Dow Jones' Dual-Class Share Structure: Family Control Turns Back On Itself

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Includes: DJ, NWS
by: Eddy Elfenbein

Eddy Elfenbein submits: Just a quick note on News Corp.'s (NASDAQ:NWS) Murdoch’s bid for Dow Jones (DJ). I can’t think of a better argument against dual-class shares than the Bancroft family’s public rift over the offer.

The family’s super shares have ten times the voting power of the Class A shares (by the way, the same thing exists at many other companies, such as Google (NASDAQ:GOOG). There are at least 35 family members with super shares.

A Bancroft family representative said that “slightly more than 50%” of DJ’s voting power is against the deal. Breaking out the math, that means that about 80% of the family’s 64% is voting “No.” But still, we now know that some in the family are for it, and “some” is all we need to make a point. The idea of super shares is so that families can maintain control, but families don’t act as a single unit.

The idea of family control is turning back on itself. Couldn’t it be said that the family members in favor of the deal are speaking in the family’s interest? I certainly think so. Dear lord, it’s a 67% premium for a stock that hasn’t moved in eons. Before the offer, the stock was lower than where it was 24 years before while the Dow is up more than tenfold. How much more evidence do we need that something needs to be done?

The family can’t hold back change forever. The company will have to be revamped, and hopefully it will happen before the Dow Jones Murdoch Industrial Average goes up another tenfold.