Murdoch woos clan for keys to Wall Street Journal

Rupert Murdoch got his long-awaited audience Monday with representatives of the family that controls Dow Jones & Co., owner of the Wall Street Journal and object of an audacious, $5-billion takeover bid by Murdoch’s News Corp.

In an afternoon meeting that major Dow Jones shareholder Jim Ottaway Jr. called the “opening tea party,” Murdoch, his son James and two other News Corp. executives sought to woo the Bancroft family with assurances that they would safeguard the Journal’s editorial independence.

The Bancrofts, who have controlled Dow Jones since 1902, hold a minority financial interest in the company’s stock but 64% of its voting power.

Neither side offered any details after the session at the New York law office of Wachtell, Lipton, Rosen & Katz, the family’s legal advisors.

“The parties had a constructive dialogue and have gone back to consider our positions,” a Bancroft spokesman said.

Investors, meanwhile, sold Dow Jones shares, perhaps believing that the Bancrofts were more interested in the Journal’s integrity than in getting Murdoch to raise his $60-a-share offer.

The offer represents a 65% premium over where the shares were trading when the bid was disclosed about five weeks ago.

Dow Jones gave back $1.04 to close at $60.16 after gaining in five straight sessions, including a $7.89 jump Friday, a day after the Bancrofts announced they had changed their minds and were willing to listen to Murdoch’s pitch.

Initially, most members of the widely scattered family were opposed to the offer, viewing Murdoch as a meddler in editorial affairs at his own newspapers who would damage the Journal’s reputation.

Murdoch has said he was willing to create an independent board, like the one at his Times of London, to stand between him and the Journal.

In an interview with the Wall Street Journal on Friday, however, Murdoch said he would not agree to give the Bancrofts seats on such a board.

They “can’t sell [the company] and keep it,” he said.

Also Monday, the union representing more than 2,000 Dow Jones employees said it had hired a financial advisor to explore alternatives to the Murdoch offer, such as using an employee stock ownership plan to provide tax advantages to other potential buyers. That idea was integral to financier Sam Zell’s winning bid to take Los Angeles Times parent Tribune Co. private in a deal expected to be completed this year.

Murdoch’s promises can’t be trusted, union president Steven Yount said. If the News Corp. bid succeeds, he said, “you are going to see an immediate exodus of some of the very best journalists at Dow Jones.”

Representing the Bancrofts at Monday’s meeting were the three family members on the Dow Jones board, Christopher Bancroft, Leslie Hill and Elizabeth Steele. Also expected to attend were board member and family trustee Michael Elefante, Dow Jones Chairman Peter McPherson and Martin Lipton, the Bancrofts’ lawyer.

Ottaway and his family control 5.2% of Dow Jones voting power through shares acquired in 1970, when the family sold its chain of community newspapers to Dow Jones. Ottaway continues to oppose a Murdoch buyout and said he was disappointed that the Bancrofts were willing to consider offers from News Corp. or others.

What changed their minds, Ottaway said, was the recent merger deal between Thomson Corp. and Reuters Group, which competes with Dow Jones in the news-service and financial-data businesses.

“Their Merrill Lynch advisors scared them,” Ottaway said, “by telling them they’d be a relatively small company in a giant media world.”

thomas.mulligan@latimes.com