Two months ago, Rupert Murdoch lobbed in a massive offer for Dow Jones and retreated to a safe distance. Since then, the controlling Bancroft family appears to have made a pretty good fist of undermining its own negotiating position.
First, the family showed weakness by making it clear that its members are by no means agreed on what they want. An initial emphatic rejection of the $5bn offer turned into a decision to explore a sale without Mr Murdoch even lifting a finger. Second, in a statement earlier this month – which appears to have put the company up for sale without the family really understanding the implications – the Bancrofts made it clear they believe Dow Jones might struggle as an independent entity in the future. To give the impression of being a forced seller is hardly helpful.
Third, the family has gone down the road of negotiating matters of editorial independence (its most powerful weapon) separately from price. If these issues can be hammered out, there are not many good reasons why Mr Murdoch would raise his bid. It is already very generous and has proved sufficiently high to scare off even the most obvious counter-bidders: Pearson, owner of the Financial Times, and General Electric, owner of CNBC, the business television channel.
The Dow Jones board has taken belated control of the sale process. Despite inheriting a poor hand, it still has some room to use the editorial independence weapon. And perhaps it can even try to use the Bancrofts’ disarray to its advantage. The lack of a clear family voice makes decisions seriously unpredictable. It remains feasible that key family members could get cold feet at any stage.
Mr Murdoch seems to have no rival bidders. But he wants the asset badly. The board could yet try to persuade him that, unless he sweetens his offer, he runs the risk of further wavering by family members.
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