Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Murdoch Snaps Up Dow Jones with $5Bln Offer

APMurdoch leaving his office Tuesday after his board of directors voted to buy Wall Street Journal publisher Dow Jones.
WASHINGTON -- Rupert Murdoch has won the Wall Street Journal.

The boards of directors of Journal parent Dow Jones & Co. and Murdoch's News Corp. approved Murdoch's unsolicited $5 billion bid for the company Tuesday night, a source said. The offer received more than enough support from the deeply split Bancroft family, Dow Jones's controlling owners.

The deal places America's premier financial newspaper in the hands of a 76-year-old mogul who owns what may soon become the world's largest media company. News Corp.'s properties include the Times of London, "American Idol," "The Simpsons Movie," Fox News Channel, MySpace, National Geographic television and a British tabloid that prints photos of topless women.

The source who confirmed the deal spoke on condition of anonymity because the takeover had not been formally announced.

The colorful and controversial tabloid king faced strong opposition during his four-month run at Dow Jones and whipped up worries that he would destroy the credibility of the august Journal. But his $60-a-share bid for the company, which also includes Barron's financial weekly, Dow Jones Newswires and the Ottaway community papers, proved too lucrative to resist. The bid represented a 67 percent premium on the trading value of the stock before Murdoch's offer.

After the takeover, which is predicted to take place by the end of the year, the Journal will join a global media conglomerate that already is second in size to only Time Warner. News Corp., valued at nearly $68 billion, dwarfs Dow Jones, which was worth a little more than $3 billion before Murdoch's bid became public May 1 and sent Dow Jones stock soaring. Murdoch first made the offer March 29.

The audacious offer kept potential rivals at bay; no other serious suitors emerged for Dow Jones.

Murdoch has promised to pour money into the Journal and its web site and use his satellite television networks in Europe and Asia to spread Journal content the world over.

The sale is the latest upheaval in the churning U.S. newspaper industry, which continues to lose readers and advertisers to other media, and will probably change the landscape of financial news reporting. Rival publications such as the Financial Times and CNBC must now ready for battle against a Murdoch-backed, more muscular Journal and the cable business news channel Murdoch plans to start in October. Fox Business Network would be a rival to CNBC, and probably will use the 750 financial journalists in the Journal's newsroom to provide it with content.

Possibly complicating matters: CNBC has a content-sharing contract with the Journal that runs for five more years.

"CNBC expects the contract to be honored no matter who owns Dow Jones," said Kevin Goldman, the cable channel's vice president of media relations. "CNBC remains the global leader in business news providing information that is fast, accurate, actionable and unbiased." News Corp. had no comment on the possible dissolution of the deal with CNBC.

Murdoch's acquisition of the Journal probably will force other financial news outlets to beef up as well.

British rival Pearson, which publishes the Financial Times and held some informal talks about teaming with General Electric to bid on Dow Jones, is exploring distribution options with a number of media outlets, Pearson chief executive Marjorie Scardino told the British press this week.

Catherine Mathis, vice president of corporate communications at the New York Times, said, "We have a number of things in the works to ensure we remain competitive."

There appear to be no regulatory hurdles to the deal. Though the U.S. Federal Communications Commission prohibits one company from owning a television station and local newspaper in the same city -- News Corp. owns a station in New York -- regulators consider the Journal a national newspaper.

The U.S. Securities and Exchange Commission is probing possible insider-trading violations related to the deal. Dow Jones director David K.P. Li could face civil charges if he is found to have passed news of Murdoch's bid to an acquaintance in Hong Kong, whose daughter bought more than 400,000 shares of Dow Jones stock before Murdoch's offer became public. Li denies the allegations, and neither side thinks the investigation is material to the deal.

Murdoch's bid was opposed by a number of members of the Bancroft family, some past and present Journal employees and media pundits. They feared that the naturalized American press lord would sully the Journal or use it to further his political and business interests, as he has done with other properties he owns.

Murdoch proposed, and Dow Jones eventually agreed to, the creation of a five-member editorial board to act as a buffer between Murdoch and the Journal newsroom and to have a say in the hiring and firing of two of the paper's top editors.

Harold Evans, who worked for Murdoch as editor of the Times of London, has said Murdoch will shred such agreements when he deems necessary. News Corp., on the other hand, says Murdoch takes such pledges seriously; Journal managing editor Marcus Brauchli approved the composition of the proposed editorial board for his paper.

Faced with the same problems as other newspapers, the Journal may have been forced to trim staff and reduce its budget if the Bancrofts had rejected the deal. The descendants of the modern Journal's founder were so bitterly split by Murdoch's offer that some family members have publicly rebuked others and one, Leslie Hill, quit the board in protest last night.