Rupert Murdoch has secured the backing of the Dow Jones board to acquire the company that owns the Wall Street Journal. The board agreed in the early hours of this morning to sell to Murdoch's News Corp for $5bn (£2.4bn), pending the approval of the Bancroft family who control the key voting shares. And they remain divided as ever over the proposal, so the outcome remains uncertain.
Winning the board's support is a major step forward for Murdoch in the three-month process, which has been bogged down over issues of family pride and concerns about turning the Journal over to a figure that many find too controversial.
The Financial Times reports that the Bancrofts' ambivalence was apparent at the meeting. Of the family's four representatives on the company's 16-member board, one, Christopher Bancroft, left the meeting early and did not vote, and another, Leslie Hill, abstained. Two other family directors, Elizabeth Steele and Michael Elefante, the Boston-based lawyer who presides over many of the Bancroft trusts, gave their support to the News Corp offer. One other Dow Jones director, Dieter von Holtzbrinck, also abstained.
A verdict from the Bancroft family may well come by next week, but if they still reject the deal, the company's stock would almost certainly fall, since Murdoch's $60-a-share offer is 65% above where the shares had been trading before he made it.
The most delicate part of the process has been the creation, at the insistence of Bancroft representatives, of a special committee to help protect the newsroom's independence. The panel would have five members, jointly appointed by Dow Jones and News Corp, who could veto the firing or hiring of the top news and editorial executives at the newspaper.
In theory, News Corp executives would have to go through those protected editors when they want to influence stories or columns, and those editors would feel safe in refusing to help. But some Journal writers believe that such a committee wouldn't go far enough to stop the possibility of meddling or the erosion of credibility.
In spite of the creation of such a panel, Christopher Bancroft, a Texas investment manager, has remained trenchantly opposed to the sale. He is a trustee of funds holding more than 3.5m of the 20m Class B shares, which have 10 times the voting power of regular shares. He and his supporters are believed to be working on a plan to buy enough Class B shares from other family members in order to vote down the Murdoch deal. "Those efforts do not appear to have gained much traction," said an FT report, which cited "people close to the matter."
There is a widely-held view that Elefante could well play the key role in shaping the Bancrofts' final decision. So Murdoch must wait a little longer for a decision. It is exactly three weeks since he said the deal would happen "within the next two, three weeks' time or not at all." I still think the "not at all" is not at all likely.
