Murdoch's Dow Jones Bid Calls A Bottom On Newspaper Stocks
NEW YORK (MarketWatch) -- Rupert Murdoch, whose unsolicited offer Tuesday to acquire Dow Jones & Co. became public on Tuesday, must be smiling right now. May 1 is known to be a revolutionary day, and now he's made history of his own.
The global media mogul, who is well accustomed to shaking up the communications industry, has done it again by essentially declaring a bottom for newspaper stocks.
Suddenly, Murdoch's audacious plan to launch a business-news television channel and challenge CNBC, has a new dimension too. He would love to combine the prestige of the Wall Street Journal with the reach of Fox News as a way to threaten rival CNBC.
The News Corp. chief caused an uproar in the beleaguered newspaper industry Tuesday morning when CNBC said he made a dramatic and unsolicited bid to acquire Dow Jones for $60 a share. The move sent Dow Jones' shares flying, as they gained 58% immediately following the report.
On Wall Street, there has been speculation for some time that Murdoch wanted to acquire Dow Jones as a way to enhance his international portfolio of media properties.
In the United States, News Corp. is best known for owning Fox News and the New York Post. Ambitious as ever, Murdoch made headlines a few months ago when he announced plans to introduce a business-news channel, which would compete directly with GE-owned CNBC .
Dow Jones publishes the Wall Street Journal, one of the most respected properties in the media industry. It also owns MarketWatch and Barron's, among other assets.
In a statement, Dow Jones confirmed the News Corp. bid.
"The board of directors and members and trustees of the Bancroft family, who hold shares representing a majority of the company's voting power, are evaluating the proposal," Dow Jones said. "There can be no assurance that this evaluation will lead to any transaction."
For several years, newspaper companies have groped for solutions, as readers either tuned out or turned their attention to the Internet. Readers like the convenience, immediacy and interactive features of the Web, and newspapers have been slow in responding to this seismic shift.
As a result, many companies have turned to layoffs as a way of staying competitive in an increasingly electronic world. For instance, Tribune Co. has drawn considerable attention for its staff cuts at the Los Angeles Times.
Dow Jones, like the New York Times and the Washington Post, has been criticized by shareholder activists for maintaining a two-tier stock structure. They say it has contributed to newspaper stocks under-performing the broad market.
The New York Times and the Washington Post also rose in trading Tuesday.
Newspaper publishers have struggled for the past several years to make up for the loss in advertising revenue. Online forces ranging from Google Inc. to Craigslist have elbowed their way into their business.
Now Murdoch is joining them.
By Jon Friedman