Murdoch’s Dow dance nearing a climax?

Marketplace Staff Jun 25, 2007


Tess Vigeland: It was thrust-and-parry over the weekend in the offices of Rupert Murdoch, who wants to own Dow Jones, and the Bancroft family, which owns Dow Jones. Murdoch is offering $5 billion dollars — $60 a share — for the media company that owns the Wall Street Journal.

So far, no deal, but quite a bit of drama. Editorial independence is still a major sticking point, as is the Bancroft family’s potential stake in Murdoch’s News Corporation. For some details, we turn to Dan Sabbagh, media editor at the Times of London. Welcome, Dan.

Dan Sabbagh:Thank you.

Vigeland: From what I’ve read today, Rupert Murdoch actually had a letter drawn up that would have withdrawn his entire offer — that’s how upset he was.

Sabbagh:I think he was at one point. But I think there’s a big prize here, in Dow Jones and the Wall Street Journal paper and a company he’s very interested in… So I don’t get the sense that talks are on the verge of breaking down.

Vigeland: This control issue — a lot of it seemed to boil down to how many members of the Bancroft family would be allowed on the board of News Corporation. They had suggested they wanted two out of the 15 board members. Murdoch is say “No way, you’re going to get one.” How are they going to resolve this one?

Sabbagh: Look, this is only a $5 billion company, the Down Jones, and News Corp. is worth $68 billion. I think to ask for two members on the board is, again, quite a lot, and I don’t know if that’s a concession that News Corp. is willing to consider.

Vigeland: What stumbling block, do you think, has to be removed before this can finally end? Is there one thing that could happen for this thing to be tied up?

Sabbagh: I think there are two things that News Corp. is looking for. One is to have financial and commercial control. The second thing is, you know, if News Corp. is going to spend $5 billion of shareholder’s money, it does expect to not have to run the business in a reasonably unpleasant way. I think what News Corp. will accept is some structures that provide some guarantees for the editorial independence — but not ones that virtually retain Bancroft control by the back door.

Vigeland: Dan Sabbagh is media editor for the Times of London. Thank you so much for helping us out.

Sabbagh: Thanks very much.

Vigeland: The Times of London is owned, by the way, by News Corporation.

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