Murdoch eyes Dow Jones
Dasu Krishnamoorty
In the middle of the gloom that envelops the newspaper industry in the United States, Rupert Murdoch made a sensational offer this month to buy Dow Jones, which virtually defines financial news, for $5 billion, an offer that is believed to scotch all competition. As a result, Dow Jones shares went up from $19.78 to $56.20 soon after the bid. The media are full of the Murdoch bonanza to the Bancroft family that owns 24.7 per cent of equity but wields 64.7 per cent of its voting power.
The media coverage is a tribute to an American icon and not a bit of American pride is involved in opposing the transfer of Dow Jones into the hands of Murdoch, about whose reputation as owner there are conflicting views. He has promised the Bancrofts that he will respect their traditions of non-interference with editorial work. Not many believe him. ?What if he sacrifices its journalism for pursuit of profit and political influence,? asked the Economist in an editorial.
The Bancrofts are in no hurry. Neither is Murdoch. He is prepared to wait and according to several columnists, David Lieberman of USA Today for example, he will succeed in capturing the media jewel. There is resistance from most members of the Bancroft family but the younger set, according to the Murdoch-owned New York Post, is keen on the sale taking place. T. Rowe Price, Dow Jones¿ biggest outside shareholder, also thinks the price is fair enough to be grabbed. Murdoch is counting on time to work in his favour. Analysts believe that Reuters, Bloomberg, Washington Post and Warren Buffet may also bid for the Dow Jones cake.
There are fears that Murdoch will change the basic personality of the Wall Street Journal as he did with the Times, London, which he reduced to a tabloid size. The employees union, Independent Union of Publishers¿ Employees, urged the Bancrofts to reject the offer. But there are fears that if the offer is rejected the share price will plummet to below $35. At one time, the Bancroft family was willing to sell their stock at $30 per share. If the family says yes to Murdoch, its fortunes will double overnight.
David Kirkpatrick writing in the New York Times feels that Murdoch is a kind of old revolutionary who delights in assaulting entrenched power. He cites the example of Murdoch buying control over the 20th Century Fox in the eighties only to use its executives and library to build Fox TV to challenge the Big Three of US television. He launched the British Sky Broadcasting Company to end the hegemony of the BBC. In Britain, he bought the Sun, the Times and the Sunday Times and made them commercially viable.
About the degree of editorial independence under Murdoch, his editors are divided. Harold Evans, a former editor of the Times, London, had to leave within a year after Murdoch took it over. But Robert Thomson, the current Times editor and several other current and former senior journalists, say according WSJ, that Murdoch gives editors wide latitude. A former editor of the New York Post Ken Chandler says he felt that Murdoch had a positive influence on the paper.
Apart from the desire to breaking monopolies, Murdoch has business reasons to offer the stunning price. WSJ says, ?Dow Jones¿s content and brands could help him build a global business brand, which would include the soon-to-be-launched Fox business news channel, which could benefit from an alliance with The Wall Street Journal.? NYT thinks, ?There is business synergy in the deal - between the News Corporation¿s proposed Fox Business cable channel and the Journal, for example. But far more important is Mr. Murdoch¿s own version of synergy, which puts business, media and government all in a single vertical. The Journal would give him leverage in all three.?
Murdoch¿s globe-spanning media empire is now worth $67 billion and includes among others 20th Century Fox, its TV studios and several TV channels, the National Geographic Channel, the New York Post, Harper Collins, MySpace.com etc. in the US and six newspapers in Britain, 21 newspapers in Australia, Fiji and Papua and New Guinea. The Dow Jones deal will add the Wall Street Journal, WSJ Online, WSJ radio network, Barrons, MraketWatch, Far Eastern Economic Review, Dow Jones Newswires, eight daily and 15 weekly community newspapers with Internet sites.
At least three newspapers saw a conflict scenario. USA Today envisages that the conflict will centre on the concept of two-tier stocks. Each of the B shares that the Bancroft family holds is equivalent to ten of the A shares held by the public. The New York Times Co. and the Washington Post Co. also have a two-tier classification of shares. The New York Post believes that the offer has polarized the family. ?For the three dozen members of the family, the offer has raised a divisive conflict,? the Post said. At a board meeting 54 per cent of the Dow Jones voters rejected the Murdoch offer. A WSJ report says, ?The company¿s decision - and the slim margin of the vote - sets the stage for a complicated clash of interest and allegiances which increases potential tensions between the Bancrofts, Dow Jones board of directors and other share holders eager to sell the company.?
American media focus is so acutely centered on the likely sale of an American icon that they took very little notice of another big offer of $ 17.5 billion from Thomson Corporation of Canada to buy the Reuters Group, an equally big British media house specializing in financial news. Acquiring Reuters would mean for Thomson an increase in its competitive position with Bloomberg, the current market leader. According to the New York Times, the merger will push up Thomson share of the market to 34 per cent compared to Bloomberg¿s 33 per cent. But the deal will have to be cleared by the anti-trust authority of the European Commission which has tougher merger norms than they are in the US.
Murdoch is biding time and is willing to raise the price if that is the tactic of the Bancrofts who were prepared to sell it for far lesser price sometime ago. Many journalists are not comfortable with the shifty ways of Murdoch who is known for his ?goalongism,? a Herbert Schiller expression for opportunism. The Economist warned, ?Mr. Murdoch is a symptom, not a cause of the trends that have changed journalism over the last three decades; and he makes money by exploiting them.?
The Columbia Journalism Review sounded very protective when it asked presidential candidates to include Murdoch-type raids in their campaigning plank. It wrote in an editorial, ?Political candidates in the coming campaign ought to be routinely queried about their information policy, just as they are asked about their domestic and foreign policies. An ideal plank might call for strengthening the independence and resources of public television and radio; increased and energetic antitrust action to hold at bay the conglomerates whose constant swallowing of media ultimately impedes healthy competition and homogenizes content; a Net Neutrality Act (to preserve a free and open Internet); and a tax break for those who inherit small family newspapers so they will not be forced to sell to the nearest chain.?