Dow Jones' Board Agrees to News Corp.'s Buyout Offer

Rupert Murdoch's News Corp. has agreed to acquire Dow Jones, publisher of the Wall Street Journal, the companies confirmed Wednesday.

Dow Jones' board agreed to News Corp'.s $5 billion buyout bid, CNBC's David Faber reported Tuesday, with the support of the Bancroft family that has controlled Dow Jones for more than a century.

The companies also agreed on safeguards to ensure editorial independence for the Dow Jones' publications.

Many family members had opposed the $60-a-Share offer, which became public on May 1, fearing Murdoch would interfere with the Journal's editorial independence. But monetary issues appeared to have caused many family members to switch their votes.

AP

"They suddenly realized that if they were to turn down this deal, they would also be on the hook for paying all those fees to their advisers," Faber said, including Merrill Lynch and the law firm of Wachtell Lipton. "It adds up to a big number. So they started "to change their minds."

"I am deeply gratified at the level of support we have received from the Bancroft family and its trustees," Murdoch said in a statement. "Given the Bancrofts' long and distinguished history as custodians of Dow Jones, we appreciate how difficult this decision was for some family members. I want to offer the Bancrofts my thanks, and an assurance that our company and my family will be equally strong custodians.''

"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, and that the Journal and Dow Jones' other print and online publications will continue to achieve great things as part of a larger, well-capitalized, global organization committed to upholding the long tradition of journalistic excellence, independence and editorial integrity of which we are all so proud," the Bancroft familty said in a separate statement.

The companies plan to establish a five-member committee "with the objective of assuring the continued journalistic and editorial integrity and independence of Dow Jones' publications and services."

A Bancroft family member "or another mutually acceptable person" will also sit on the board of News Corp.

Mounting Fees Swing the Deal

Tuesday's board meetings came after members of the Bancroft family holding about 37% of Dow Jones' voting shares signaled that they favored the deal. That level of support represents more than half of the 64% voting shares held by the family.

Family members decided that if they approved the deal, they could try to get Murdoch to cover the fees, Faber said. And that resulted in a large enough percentage of Bancrofts favoring the deal.

The Boston-based branch of the Bancrofts were the first to switch their vote. That prompted the Denver branch to fold as well, bringing the necessary votes to News Corp.'s side, people close to the Denver branch told Faber.

News Corp. will now pay almost all the fees in question, Faber said, though it was unclear whether the $10 million fee of Wachtell Lipton will be included. Wachtell and its lead partner Marty Lipton were key advisors to the Bancrofts.

The Bancrofts are a diverse clan and their voting interest in the company is held through a complex series of privately held trusts, making the outcome difficult to predict.

Dow Jones shareholders still must approve the buyout, an outcome that analysts have said is all but guaranteed, given the 65% premium Murdoch offered.

Over the past few weeks investors have been steadily pushing Dow Jones shares below the $60 price that Murdoch has offered, reflecting increasing doubts about the deal going through.

The Bancroft family has been deeply divided over whether to sell to Murdoch, largely over concerns that his management style could affect the papers' coverage.

Murdoch says any concerns about corporate meddling in the Journal's news coverage are unwarranted.

In a lengthy letter to fellow family members last week, Bancroft descendant Crawford Hill urged them to vote for a sale, saying the family hadn't taken an active enough role in overseeing Dow Jones and was now "paying the price for our passivity over the past 25 years."

Dow Jones, which competes with Reuters, also owns the Barron's financial weekly, the MarketWatch.com financial news Web site and Dow Jones Newswires. Its shares closed up 11.3% at $57.38 ahead of the votes. News Corp.'s shares edged 0.71% lower to $21.12.