Blog Post

NWS-DJ: Thinking It Through

New motto: no day is ever safely declared slow when Rupert Murdoch has money to spend. As we wrote earlier, Murdoch has wanted Dow Jones for a long time — the WSJ and its editorial page are surely a draw but the business news itself online and off is core. The bid closely follows News Corp.’s disentanglement from DirecTV and precedes the anticipated launch later this year of a Fox business channel.

Despite the obvious interest, the timing still caught people off guard. A favorite quote along those lines comes from Vanity Fair columnist Michael Wolff on CNBC: “I think it’s just amazing although I wouldn’t claim any insight here. I’m just as gobsmacked as anybody.” CNBC, which broke the story Tuesday morning, also reported that Murdoch had been given to believe a bid at the right price would not be unwelcome although it’s still termed an “unsolicited” bid. (Update: As we report here, in a statement released after the market closed, the family said it would reject this bid.)

I reached out to former Merrill Lynch analyst Lauren Rich Fine, who captured the situation in Blackberry speak: “Great price. Motivated buyer, ie loves the product and has 24 by 7 to fill on news channel. Shame on Bancrofts if they say no.”

Some elements to consider:

Newco: News Corp. and NBCU have that nifty video JV yet to be named but are competitors in this arena. CNBC has a content deal with Dow Jones that runs for several more years; the proposed business channel already adds to the competition and the DJ element could complicate it.

— Murdoch is already in the newspaper business so he’s well aware of the challenges that industry faces. That also means his reputation precedes him, which may be a plus for some but not for others, especially those concerned about the journalism side. (DJ union IABE is already opposing the sale.) When Pulitzer Publishing, which also had a two-class voting system, sold to Lee Enterprises, some provisions kept certain aspects of the company in place for several years — including running the Pulitzer mission statement. Would he be willing to buy with some limits imposed by the agreement? Say, for instance, keeping management intact for a certain time or promising the Journal autonomy?

DJ in play: Whatever the result with News Corp., Dow Jones is now in play. It’s too big an offer to ignore. Is it too big for other possible buyers? It would be a huge bite to take for some of the media companies that might be a fit — Washington Post, NYT, Gannett. Affording it is one issue; living with it is another. McClatchy is still digesting Knight-Ridder and we’ve all seen how well the Tribune did absorbing Times Mirror. As for private equity, hard to believe someone won’t try. Then again, News Corp.’s $5 billion offer may be too much to top.

The CNBC Factor: The exclusive content deal between CNBC and Dow Jones runs through 2012 and is expected — on the GE/NBCU side, at least — to continue no matter who owns the company. I am told that NBCU has the right to terminate the deal.