Rupert Murdoch has sealed a deal to buy Wall Street Journal publisher Dow Jones & Co for US$5 billion, ending a century of family ownership and adding a new crown jewel to his global media empire, News Corp.
The companies said in the wee hours of yesterday morning that they signed a definitive merger agreement after the deal won sufficient support to pass from a deeply divided Bancroft family, which has controlled the newspaper publisher for generations.
Murdoch is getting one of the great trophies of US journalism and a newspaper that is considered required reading among the business and power elite.
The deal will also expand Murdoch's already massive global media and entertainment empire News Corp, which owns the Fox broadcast network, Fox News Channel, the Twentieth Century Fox movie and TV studio, MySpace, newspapers in Australia and the UK, and several satellite TV broadcasters.
Dow Jones and News Corp said in a statement that Bancroft family members and trustees representing 37 percent of the company's shareholder vote have agreed to support the deal. Combined with the 29 percent of the vote held by public shareholders, who are very likely to support Murdoch, the deal is now assured of passing.
The companies said a member of the Bancroft family or another mutually acceptable person would be appointed to News Corp's board of directors as part of the agreement.
The Bancroft family, descended over several generations from an early owner of Dow Jones, Clarence Barron, clashed long and hard over whether to sell to Murdoch, with several members saying they feared the quality and independence of the paper would suffer under his watch.
Some family members actively sought alternatives to Murdoch -- without success.
The Bancroft family initially rebuffed Murdoch in early May, but then agreed to reconsider. Last week, they heard exhaustive presentations on Murdoch's plans but remained divided.
Wrangling continued past a Monday deadline for them to signal their intentions, and on Tuesday the break came when a holdout trust agreed to support the deal, apparently after Dow Jones agreed to pay the family's advisers' fees, the Journal reported.
Murdoch had long been interested in owning Dow Jones, but it was widely assumed that the Bancroft family would not sell. In the end, his price of US$60 per share -- a good 65 percent over the level of Dow Jones' shares before his offer became public -- proved too rich to turn down.
The companies' statement put the value of the deal at US$5.6 billion, but it was not clear if that figure also included the assumption of debt, and the companies did not provide a breakdown of how they arrived at that figure. Dow Jones' most recent financial filing shows it has 83.8 million shares outstanding, valuing the company at US$5 billion at Murdoch's price of US$60 per share.
Murdoch has said he would invest in the Journal's Washington bureau and digital operations and expand its domestic readership, taking on the two other national US newspapers, the New York Times and Gannett Co's USA Today. He has also said he would expand the Journal's presence overseas, where it would go up against other business publications including Pearson PLC's Financial Times.
Murdoch also plans to launch a business-themed cable news channel in the US later this year to rival General Electric Co's highly profitable CNBC network. Murdoch hopes Dow Jones' news resources and brand name help jump-start that channel, but he would have to negotiate out of a deal CNBC has to use Dow Jones news through 2012.