Internet Outsider

Dear WSJ Bancrofts: Time to #@%$ or Get Off The Pot

Enough already.  The sanctimonious whinging about what will become of the glorious Wall Street Journal if it falls into Rupert Murdoch's nefarious hands is an annoying sideshow, one that has gone on far too long. 

The Bancrofts have two futures: 1) Owners of a lot of moribund Dow Jones stock perpetually worth less than $30 a share, or 2) Former owners of a lot of Dow Jones stock sold for the amazing price of $60 a share.  Time to pick one and move on.

The Journal is a business, not a national park.  It is a business that currently produces a good product--which is why Murdoch wants to buy it.  If Murdoch wrecks the product by turning it into a tabloid, the business will suffer.  For more than seventy years, Murdoch has demonstrated that 1) he understands the newspaper business, and 2) he's not into suffering.  So take Murdoch's generous offer and double your money--or reject it and forever face the wrath and ridicule of Dow Jones' other shareholders.

WSJ Bancrofts: Hallucinating Again...or Just Stalling?

The NYT reports that the Bancrofts have "refined" the ludicrous proposal they made to Rupert Murdoch a few weeks back in which they, not he, would have control over the selection of the Journal's senior editors.  The proposal was absurd, in part because it would have left ongoing operating decisions in the hands of a fragmented family that already has no interest in making them and in part because the main point of buying an asset is to be able to control it.  So Murdoch politely dismissed it. 

But now, the Times reports, the family will present a refined version of the plan, which sounds little different than the prior version.  This means one of three things: 1) The family is still hallucinating, 2) The new plan is unenforceable (which would be allow the Bancrofts to save face and still give Murdoch what he wants), and/or 3) the Bancrofts are just stalling, hoping a more respectable bidder will emerge.

WSJ Reporters Praying Burkle Will Save Them. And How About Google or Yahoo?

The rate of hyperventilation in Wall Street Journal offices presumably slowed yesterday, after a potential Not-Murdoch savior emerged.  After much groveling on the part of Dow Jones employee union head Steve Yount, LA billionaire Ron Burkle has apparently agreed to at least take a look at the Dow Jones deal.  More from the AP's Seth Sutel...

Meanwhile, the hunt is on for other potential white knights.  A savvy friend suggested Google or Yahoo.  The acquisition would be a tuck-in for either (for Google, anyway), and there would certainly be no worries about overbearing editorial control (because neither company is really in that business).  But still seems a long shot.  Not because there wouldn't be synergy--there would.  Just because the move would require a major commitment to a single vertical.

Bancrofts Meet Murdoch, Continue to Hallucinate

Amusing portrayal of yesterday's Bancroft-Murdoch meeting in the NYT: Bancrofts propose ludicrous plan in which they, a fragmented family with no operating media experience, get to elect members of a journalistic-integrity-enforcement-board that Murdoch, the company's owner, will have no control over.  Murdoch's understandable and apparently polite response?  NFW. 

In the interest of Bancroft face-saving, these silly meetings will probably continue for a while, but unless GE or another, more journalistically-respectable suitor jumps in, the deal is as good as done.

Bancrofts Come to Senses and Agree to Sell Dow Jones

...To Murdoch or anyone else willing to pay nearly twice as much as the stock's normal market price.  No, the family statement didn't say that they had agreed to sell Dow Jones, just to chat with Murdoch et al, but that's what it means.

Look out CNBC.  And the New York Times is now presumably in play, too...

From the family statement:

"After a detailed review of the business of Dow Jones and the evolving competitive environment in which it operates, the Family has reached consensus that the mission of Dow Jones may be better accomplished in combination or collaboration with another organization, which may include News Corporation.

"Accordingly, the Family has advised the Company's Board that it intends to meet with News Corporation to determine whether, in the context of the current or any modified News Corporation proposal, it will be possible to ensure the level of commitment to editorial independence, integrity and journalistic freedom that is the hallmark of Dow Jones.

"The Family also indicated its receptivity to other options that might achieve the same overarching objective."

Do Dow Jones' Bancrofts Have Fiduciary Duty to Other Shareholders?

If so, the rejection of the News Corp offer is going to get sticky.  $60 a share is a massive premium over Dow Jones's average trading price over the past twenty years, and it is close to the stock's all-time peak back in 2000 (a bubble-related spike).  Dow Jones shareholders have been awfully patient for an awfully long time, and however attached they may be to the company's timeless and influential brands, they are also presumably focused on their bottom lines.

The Bancrofts' rejection of Murdoch's offer may be a negotiating move (why not?), but if Murdoch raises his offer--or even if he simply reiterates it--the family will likely take increasing heat from the other shareholders and board members.  And as long as the "fiduciary duty" standard applies (which it may not--anyone know?), if the Bancrofts refuse to deal, they will presumably be opening themselves up to legal liability.  The Bancrofts' expressed desire not to see the Journal fall into Murdoch's hands--and to have the Journal-less Bancrofts become "just another rich family")--is presumably not logic shared by the average shareholder.

UPDATE

According to an attorney quoted in the Journal, the family does NOT have a fiduciary duty here, at least not as a unit.  It also sounds as if the family ownership is so diluted that it shouldn't be viewed as a single entity (which certainly creates possibilities for Murdoch).

Why Murdoch Wants Dow Jones (and Why CNBC Should Sweat)

Well, yes, there's some diversification for News Corp (geographical and business-line), and, yes, there is perhaps the ability to fire up the financial performance of an ancient family-controlled company, but, more important, there's also the instantaneous injection of credibility and content into FOX's future business-news channel.

Today's financial TV leader, CNBC, has been understandably nervous about FOX's entry into the market (look at what FOX did to the incumbents in an apparently unassailable three-network TV monopoly a decade or two ago).  Until now, however, the assumption was that the FOX business formula would be "beautiful women reading shocking headlines."  This strategy would certainly allow FOX to run away with some of the viewership (beautiful women reading to testosterone- and adrenalin-filled men is not a lousy gameplan), but CNBC would likely position itself as the "prestigious" and "thoughtful" business channel.

If Rupert is successful in his Dow Jones bid, however, CNBC will look comparatively like business-lite.  The sharp, telegenic Wall Street Journal reporters who now provide CNBC with some of its pith will provide it to FOX's business channel instead.  Executives who want to reach the greatest number of influential leaders will speak first to News/Dow Jones/Marketwatch/FOX Business News--and thus cover all their media bases--instead of to CNBC.  And the combination of MySpace/Marketwatch/Wall Street Journal Online would give News Corp a very credible Internet platform on which to repurpose much of the resulting content (a la Bloomberg).  Since CNBC/NBC has no Internet platform, the TV brand would become increasingly isolated and marginalized.

So the folks at CNBC are presumably hoping that the Dow Jones Bancrofts will snicker at $60 a share and tell Rupert to get lost.  Which they have.  For now.  Which gives the folks at GE/NBC/CNBC a chance to think about whether they really can afford to let Dow Jones fall into Murdoch's hands.