CNBC's Faber: Bancrofts Oppose Murdoch Bid for Dow Jones
The Bancroft family is opposing News Corp.'s unsolicited bid of $60 a share, or about $5 billion, for Dow Jones , owner of the Wall Street Journal.
A representative of the Bancroft family, which controls Dow Jones, said that family members and trusts representing slightly more than 50% of the voting shares will vote against the News Corp. offer, according to a statement by Dow Jones.
News Corp. , which is controlled by Rupert Murdoch, proposed the acquisition in a letter sent to the Dow Jones board two weeks ago.
News of Murdoch's bid was first reported Tuesday morning by CNBC's David Faber.
In an interview on Fox News Tuesday afternoon, Murdoch said he expected to have a meeting with Bancroft representatives "sometime in the next two or three weeks" but hasn't been directly in touch with family members.
"The chance of the family sticking together and holding out against this seem to me … somewhat remote. I think this is the start of a process, not the end,” said Anthony Fry, managing director at Lehman Brothers, on "Worldwide Exchange" Wednesday.
"Great Deal to be Done"
"There's a great deal to be done here," Murdoch said of the Wall Street Journal. "It's got great journalists. It's got great management, but it's got a rather confined capital. It needs to be part of a bigger organization to be taken further."
Murdoch, who has built News Corp. into a media empire extending far beyond its roots in the newspaper business, has carried with him a deep desire to own Dow Jones and its prized property, the Wall Street Journal.
Later this year, News Corp. is expected to begin a business news channel to compete with CNBC. The addition of Dow Jones would certainly help those efforts, Faber said. CNBC currently has a partnership with Dow Jones that extends until 2012.
In the Fox interview, Murdoch said he didn't see the CNBC relationship with Dow Jones as a problem.
"There is a deal already with CNBC," Murdoch said. "But we just want to have a business channel that lives up the quality and traditions of the Wall Street Journal and we think if we could do that we would do very well."
Murdoch said he was "not aware" of any regulatory issues that might prove to be a stumbling block for a News Corp. acquisition of Dow Jones.
"There are no laws against this," Murdoch said, noting that U.S. laws
currently don't prohibit overlapping ownership of a national newspaper and a
broadcast station. "There's no monopoly issue."
CNBC's Jim Cramer said Murdoch has been interested in Dow Jones for at least a decade and believes he has a better chance of securing a deal now. Murdoch called Cramer in 1996 when Dow Jones was trading in the 40's -- higher than it's trading now -- and asked him whether he should make a $73 a share offer for the company, Cramer said on CNBC.
"I suggested at the time that the family would reject it," Cramer said. But "ten years have passed and the stock is down substantially from when he wanted to make the bid...It's clear to me that the pressure on newspaper is so great that this time, so much better than 1996, he has a shot of pulling it off."
Cramer also said there has always been a sense that some of the Dow Jones board members are tired of the low stock price.
Not So Unsolicited
According to CNBC's Charlie Gasparino, Murdoch's "unsolicited bid" for Dow Jones may not have been so unsolicited. Acording to people with knowledge of Murdoch's intentions, he recently put out feelers to the powers-that-be at Dow Jones--either key board members or members of the controlling Bancroft family--about his intentions and received a positive reception.
"Rupert has been looking at this for a while," one person told Gasparino. "He recently put out feelers and the reception was good."
With the Bancroft family opposed to the deal, it's unclear whether other potential buyers for Dow Jones might surface.
"We’re talking about lots of ups to Dow Jones share price so I think private equity would have a tough time matching the offer," Amanda Purton, media analyst at Barclays Stockbrokers, told "Worldwide Exchange" on Wednesday.
Norman Pearlstine, former managing editor of the Wall Street Journal and now senior adviser to Carlyle Group's telecom and media team, said he is not advising Carlyle to bid against News Corps.'s $60-per-share offer: "At these kinds of price levels,” any rival bid “would have to be a careful and considered decision.”
Pearlstine said if the Bancroft family votes against Murdoch’s bid, it would create a “very fluid situation.”
But finding rival bidders might be difficult, Pearlstine said. Private-equity firms--which seek assets with resale value as much as low purchase prices-- haven’t been big players in newspaper deals, Pearstine said. Thus, to line up a competitive bid, “you’d have to find another person who can write a $350 million check,” he said.
Mort Zuckerman, chairman of Boston Properties and publisher of the New York Daily News, called the News Corp.'s offer a "brilliant move."
"He’s starting a business channel and he’ll be able marry this (proposed acquisition) to the business channel," Zuckerman told CNBC. "And he offered a price, recognizing what capital gains rates are now, that’s hugely attractive for a lot of members of the Bancroft family who have been unhappy with the way the stock has performed.”
Shares of several U.S. newspaper and media stocks rose on the news.