Blog Post

NWS-DJ: No Action By DJ Board

Information from a representative of the Bancroft family that a majority of voting power was against a sale to News Corp. left the Dow Jones board without any actions to take, according to a statement issued by the company after a Wednesday afternoon board meeting. From the brief statement: “Approval of a merger under Delaware law requires approval of a majority of the outstanding voting power of the corporation. Accordingly, the Dow Jones Board of Directors has determined to take no action with respect to the proposal.”

That doesn’t mean this is going away, not by any stretch. As the Journal points out, “the company’s demurral only ratchets up the potential for tension and confusion among the Bancroft family, the Dow Jones board, and shareholders pressing the company to sell itself. … The family’s rejection is sure to upset Dow Jones’s nonfamily shareholders, many of whom traded into the stock in the past 48 hours on expectations of a sale.” The article includes a detailed explanation of the Bancroft family. One aspect worth remembering: unlike the family trusts at NYTCo, the Bancrofts are not obliged to vote together.

Update: An interesting piece in the NYT looks at what a sale could mean for some DJ execs. CEO Rich Zannino could qualiify for an exit package of $18.9 million or so while WSJ publisher Gordon Crovitz could get more than $7.2 million. The figures are based on the $60 option and instant vesting of options.

Update II: At DJ’s, Eric Savitz suggests the market thinks the Bancrofts are bluffing and offers some analyst round-up.

Also, stories are popping up about some eyebrow-raising options activity before news of the News Corp. bid was leaked to CNBC. The NYT: One options contract written a few days before the news brought in a paper profit of $4.6 million. “That profitable bet was one of severally unusually large trades in the options to buy shares of Dow Jones in the last week, indicating that some investors may have known about the acquisition offer ahead of time. … The heaviest trading in Dow Jones options happened on Monday, April 30, when volumes surpassed the number of option contracts that exchanged hands for the entire month of March, and Wednesday, April 25.”

3 Responses to “NWS-DJ: No Action By DJ Board”

  1. I don't understand how you can reject an offer with that kind of premium. I guess something is worth what someone is willing to pay, put it was worth $35 last week and somehow this week, $60 is too low. Something isn't right with that in my mind.


  2. Certainly, we know the Bancrofts won't see an offer like this for quite awhile. While we follow the money — always fun — it's as important to talk about the family's responsibility to readers is as it is their responsibility to non-family shareholders, as Henry Blodgett has done

    The Journal itself has become a more vital news source over the last several years, with incisive, knowledgable reporting on everything from the Iraq war to making the stock back-dating story an important one. That's valuable, but even more valuable in a world where major metros — L.A. Times, Chicago Tribune, Miami Herald, Dallas Morning News, among others — have cut back on national and international reporting.

    That leaves us with the Journal, the Times and the Post, as well as ubiquitous AP. Both the Times and Post of course enjoy (?!) two-tier structures. So as goes Dow Jones, could go the Times and the Post. Both are under the same pressures of challenged ad revenues and circulation. If Rupert or others with lesser historical concern for high-quality, independent journalism, where exactly would that leave this little struggling democracy of ours? More thoughts on the whether this two-tier structure is indeed an effective firewall at:

  3. Staci,

    I agree, while this is far from a done deal it's a deal that's going to be done. There is no other deal for Dow Jones that's likely to make sense any time soon. That's not to say that it's a likable deal in some ways but it's the deal that shareholders have a right to consider seriously. The Bancrofts have faith in Zannino, Crovitz and Hart and it's not misplaced faith, but it is going to take more than they can deliver to keep up with the pace of change in business media.

    All the best,
    John Blossom