Murdoch Has `Constructive' Talk With Dow Jones Family (Update2)

By Greg Miles and Leon Lazaroff

June 5 (Bloomberg) -- Rupert Murdoch had ``a very long, constructive meeting'' with Dow Jones & Co.'s controlling Bancroft family over his proposal to purchase the publisher of the Wall Street Journal for $5 billion.

Murdoch, 76, described the talks yesterday after leaving his first meeting with the family that has controlled Dow Jones for 105 years. Later, Roy Winnick, a spokesman for the Bancrofts, issued a similar statement agreed to by both sides.

The discussions followed the family's review of Dow Jones's operations last week and their decision to put the company up for sale a month after Murdoch announced his surprise bid. Bancroft family members, with 64 percent of the voting power at New York- based Dow Jones, have a veto over any sale.

``The comments are telling because it means both he and the family recognize that each have to do a little something for the other,'' said Richard Dorfman, managing director of Richard Alan Inc., an investment firm focusing on media companies based in New York. ``Murdoch will get the company. I don't think there is any other credible bidder out there.''

News Corp. has offered Dow Jones shareholders $60 a share, a 65 percent premium to the closing price on April 30, the day before Murdoch's bid became public. The Bancrofts are heirs to the family that has controlled Dow Jones since 1902.

Shares of Dow Jones advanced 27 cents to $60.43 at 12:58 p.m. in New York Stock Exchange composite trading. Class A shares of News Corp. fell 8 cents to $22.49. They had gained 5.1 percent this year before today.

A union representing 2,000 Dow Jones employees said today it enlisted billionaire Ron Burkle to help explore alternatives to Murdoch's bid.

`Constructive Dialog'

At yesterday's meeting, Murdoch and representatives from the Bancroft family discussed ways to structure the company's editorial board and News Corp.'s coverage and business activities in China, the Wall Street Journal reported, citing people familiar with the matter. The newspaper said price wasn't discussed, according to one person close to the family.

``The parties had a constructive dialog and have gone back to consider our positions,'' according to the statement issued by Winnick. News Corp. spokesman Andrew Butcher declined to make any additional comment.

Until last week, the Bancroft family had resisted selling the company to New York-based News Corp. They changed course and decided on May 31 to open talks after reviewing Dow Jones's prospects and conditions in the publishing industry.

`Likely Indication'

Their decision also came after competitors Thomson Corp. and Reuters Group Plc agreed to combine in a $17.2 billion deal. Dow Jones said on May 8 advertising sales at the Wall Street Journal dropped 12 percent in April.

Yesterday's meeting was held at the offices of the Bancrofts' legal adviser, New York-based Wachtell, Lipton, Rosen & Katz. Dow Jones directors Christopher Bancroft, Leslie Hill and Elizabeth Steele, all members of the Bancroft family, attended the meeting, the Wall Street Journal reported.

``The fact that they met with him is a likely indication there will be a deal,'' Dorfman said, adding Murdoch may offer as much as $65 a share to clinch an agreement.

Murdoch is trying to persuade the Bancrofts he is sincere in his pledge to maintain the editorial independence of publications that include the Wall Street Journal and Barron's.

Business News

Dow Jones would give News Corp. a respected name in business news, as well as a news-gathering organization to support the Fox business channel that starts later this year. In addition to the Wall Street Journal and Barron's, Murdoch would acquire Dow Jones Newswires, the MarketWatch.com financial Web site and Factiva, a research service.

Bloomberg LP, parent of Bloomberg News, competes in providing financial news and information.

The News Corp. chairman has provided few specifics about his plans for the Wall Street Journal, the second most widely circulated newspaper in the U.S. after USA Today, except to say its reports and journalists would appear on his cable networks in Europe and Australia and in more than 170 newspapers.

``Murdoch sees the potential of being number one worldwide in business news through cable-TV and the Internet,'' said Ken Doctor, an analyst at Burlingame, California-based Outsell Inc., a market-research company, who spoke before today's statements. ``That's worth a lot of money to him, especially in a very new media world that isn't fully developed.''

To contact the reporter on this story: Leon Lazaroff in New York at llazaroff@bloomberg.net .

Last Updated: June 5, 2007 13:03 EDT

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