LOS ANGELES - Dow Jones & Co.‘s board of directors and News Corp. reached an agreement in principle Tuesday on the makeup of an editorial board that would oversee Dow Jones’ flagship newspaper, The Wall Street Journal, people familiar with the matter said.
The major elements of the deal were set in place, but some smaller issues were still being finalized, according to two people familiar with the discussions. It was not clear how soon the negotiations would be concluded.
Details of the pact’s structure were not immediately available, but the removal of this sticking point in the slow-motion negotiations regarding a takeover of Dow Jones by News Corp. could pave the way for a merger of the two in relatively short order.
News of the preliminary pact sent Dow Jones shares up by 2.2 percent to $58.77. News Corp. shares were off marginally to $23.31. Officials from Dow Jones and News Corp. declined to comment.
The Journal reported Tuesday that it was expected the two sides would call for a board whose members have no ties to either the Bancrofts or News Corp. But yet to be ironed out were how many members of the Bancroft family would be invited to sit on the News Corp. board.
The deal still requires approval by members of Dow Jones’ controlling Bancroft family, one source said. Another person pointed out it was expected the Bancrofts would be presented the editorial setup along with the other details of the deal, including price. That source said price still may be up for negotiation.
News Corp. has a standing offer for Dow Jones for $5 billion, or $60 a share. That offer was handed to Dow Jones in mid-April but the deal was not made public for two weeks.
The Bancrofts initially resisted Murdoch’s overtures, citing concerns that he’ll change the face of the Journal, considered the nation’s premier financial newspaper. Many of Murdoch’s newspapers have a reputation for sensationalism, and he has been known to use his publications to further his business aims.
The Bancrofts, who have controlled Dow Jones for nearly a century, later relented somewhat. Murdoch’s offer is 67 percent higher than the price Dow Jones’ stock was trading at before the prospective deal was made public. The Bancrofts agreed to negotiate, as well as consider other offers for the company.
General Electric Co.‘s NBC Universal unit and Pearson PLC, publisher of the Financial Times of London, considered making a joint bid, but later decided against it. Officials from Pearson said Murdoch’s offer set the bar too high for others to beat.
Also, the union representing Dow Jones staffers, the Independent Association of Publishers’ Employees, was hoping to forward an offer in conjunction with supermarket magnate Ron Burkle, but an offer from that camp has yet to surface.
One reason for Murdoch’s aggressive bid is that News Corp. is looking to beef up content for its planned cable business channel that would challenge GE’s CNBC. The Journal and other Dow Jones news sources - including MarketWatch, publisher of this report - could figure prominently in the channel’s future.
The channel is building up its personnel, and on Tuesday named Ray Hennessey as managing editor and director for the channel’s Web site. Hennessey was the editor of SmartMoney.com, a joint Dow Jones venture with Hearst. He also was a Dow Jones news editor at one point in his career.
Further, MySpace creator Brad Greenspan has put forth a bid, but not for all of Dow Jones. Greenspan wants to buy 25 percent of the company and plans to leverage the company’s online properties as well as its broadcast units.
Greenspan also is offering $60 a share, but his bid allows the Bancrofts to retain control of Dow Jones, which may prove inviting both to family members who want a say in the company’s future and to those looking to sell their shares. In an interview on CNBC Tuesday afternoon, Greenspan said he expects to meet with the family later in the week.
“My offer is really the best of all worlds,” Greenspan said in an interview with the business channel’s Maria Bartiromo. He later added: “I think it satisfies everyone’s situation here.”