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News Corp. sets sights on Dow Jones

The media giant and MySpace parent has launched a high-value takeover bid for The Wall Street Journal publisher.

Can Rupert Murdoch sell The Wall Street Journal to the MySpace generation?

It's an odd question, but it's a subject executives from Murdoch's News Corp. might end up discussing if Dow Jones, The Wall Street Journal publisher, accepts News Corp.'s multibillion-dollar buyout offer. If accepted, such a deal would marry News Corp.'s properties, including cable channel Fox News and Web phenomenon MySpace, with Dow Jones' venerable Journal, WSJ Online and the Web financial site MarketWatch, among other assets.

Both companies confirmed Tuesday that News Corp. offered to buy all of Dow Jones' outstanding shares for $60 per share, either all in cash or through some combination of cash and News Corp. securities. The bid, described by News Corp. as "friendly," sent Dow Jones shares up more than 50 percent to $58 in late afternoon trading. News Corp.'s bid is remarkable for its premium, which would value Dow Jones at more than double its trading value.

But the deal has already met with resistance from one of Dow Jones' board of directors and a member of the Bancroft family, which controls more than 50 percent of the voting power in the company. Dow Jones said Michael Elefante, a director and a representative of Bancroft's, told the company Tuesday that members of the family said they would vote against the proposal. Dow Jones said its board of directors would consider the information from Elefante as it looks at News Corp.'s offer.

Media experts say that the proposed deal would give News Corp. an immediate entry into the financial news world and--at least in the short term--the News Corp./Dow Jones combo could be more about television than the Internet. News Corp. execs have long expressed aspirations to launch a financial news cable channel to rival CNBC, and the acquisition would give them a leg up in that effort. (Still, Dow Jones has a licensing deal with CNBC to provide financial news content, and media analysts suspect that News Corp. would likely let that contract expire.)

News Corp.'s proposed bid could invite competitive offers, however. In the first quarter of 2007, Dow Jones teamed up with Barry Diller's InterActive Corp. to jointly build a personal finance site for consumers, which has yet to launch. That deal could invite bids from Diller's IAC.

If News Corp. landed Dow Jones, it would also claim ownership to one of the few and most prominent success stories in subscription publishing on the Web. Like most newspapers, the Journal has struggled with changing readership habits in the digital age, along with declining print advertising sales.

But the publisher has offset those declines by selling subscriptions online--it's one of the few news outlets, along with The New York Times, to prove the model can work. In its most recent quarter, Dow Jones reported a 17.9 percent year-over-year rise in revenue based on growth in Dow Jones Online and the acquisition of financial search service Factiva, offsetting "modest declines" in the Journal print edition, according to a company press release.

"It's worth thinking about that Dow Jones' business is quite diversified. Take the entire company, and (a large portion of revenues) are from Internet-related businesses," said Rick Edmonds, media business analyst at the Poynter Institute. "Given what Murdoch has said, that he wants News Corp. to be part of that digital transition," it makes sense to buy Dow Jones.

To be sure, Murdoch reportedly plans to host a News Corp. summit for its 50 top new media executives in California next month, when the team will talk about the company's digital media future.

News Corp. has a growing list of Web properties, including the leading social networking site MySpace, the Fox News network online, IGN Entertainment and Scout.com. Dow Jones owns Barron's, MarketWatch and the Dow Jones Newswires. It recently acquired the European financial news site eFinancialNews.

"This deal would definitely give (the combined company) a lot of outlets to different sources of people that aren't reading financial news today. People like the MySpace generation," said Josh Martin, analyst at Yankee Group.

Representatives from News Corp. and Dow Jones did not immediately respond to requests for comment.