Following is a letter published in the Financial Times:
Sir,
Many of the controlling family shareholders of Dow Jones appear to be looking for assurances from Rupert Murdoch with regard to the future independence, editorial and otherwise, of the company he wants to buy ("Power behind Dow Jones - a prophecy fulfilled" Financial Times, May 4, 2007). He has already begun offering independence and a separate board, and will very likely offer more.
Mr. Murdoch knows that the objective is to secure the deal at the lowest price and will promise whatever will achieve this objective.
He need not be too concerned about these promises as, once he has secured the business, commercial reality will come into play and he will then be able to make the decisions needed.
He need look no further than the recent Mittal acquisition of Arcelor. In the final stages of this deal and in order to push through the deal at the final Arcelor board meeting, Lakshmi N. Mittal, the major shareholder, agreed to become non-executive chairman of the combined group and step back from involvement in the operations of the business.
A matter of weeks after the deal closed, Mr. Mittal changed his mind and moved back to become President and CEO, clearly in contravention of the promise made to public shareholders of Arcelor prior to their final vote. We did not hear a word of criticism either from regulators or from the press, and everything has gone on as if no promise was ever made.
The message is clear, make any promise necessary to secure the deal and then do what you want, alleging commercial reality.
Regards.
Onésimo Alvarez-Moro
See article:
Back in 1984, Dow Jones proposed splitting its stock into two classes to preserve the control of the Bancroft family, whose ties to the media group and its flagship Wall Street Journal date back to the turn of the century.
There was no imminent threat on the horizon, but, said Warren Phillips, who was then the company's chairman: "The plan is one designed to protect Dow Jones' publications and services against uncertainties that might arise early in the next century."
That prophecy was fulfilled last month in the form of Rupert Murdoch, whose News Corp made an unsolicited $5bn offer for Dow Jones. Now, the main obstacle to Mr Murdoch's plan to add the Journal to his media empire is the Bancroft family and the company's dual share structure.
While the Bancrofts have been selling their Dow Jones' shares over the years, they still control 64 per cent of the company's class B voting shares through personal holdings and various trusts. With that power in hand, a group of Bancrofts banded together this week to oppose Mr Murdoch's offer of $60 per share, even though it represented a 65 per cent premium and was supported by many other investors.
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