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Legal fees grease News Corp deal

The Wall Street Journal building in Midtown Manhattan

TEXT OF INTERVIEW

Kai Ryssdal: Almost three months to the day that the news broke, Rupert Murdoch seems to have won control of Dow Jones and the Wall Street Journal. There are still some boardroom formalities to go through, but all signs are that enough members of the Bancroft family have decided to take Mr. Murdoch up on his offer of $60 a share.

Yesterday about this time, the outcome was in some doubt. Overnight, though, there was a twist. Bancrofts who were against the sale — who had said they were uncomfortable with Rupert Murdoch — changed their minds once they realized they'd be on the hook for lawyers and bankers fees if the deal failed.

Aline Van Duyn's been covering developments today for the Financial Times. And Ms. Van Duyn, was it just that that changed peoples minds — that they're getting their bills paid?

Aline Van Duyn: Well certainly, there were a group of members of the Bancroft family who seemed to be holding out for slightly better terms than those that Rupert Murdoch had offered. He'd offered $60 a share. Some family members wanted to sell, but were hoping for a much higher price. And in the end, it seems like they've settled for a higher price, but in the form of having their legal and advisory fees paid.

Ryssdal: We've been going through the machinations on this deal now for almost three months — since May the First, when news of the bid broke. Was it really fait accompli, back on May the First or Second, when the Bancroft family didn't firmly close the door and stock price zoomed?

Van Duyn: Well certainly, Rupert Murdoch has been trying to think of ways that he can buy the Wall Street Journal and Dow Jones for at least a decade. And it seemed as if he'd spotted an opportunity. But there's been a lot of family turmoil and there continues to be. In the end, though, it's often hard to refuse a large amount of money. And I think there's been historically very few cases where families have managed to hold out in the face of a generous offer for the assets that they've inherited.

Ryssdal: What do you make of the fact that, just watching the market today, that Dow Jones shares are still not back to the $60 that Rupert Murdoch offered three months ago?

Van Duyn: The shares are certainly a lot closer to 60 now than they have been. In fact yesterday, they traded below $50, which seems astonishing just a day before the results of a deal was in. And I think it highlights the uncertainty, and it highlights the divisions.

Ryssdal: Any doubt at all that this deal will close and that'll happen?

Van Duyn: Well, I guess you never know until it's finally signed and sealed, but it seems very unlikely that this will slip away from Mr. Murdoch this time.

Ryssdal: Was this entire protracted episode just an instance of Rupert Murdoch realizing the value of financial information in the digital age, and the Bancroft family realizing it, but a decade or two too late?

Van Duyn: Yes, the Bancroft family have not been a very hands-on newspaper-owning family. Some of the other U.S. newspaper-owning families are much more involved in their businesses. So yes, some of the family members themselves say that they should have been more active in the last 25 years or so to have prevented this. And indeed, Warren Buffett has criticized the family saying that they blew it, and arguing that potentially, Dow Jones could have been worth $50 billion today instead of the $5 billion that Rupert Murdoch's paying for it.

Ryssdal: We shall never know. Aline Van Duyn at the Financial Times, thank you so much.

Van Duyn: Thank you.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.
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