Murdoch Said to Be Close to Terms on Journal

RICHARD SIKLOS and ANDREW ROSS SORKIN
NY Times
Monday June 25, 2007

The News Corporation, controlled by Rupert Murdoch, and advisers for Dow Jones and its controlling Bancroft family were close last night to agreeing on terms designed to protect The Wall Street Journal’s newsroom independence if the company accepts a takeover bid from Mr. Murdoch, according to several people briefed on the talks.

However, these people cautioned that a deal between Mr. Murdoch and the Bancrofts’ advisers did not mean that either the Dow Jones board or the family, which controls 64 percent of the shareholder votes, would approve the arrangement.

If an agreement on newsroom independence were to be made by the Dow Jones board, the News Corporation and the Bancroft family, the only barrier standing in the way of Mr. Murdoch’s control of The Wall Street Journal would be the selling price.

Mr. Murdoch has offered $60 a share for Dow Jones, which he has long wanted to add to his global media empire, and promises that he will not meddle in the news pages. But the Bancroft family, which has controlled the company for more than 100 years, is wary of his reputation for sensationalism and for interfering in the news operations of his media companies for his own political or financial ends.

Over the weekend, Mr. Murdoch responded to a proposal of editorial assurances the Bancrofts sent him on Friday, which his advisers described as wholly unacceptable and virtually identical to what the Bancrofts had proposed three weeks ago. Mr. Murdoch’s counterproposal closely mirrored Mr. Murdoch’s initial proposal, said one person with knowledge of the offer who was not authorized to speak publicly.

Under the proposal, the News Corporation would maintain a 16-member board of directors at Dow Jones and five of those directors would form a special committee charged with preserving editorial independence. The committee’s members would be mutually agreed on by News Corporation and the Bancrofts and would oversee the hiring of the managing editor and editorial page editor. Unlike the Bancroft’s proposal which Mr. Murdoch rejected, the committee would not also oversee budgets and the appointment of publisher.

The News Corporation proposal also offers a seat on its board to a Bancroft family member of its choosing, rather than two members of the family’s choosing as they had proposed. Whereas the Bancroft proposal entrusted the committee with oversight of Dow Jones brands, Mr. Murdoch’s counter-proposal does not. However, it does give the managing editor approval over any deal to use the Journal brand with any business not owned by News Corporation.

That plan resembles one put in place at The Times of London, which he bought in 1981. Some critics and former employees of The Times have accused Mr. Murdoch of reneging on his promises to not interfere in The Times’s news pages, though other editors have said he has maintained the paper’s independence.

Before agreeing to meet Mr. Murdoch on June 4, the Bancrofts had said they had “reached consensus that the mission of Dow Jones may be better accomplished in combination or collaboration with another organization, which may include News Corporation.”

However, since making that statement, no other strong competing bids have emerged. Without one, it is difficult to know how far Dow Jones can push Mr. Murdoch on price. The News Corporation is offering a premium of 67 percent over what Dow Jones shares were trading at when the offer first became public.