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Dow Jones board backs Murdoch bid

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Times Staff Writer

The board of Dow Jones & Co. late Tuesday agreed to sell the company to Rupert Murdoch’s News Corp. for $5 billion in cash and stock, pending the approval of the family that has controlled the newspaper for more than 100 years.

The publisher of the Wall Street Journal said that if enough shares held by the Bancroft family committed to supporting the transaction “promptly,” then News Corp. would agree to proceed and the two companies would meet to review final terms.

Dow Jones said the Bancrofts had already begun to consider the deal. The family is split on the matter, leaving the prospects for Murdoch’s bid uncertain.

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Still, board support is a major step in the three-month process, which bogged down over issues of family pride and concerns about turning the most respected provider of business news over to a major financial player. Under the terms outlined Tuesday, some Dow Jones shareholders could receive News Corp. stock, reducing the tax effect of the deal.

With a favorable vote from directors, a verdict from the family could come by next week, and an all-clear would combine the ownership of the No. 2 U.S. paper by circulation with that of the New York Post, Fox News and a forthcoming Fox business channel.

If the Bancroft family still rejects the deal, the stock would almost certainly fall, since Murdoch’s $60-a-share offer is 65% above where the shares had been trading.

The negotiations with News Corp. were handled by a five-member board committee that included a key attorney for the Bancroft family trusts, which hold shares on behalf of more than three dozen heirs.

The most delicate part of the process was the creation, at the insistence of Bancroft representatives, of a special committee to help protect the newsroom from attempts to steer coverage that relates to News Corp. or Murdoch’s other interests.

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. When any member steps down, the successor would have to be approved by the remaining members and News Corp.

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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.

The potential for awkwardness in reporting on News Corp. was highlighted Tuesday after the Journal noted that Paul Steiger had been mentioned during Monday’s negotiations as a possible director of News Corp.

Steiger served as the top newsroom executive at the Journal until shortly before Murdoch’s bid became public knowledge. Now an editor at large, Steiger has been overseeing the coverage of the offer, and some reporters contend that he has an apparent conflict of interest and should recuse himself.

Steiger told the Journal’s website late Tuesday that he hadn’t been approached about serving as a director.

Even so, one reporter said, “he stands to gain financially” if the deal goes through. “This is a very valid, strong issue that a lot of people are concerned about, bewildered about.”

In response to e-mailed questions from The Times, Steiger said his editing colleagues “saw no conflict for me beyond the one that we all face -- if the deal goes through we will all have new bosses. That hasn’t stopped us from covering this story aggressively and thoroughly, with neither fear nor favor, nor will it.”

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Opposition to a sale among some of the Bancrofts has coalesced around Texas investment manager Christopher Bancroft, a Dow Jones director who is a trustee of funds holding more than 3.5 million of the 20 million Class B shares, which have 10 times the voting power of regular shares. As of Tuesday, Bancroft and his supporters were still working on a plan to buy enough Class B shares to vote the Murdoch deal down.

joseph.menn@latimes.com

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