According to few reports floating around, the Bancroft family (ie. holders of the controlling interest in the Dow Jones & Co. Inc.) has agreed to meet with Mr. Murdoch to discuss his US$5 billion bid for the company.

Anyone with a little bit of interest in money markets and investing must have noticed when the bid was first announced. Obviously, Mr. Murdoch’s News Corp. has been around for quite some time and has become one of the most dominating players in the worldwide media business. At the current time this company owns such household names as Fox Channels in US, Sky Channels in UK, The New York Post, 20th Century Fox or MySpace.com just to name a few.

And so it seems that the Dow Jones & Co. Inc., whose flagship newspapers The Wall Street Journal hold a prime position in the mind of every self respecting investor around the world, would be a perfect fit.

Why buying Dow Jones?
The company was established in 1882 and over the next 125 years grew into a dominant and trustworhty financial media business. It operates a rather larger number of subsidiaries all around the world including The Wall Street Journal, The Wall Street Journal Asia, The Wall Street Journal Europe, Baron’s, Market Watch and many more mostly media businesses. As would Warren Buffett probably put it, in the field of finance reporting, Dow Jones is having a reasonable “protective moatâ€? around its franchise.

What’s in it for News Corp?
In recent years, Mr. Murdoch’s News Corp. has been surely recognizing the shift in customer’s interests from traditional to other, mainly online based media. Hence the News Corp. has been gaining ever stronger foothold in the online advertising market with number of recent acquisitions, the most interesting one to-date perhaps the purchase of social network website MySpace.com. With The Wall Street Journal , News Corp would, amongst other valuable assets, obtain one of the largest and very well established online subscription newspapers existing today.

If successful with this purchase, sky is the limit for Mr. Murdoch as he could incorporate The Journal’s excellent financial know how into a number of his other media outlets and use it to realise the full advertising potential.

Why would Bancrofts agree to sell?
Reasons may be quite a few, one of them perhaps rather sluggish Dow Jones’ share price performance of recent years. The stock as well as the business itself do not seem to be going anywhere fast and even its, once unchallenged, position of leading financial market reporter is now being tested by the likes of Bloomberg or CNBC.

However, do not discount the Rupert Murdoch’s genius, as he would hardly pay an exuberant price for any business without seeing some great value in it. In the recent interview Warren Buffett was quick to point out, that the owner of The Wall Street Journal does not only hold a great business in his hand but also enjoys certain status (and powers) within the society and amongst the wider public. Such status is impossible to quantify financially but its definitely there, a fact the Bancroft family may be failing to fully appreciate.

To see Warren Buffett’s detailed opinion on Dow Jones & Co. Inc and the proposed transaction, watch the video in my previous article According to Warren.
 
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This entry was posted on Saturday, June 2nd, 2007 at 7:51 pm and is filed under Miscalleanous, My View. You can follow any responses to this entry through the RSS feed. You can leave a response, or trackback from your own site.