Murdoch poised to acquire Dow Jones
The Wall Street Journal building in Midtown Manhattan
KAI RYSSDAL: It appears to be all over but the shouting for Wall Street Journal parent company Dow Jones and Rupert Murdoch. Published reports today — in the Journal, mind you — say Murdoch and Dow's CEO Richard Zannino have come to a tentative understanding. Murdoch gets the Journal, Barrons, Dow Jones Newswires and a bunch of other properties. Dow Jones shareholders get five billion of Murdoch's dollars. Dow's board is set to vote on the matter this evening. What the Bancroft family, which controls about 64 percent of Dow's voting stock, thinks might not be known until next week sometime. So we called Forbes magazine's Managing Editor Dennis Kneale to talk about Mr. Murdoch's investment.
Mr. Kneale, good to have you with us.
DENNIS KNEALE: Thank you.
RYSSDAL: So Rupert Murdoch's paying a 65 percent premium on the share price from May the 1st, when news of this deal broke. So, obviously, no question, it's a good deal for Dow Jones shareholders. Question is, though, is it a good deal for Rupert Murdoch?
KNEALE: Well, this will be a great deal for Rupert Murdoch in many ways. It instantly takes a guy who is dismissed as this Australian-born U.S. citizen, a tabloid-press lord, and gives him credibility by owning one of the best journalistic brands in the entire world. It'll be a good deal for that reason. Also, with this new financial news cable channel that Rupert Murdoch's NewsCorp is starting up, the Wall Street Journal offers an instant flow of content and even on-air talent if he can manage to buy out the contract that CNBC has with the Wall Street Journal.
RYSSDAL: That's all well and good but the last time we checked newspapers were a struggling business model in this country. How's he gonna use all the leverage you say he's buying, if the paper itself is struggling?
KNEALE: Well, the great thing for this deal is that it gives the Wall Street Journal a whole extra outlet to serve with its content. And that is, of course, cable television. And the Journal is not a dying dinosaur. The Journal is a collection of 100 of some of the most trusted bloggers and experts in the world. And they can write for any platform. And the more platforms you can spread that content and those costs over, the better it is for the company.
RYSSDAL: We oughta point out here, probably, that you were at the Journal for about 16, 17 years . . .
KNEALE: I was there, yeah, for 16 years. I grew up at the Wall Street Journal. And I love that newspaper. But I must tell you, the editors there are being really precious and really spoiled in their approach to this Rupert takeover. And that is one problem with the Wall Street Journal, and why it is weak today. Is it is regarding itself as special, when really a newspaper is nothing more than a business. And you better make that business work if you hope to stand on your own.
RYSSDAL: OK, but hold on a second. What's your take on what the reporters at the Journal are feeling today? Would you guess that maybe they're looking for other opportunities?
KNEALE: I'm sure the reporters at the Journal are dressed in black. They're hanging crepe. They're lamenting a horrible, terrible thing that happened to the newspaper. I'm sure that some of them will start looking for jobs. And you know what? They're gonna have to. Because I predict big cutbacks at the Journal. I think that newsroom has 500 employees. I'll betcha they need only 400.
RYSSDAL: Wow. You think Rupert Murdoch's gonna do that?
KNEALE: I think Rupert Murdoch will do that. He'll wait a certain period to honor the Bancroft family. But then he will come in and he will cut. They have a new Saturday edition that's largely a failure. They oughta kill the Saturday edition. They have an entire Europe staff for a newspaper that in 25 years — the European edition — has almost never turned a profit. You oughta kill the European edition. Right there those two big moves would save tons of money. But they would result in the layoff of dozens and dozens of people.
RYSSDAL: Last question before I let you go, Mr. Kneale: Any doubt in your mind that the Dow board's gonna approve this and the Bancroft family will eventually approve it?
KNEALE: The surprise here is that they're acting like there is any tension at all as to whether the Bancroft family will approve. The Bancroft family has enough votes to turn down that offer out of hand. And yet they sat down and talked with a guy they do not like. And that is the surest signal that the Bancroft family dare not turn down this offer. They have basically poorly served other Dow Jones shareholders for the better part of 25 years. They dare not turn it down.
RYSSDAL: Dennis Kneale is the managing editor of Forbes magazine. Mr. Kneale, thanks for your time.
KNEALE: Thank you.