Dow Jones/News Corp. Merger Unlikely to Succeed

Dow Jones (DJ) has evidently come no closer to reaching an agreement with News Corp. (NWS) than at any point in the companies' previous negotiations. In fact, it is now being widely reported that DJ is currently in advanced discussions Brad Greenspan (see previous update) and his financial backers for a potential, partial offer. None of what has developed over the course of this week comes as a surprise.

It is fairly obvious that DJ is employing tactics which are intended to draw a more attractive offer from NWS or, perhaps more desirable, dissuade NWS from continuing its pursuit of the company. If nothing else, DJ and its complex ownership have shown that its interest to be acquired outright is very low and that the alternatives to a DJ-NWS combination -- which include no major action at all -- perfectly acceptable and strategically rational. Whether this includes some form of agreement with Greenspan and partners remains to be seen.

In short, this continues to be viewed as a situation in which it is entirely possible that the end result will be absolutely no transaction involving DJ. This is, of course, a somewhat tentative projection given the current activity, but the overall scenario is indicative of a company that is simply going through the necessary steps to remain independent.

It is therefore currently anticipated that DJ will entertain Greenspan and Co's proposition, before politely rejecting it, and will in turn take similar action with respect to the current NWS offer. It is uncertain at this point if NWS is inclined to significantly increase its offer, but the general impression is that the company probably will not go much higher given the myriad of circumstances involved.

Disclosure: We have no positions of any kind, in any security. We are a completely neutral source of research and analysis.

Comments

[Sr. Pessimist:]

My observation is how one may extend a conclusion from this. Rupert Murdoch and News Corp have a very bad name. Their money is dirty.

Too much money is "dirty." Money is nothing but power backed by the US legal system. Big US money is evil and dirty. It empowers those lacking of merit. It empowers evil, such as Rupert Murdoch. All these evil influences make for a horrible system dominated by these evil influences.

So as long as the US Dollar is recognized, evil people like Rupert Murdoch make US business dirty. It doesn't matter where you get your money from. If you have money, it strongly originated from doing something the evil capital influences benefited from.

US business is as dirty as it is because of the nature of the heirs of the US Dollar.

2007 Jul 12 10:14 AM