A New Era For The Wall Street Journal
One of Wall Street's most iconic firms, Dow Jones & Co., is entering a new era.
Word spread late Tuesday that Rupert Murdoch has succeeded in his bid to buy the 125-year-old purveyor of financial wisdom, despite critics who have doubted whether Murdoch – king of the tabloid format, the mind behind Fox News, and owner of properties including The Times of London, Twentieth Century Fox and MySpace – is the right steward for Dow's flagship property, the Wall Street Journal.
The $5 billion deal, which still requires shareholder approval, got the nod Tuesday from the boards of both Dow Jones and Murdoch's News Corp., which waited until early Wednesday to make an official announcement.
The companies said a member of the Bancroft family or another mutually acceptable person would be appointed to News Corp.'s board of directors as part of the agreement.
The Bancroft family, descended over several generations from an early owner of Dow Jones, Clarence Barron, clashed long and hard over whether to sell to Murdoch, with several members saying they feared the quality and independence of the paper would suffer under his watch.
In a statement released early Wednesday morning, a family spokesman said: "It is our most fervent hope that in the years to come, The Wall Street Journal will continue to enjoy, and deserve, the universal admiration and respect in which it is held all over the world."
The Bancroft family initially rebuffed Murdoch in early May, but then agreed to reconsider. Last week they heard exhaustive presentations on Murdoch's plans but remained divided.
Wrangling continued past a Monday deadline for them to signal their intentions, and on Tuesday the break came when a holdout trust agreed to support the deal, apparently after Dow Jones agreed to pay the family's advisers' fees, the Journal reported.
For Murdoch, it was a long, hard courtship as he ultimately got the Bancroft family – which holds a controlling interest in Dow Jones – to line up 37 percent of the company's overall voting stock in favor of the takeover by the 76-year-old media tycoon.
Not everyone was won over. As the Journal reported the deal on its website, it also delivered the news that one member of the Bancroft family – Leslie Hill – is resigning the Dow Jones board in protest of the sale.
Murdoch will be clinching one of the great trophies of U.S. journalism and a newspaper that is considered required daily reading among the business and power elite.
The planned sale comes as newspapers across the country face a deepening crisis of slumping revenues as readers flock to the Internet for information and entertainment, and advertising dollars chase them there.
The deal for Dow Jones would be the third time in just over a year in which a major newspaper publisher was pushed into a sale. Last year, Knight Ridder Inc. was forced to sell itself following shareholder pressure, and this year Tribune Co. agreed to a going-private transaction orchestrated by the real estate magnate Sam Zell.
News Corp. had said it would only agree to move ahead if the deal had sufficient support from Dow Jones' controlling shareholders, the Bancroft family.
Combined with the 29 percent of the vote held by public shareholders, who are very likely to support Murdoch, the deal is now assured of passing.
In a lengthy letter to fellow family members last week, Bancroft descendant Crawford Hill argued for the sale, saying the family hasn't taken an active enough role in overseeing Dow Jones and is now "paying the price for our passivity over the past 25 years."
Some of the Bancrofts - who collectively hold 64 percent of Dow Jones' vote - had actively sought alternatives to Murdoch's offer.
At various times in the past three months, several family members, a union representing Journal reporters, and former board member Jim Ottaway Jr. expressed concerns about preserving the Journal's quality and independence under Murdoch, saying there was potential for corporate meddling in the Journal's news coverage.
German publishing executive Dieter von Holtzbrinck resigned as a director of Dow Jones two weeks ago after the board tentatively signed off on the deal, saying he was worried about how the Journal would fare under Murdoch.
Murdoch says concerns about potential corporate interference in the Journal's news pages are unwarranted. News Corp. has agreed to create a committee that would have to sign off on any decision to hire or fire top editors at the paper.
Skepticism remains in some quarters as The Journal prepares to step off into a period that is likely to bring many changes.
"I think it's almost naive for anybody to believe that he's going to buy The Journal and keep his hands off the editorial product," said Arlene Morgan, a newspaper industry veteran and an associate dean at the Columbia School of Journalism.
Outside of the Dow Jones building in lower Manhattan Tuesday, Thomas Walker, who works on the global copy desk at The Wall Street Journal, said that he is quitting rather than see the paper sold to Murdoch.
"I don't want to work for the man," he said.