Having lost Tribune Co. to Sam Zell, supermarket billionaire Ron Burkle is now entering the bidding for Dow Jones & Co. Burkle has joined forces with the union representing many Wall Street Journal employees, which is desperately seeking an alternative to the company being acquired by Rupert Murdoch and News Corporation.
"Desperately" may even be an understatement.
The Independent Association of Publisher' Employees, which represents about 2,000 Dow Jones workers, or about 26% of the workforce, is dead set against having to deal with Murdoch. It has not only sought out Burkle as a partner, but has also made a public appeal for Warren Buffet to come to its aid. The union has enlisted Ownership Associates as its financial consultant. That's the firm that worked with the unions who sought to buy Knight Ridder when it was up for sale. They were not successful.
Burkle's move to join the union bid came shortly after Murdoch met with various members of the Bancroft family, which has controlled Dow Jones for the past 100 years. "The parties had a constructive dialogue and have gone back to consider our positions," said a family spokesman, pretty much echoing the Murdoch statement that the meeting was "constructive." The four-hour meeting apparently focused less on money – Murdoch is already offering an impressive five billion bucks – than on safeguards to ensure the journalistic independence of the Wall Street Journal.
RBR observation: Here is what Warren Buffet had to say about the newspaper business two months ago in his annual Chairman's Letter to Berkshire Hathaway shareholders: "Not all of our businesses are destined to increase profits. When an industry's underlying economics are crumbling, talented management may slow the rate of decline. Eventually, though, eroding fundamentals will overwhelm managerial brilliance. (As a wise friend told me long ago, 'If you want to get a reputation as a good businessman, be sure to get into a good business.') And fundamentals are definitely eroding in the newspaper industry, a trend that has caused the profits of our Buffalo News to decline. The skid will almost certainly continue." Does that sound like a guy who is going to rush forward to help top a bid that's already an astounding 17 times EBITDA?