Pearson and GE Considering Joint Bid for Dow Jones

Shares of Dow Jones gained almost 2% to close at $59.01 Friday on news that Pearson PLC, publisher of the Financial Times [FT], is seeking partners for a joint counteroffer for the company that would compete with Rupert Murdoch's $5 billion bid. One company Pearson has approached is General Electric, which owns business news channel CNBC. They are said to have discussed combining the FT, CNBC and Dow Jones into a privately held JV. The two companies would have equal shares, and the Bancroft family, which holds a controlling interest in Dow Jones, would keep a minority stake. In addition to the Wall Street Journal, the FT and CNBC, the JV would own Barron's weekly and half the Economist, as well as Dow Jones Newswires and the Factiva news database. CNBC's online profile would be enhanced by FT.com, WSJ.com and MarketWatch.com. If, on the other hand, Murdoch acquires Dow Jones, the Journal will compete more directly with the FT in Europe and Asia, and News Corp.'s plans for a Fox News business channel -- which would compete with CNBC -- will gain traction. The Bancrofts, who are reluctant to put the Journal's editorial integrity in Murdoch's hands, are expected to warm to a Pearson approach, but it is viewed as "a long shot" because of the difficulty of three-way mergers, the lack of a leader, and the expensive problem of cashing out the company's shareholders.

Sources: Wall Street Journal I, II, Financial Times, Bloomberg, Reuters (I, II)
Commentary: Matchmaker, Matchmaker: Pearson Looks For Partner To Beat News Corp. For Dow Jones Bid • Is Rupert Murdoch Overpaying For Dow Jones? • Philadelphia Inquirer's Tierney Mulls Dow Jones Bid -- WSJ • Microsoft, GE Considered Dow Jones Bid -- WSJ
Stocks/ETFs to watch: Dow Jones & Company, Inc. (DJ), News Corp. (NWS), Pearson PLC [ADR] (PSO), General Electric (GE). ETFs: PowerShares Dynamic Media Portfolio ETF (PBS)
Conference call transcripts: Dow Jones Q1 2007, News Corporation F3Q07

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Comments

[Victor Cook:]

Under the right leadership is Dow Jones worth $75? My analysis compares
DJ's financial performance against competitors in 2006 with a forecast of its performance in 2010 (media.seekingalpha.com...). The bottom line? It is.

2007 Jun 18 10:10 AM