Posted on 08/15/2005 10:29:17 PM PDT by nickcarraway
SHARES in Dow Jones, the publisher of The Wall Street Journal, soared yesterday as it emerged that some members of the Bancroft family may be pushing to sell their controlling stake.
The shares rose almost 10 per cent as Wall Street investors speculated that the younger heirs of Clarence Barron, who bought The Wall Street Journal in 1902, are looking to crystalise their fortune and ensure that it remains intact for future generations.
The family is said to be split over what to do with the stake in Dow Jones, which has halved in value during the past decade. Meanwhile, some independent shareholders are echoing their call for the company to be sold.
Some observers believe that the Bancrofts, who receive a $25 million (£14 million) dividend from Dow Jones every year, could sell their stake for as much as double the current value of about $950 million.
Mark Boyar, of Boyar Asset Management, a shareholder that has been critical of management, said: “The best thing for the newspaper would be to sell to a large newspaper publisher, who could create significant cost synergies.”
The Bancrofts control Dow Jones through their ownership of super-voting Class B shares that carry ten votes apiece, but they have been selling them gradually.
Dow Jones shareholders recently allowed the family to reduce the level of stock ownership that they need to maintain control of the company from 12 million to 7.5 million. If they fall below that level, the Class B shares convert to ordinary stock.
Family members own about 15.6 million Class B shares, giving them about 60 per cent of the vote, plus another 9.5 million shares of common stock.
Speculation that the Bancrofts are looking to sell has been increased by the waning fortunes of American newspaper stocks this year, with investors concerned over their ability to compete with the internet and cable television. Mr Boyar, who controls total investments worth more than $600 million, has written to the Dow Jones board urging it to consider a sale or shake-up of the company. He said that there would be “a long line” of potential buyers, including other media groups and private-equity investors.
“Trophy assets like this don’t come up for sale too often. If they only put up The Wall Street Journal for sale, there would be a feeding frenzy,” Mr Boyar said.
Even in a flat market, investors have long been unhappy with the performance of Dow Jones, whose assets also include the Barron’s weekly financial magazine and the Dow Jones wire service. “It’s been the worst-performing newspaper stock over the past 15 years,” Mr Boyar said.
In recent years Dow Jones has been hit harder than other newspaper companies because of its reliance on financial and technology advertising, which slumped during the dot-com collapse.
Other investors blame the underperformance of the shares on the strategy of Peter Kann, the chief executive. They believe that Mr Kann may have overpaid for MarketWatch, an online financial information service, in January. They also question his plan to launch a Saturday edition of The Wall Street Journal next month, a move that they fear will cannibalise weekday sales and reduce demand for Barron’s.
Dow Jones refused to comment, and representatives of the Bancroft family did not return phone calls.
The company was started in 1882 as a financial news service in the basement of the New York Stock Exchange by Charles Dow and Edward Jones. Its publications are considered to be the journals of record for the American financial establishment.
PAPER TRAIL
Market value: $3.1bn
Sales (2004): $1.7bn
Profits (2004): $99.5m
Assets Include: The Wall Street Journal, including European and Asian editions and WSJ.com; Barron’s; Dow Jones Newswires; MarketWatch; Ottaway Newspapers, comprising 15 daily and 18 weekly newspapers
Strategic alliances: Factiva, CNBC Asia, CNBC Europe, SmartMoney and STOXX
Uh-oh. It'll be a disaster if the MSM liberal elite wind up running the WSJ editorial page. The WSJ is just about the only good newspaper left.
The New York Post article reported says the Bancrofts want to sell Dow Jones (including the Wall Street Journal) to Warren Buffett for $6.6 billion.
May as well sell it to George Soros and be done with it.
I can see it now - Warren Buffett and Bill Gates buy The Wall Street Journal.
Why would Buffett want to buy it?
To manipulate the markets for his other investments.
Well, I'm not a fan of Buffett's, but I guess I never suspected him of indulging in that kind of behavior. But it does bring up an interesting point, how is such a conflict of interest dealt with. The reason I think this may just a rumor is Buffet does have a set of criteria he invests based on. And I'm not sure Dow Jones qualifies.
Buffett is a major investor in the Washington Post.
Wouldn't that alone be an obstacle to him buying Dow?
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