom." The union encouraged the Bancrofts to "stand up for the institution's independence, and to walk away from this offer."

Ross Kerber of the Globe staff contributed to this story and material from the Associated Press was used. Christopher Rowland can be reached at crowland@globe.com.