News Corp-Dow Jones: Hope Yet For Rupert

The unions hate it. The owners are going to vote against it. The New York Observer says that it's sunk. So is there any hope for Rupert Murdoch in his bid to buy Dow Jones?

In a word, yes: and a lot of the reason is in the stock price. The Bancrofts allowed Murdoch's bid to get this far, rather than dismissing it out of hand, as they've done with any number of bids in the past. Murdoch himself described the bid as "friendly". So the Bancrofts look as though they're holding out for a higher sum, rather than simply refusing.

What's more, the Bancrofts, as controlling shareholders, do actually have a fiduciary duty to the non-controlling shareholders, as Gary Lutin notes here. If the company turns out not to be for sale and the share price collapses back to where it was pre-bid, there's going to be a lot of very unhappy shareholders that the Bancrofts will have to answer to.

Finally, there's almost certain to be a bidding war, now that Dow Jones is in play. If anything, the problem is that there aren't going to be enough investment banks to advise all the possible suitors – which range from the Washington Post and the New York Times through Pearson and Reuters to GE and even Yahoo. Not to mention the occasional billionaire with a yen for a trophy publication or any number of private-equity shops for whom $5 billion or $6 billion is the kind of money you find down the back of the sofa on a Sunday afternoon.

I just can't see a situation wherein the Bancrofts retain control of the company and the Journal, as IAPE 1096 would like. This still looks very much like the beginning of the end of their days as media magnates. And if they're going to sell anyway, there are definitely pretty good reasons to sell to Rupert.