The Dow Jones deal is done…maybe


Directors of Dow Jones & Co. were scheduled to meet last evening to consider approval of a tentative deal to sell the company, including the Wall Street Journal, to News Corporation for five billion bucks. But that's the easy part. The controlling Bancroft family meets Thursday to hear about the terms of the buyout offer. Their decision may not come until next week.

After weeks of negotiations, the Dow Jones representatives who've been talking with Rupert Murdoch and News Corporation have a deal to present to the full board. With no other bidder in sight, Murdoch didn't boost his 60 bucks per share bid, so the five billion bucks price tag stands. And all details have been worked out on an agreement to guarantee the editorial independence of the Wall Street Journal and Dow Jones Newswires, without actually barring News Corporation from picking its own management team. According to the Wall Street Journal, which has been following this very close, the deal was being presented to the full board last night. If it is accepted, which seems likely, the Bancrofts will get a full presentation on Thursday. That's where it gets interesting, since some family members don't want to sell to Murdoch – but are under pressure because there is no other bidder willing to ante up five billion. According to the WSJ, the outcome of the family vote is too close to call.

SmartMedia observation: Most of the focus has been on the Dow Jones side, but is this a good deal for News Corporation? Bank of America analyst Jonathan Jacoby says yes. He says the Dow Jones deal is not that dilutive to News Corporation on an EBITDA basis and is actually accretive on an earnings per share basis. He also thinks it is strategic and does not signal any plan by Murdoch to go on a buying binge. Meanwhile, he notes that News Corporation has been shedding some non-core assets, such as putting its smaller TV stations up for sale and preparing to sell Gemstar-TV Guide. As far as Jacoby is concerned, News Corporation stock is a "Buy."