News Corporation's Acquisition of Dow Jones


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Case Details:

Case Code : BSTR301
Case Length : 20 Pages
Period : 2007-2008
Pub Date : 2009
Teaching Note : Available
Organization : News Corporation; Dow Jones
Industry : Media & Newspaper Publishing
Countries : Global; USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"[The Wall Street Journal], for all its cachet and influence, is at best marginally profitable; the profits of its parent, Dow Jones, come primarily from electronic data distribution. But the Journal, financial laggard though it may be, is the primary reason that Rupert Murdoch and possibly other players are willing to pay $5 billion or more for Dow Jones."1

- Allan Sloan, Newsweek's Wall Street editor.

"There are a lot of entities that would like to own Dow Jones; the question is at what price? It's pretty clear the board doesn't want to sell to Murdoch. Their problem is that Murdoch's bid is so attractive from a valuation perspective that it will be difficult for anyone else to pay $60 a share."2

- Michael Chren, Managing Director, Allegiant Asset Management Co.3

Introduction

On August 1, 2007, Dow Jones & Co., Inc. (Dow Jones) and News Corporation (News Corp.) announced in a joint statement that they had signed a merger agreement. Under the agreement, News Corp. would acquire Dow Jones for US$5.6 billion.4 The announcement of the merger put an end to the three months of bickering between the Bancroft family, which owned a major stake in Dow Jones, and News Corp. over the sale of the stake. The Bancroft family and other stakeholders in Dow Jones had initially rejected the merger proposal, reportedly due to a widespread perception that News Corp. used its publications for promoting its own interests.

News Corporation's Acquisition of Dow Jones - Next Page>>

1] Allan Sloan, "Wall Street Journal's Net Worth isn't in Profits,"www.washingtonpost.com, June 5, 2007.
2] Leon Lazaroff and Cecile Daurat, "Dow Jones Holders Say Murdoch Bid May Trigger Auction (Update4),"www.bloomberg.com, May 2, 2007.
3] Allegiant Asset Management Co. is a US-based asset management company.
4] Paul R. La Monica, "News Corp. Wins Fight for Dow Jones,"www.cnnmoney.com, August 1, 2007.

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