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May 1, 2007 8:35 pm

Murdoch stalks Dow Jones

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Rupert Murdoch has gone straight for the jugular. Instead of a stealthy pursuit of Dow Jones, the News Corp chairman lobbed in a massive $60-a-share bid. That sends two clear messages.

First, that he is not being cute and attempting to get hold of the Wall Street Journal on the cheap. The offer is bang on the number the controlling Bancroft family’s representative once mooted as a price where a deal might be done – and is a massive 65 per cent premium to the recent trading price. The family has narrowly turned down the opening shot, using its control of the company through super-voting shares. But given Dow Jones’s recent performance – the last time it went sustainably above $60 was during the dotcom bubble – it will be hard to ignore higher offers.

Second, Mr Murdoch is telling rivals to back off. He is used to making such aggressive bets. He loves the news business. He sees real value in the Journal brand, despite the current malaise in the newspaper industry. He can conjure up a “vision” of marrying the Journal with, say, his new Fox business channel as news converges between print, online and video (Dow Jones also brings some other interesting digital properties). Dow Jones could arguably be run better. And, in the context of News Corp as a whole, the $5bn price tag is small.

It is not obvious how the deal makes financial sense at such a price, given the uncertainty around newspapers. But Mr Murdoch, like the Bancrofts, is no stranger to the power dual-voting structures bring. He can roll the dice as he pleases. If he has decided that the powerful Journal brand is worth betting on long-term, he can look through the near-term turbulence. Other potential bidders do not have that luxury. All the big financial information and news groups will have to take a look. But Mr Murdoch is clear favourite if the Bancrofts can be persuaded to sell.

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