Wednesday, June 06, 2007

A Private Dow Jones?

"I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years."
Warren Buffett

Mergers & Acquisitions
A Private Dow Jones?

Could Dow Jones & Co. go the way of Tribune?

It would be an ironic fate for the company that shares its name with America's leading stock market barometer, but the union that represents about 2,000 Dow Jones employees may try to take the company private.

The Independent Association of Publishers' Employees has retained Ownership Associates of Cambridge, Mass., to organize a bid that would counter the $5 billion, $60-a-share offer News Corp. Chairman and Chief Executive Rupert Murdoch put on the table for the company (see: "Game Over?").

IAPE and Ownership Associates have reached out to a short list of about 10 potential partners, including supermarket magnate Ron Burkle, who's agreed to join the effort, and billionaire investor Warren Buffett, who hasn't yet responded, according to IAPE President Steve Yount. Buffett said earlier that he wasn't interested in Dow Jones.

One possible option would be to take the company private through an employee stock ownership plan, or ESOP, Yount said. Depending on how the ESOP were structured, it could accomplish three different objectives: remove Murdoch from the picture, keep the Bancroft family invested in the company and shield Dow Jones from the pressures of the public markets. The union has said it fears Murdoch would meddle in the journalism at the company.

But scrounging up enough financial might to counter Murdoch's determination and considerable resources would appear to be an awfully tall order.

"If this was just about money, then I think we're in trouble,'' Yount acknowledged. But he added that "I have not gotten the impression from the Bancroft family that this is just about money. They have a legacy to protect."

Real estate mogul Sam Zell's highly leveraged buyout of Tribune involves increasing Tribune's debt to more than $13 billion, which will necessitate selling off key assets. But at least Tribune has assets to sell, such as the Chicago Cubs, which the company is already shopping around, and TV station holdings.

By contrast, Dow Jones is far closer to a media pure-play than Tribune and doesn't have much to sell that would make attractive, standalone assets separate from the rest of the company. The value of Barron's, Dow Jones Newswires, and, of course, The Wall Street Journal Online are buttressed to varying degrees by their ties to the Journal.

Burkle makes for an interesting--and in some ways, uninspiring--partner. He made millions from grocery chain mergers and acquisitions and his Los Angeles holding company Yucaipa has investments in a wide range of other industries.

But Burkle has been decidedly less successful in his recent pursuit of newspapers. He led a failed effort last year to acquire 12 newspapers from McClatchy that the newspaper company had acquired from Knight-Ridder. Burkle worked with Ownership Associates to come up with a buyout proposal that would have involved an ESOP.

Later in the year, Burkle expressed interest in buying the Los Angeles Times from Tribune and subsequently joined forces with developer-philanthropist Eli Broad--surely another billionaire that IAPE has contacted--to submit a bid for the entire company. But the pair lost out in April to Zell. Burkle and representatives for Yucaipa would not comment.

IAPE's Yount said the union's hiring of Ownership Associates on Friday was prompted by a May 31 statement by the Bancroft family, which it was willing to consider strategic alternatives for the company and that it planned to hold talks with Murdoch. The family began meetings with the News Corp. chief began this week.

"I believe and the union believes that the unquestioned integrity of The Wall Street Journal would be called into question because of the track record of News Corp. and how it has handled its other properties,'' he said, adding that the "overwhelming majority" of the union membership "understands and shares the concerns of a News Corp. takeover."

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Newspapers flourish in Internet age
Web posted at: 6/5/2007 8:53:8
Source ::: AFP
CAPE TOWN · Newspapers around the world saw a 2.3 per cent rise in circulation in 2006 and a growth in advertising revenue despite the rise of digital media, a report by a global industry body said yesterday.

Sales have increased 9.5 per cent in the last five years, the World Association of Newspapers (WAN) said in a report, while advertising revenues in paid dailies rose 3.8 per cent last year and 15.8 per cent since 2002.

When adding free dailies into the mix, global circulation grew 4.6 per cent last year and 14.8 per cent since 2002.

"Newspapers are alive and well and exhibiting enormous innovation and energy to maintain their place as the news media of preference for hundreds of millions of people daily," WAN's CEO Timothy Balding said.

"As the digital tide gathers strength, it is remarkable that the press in print continues to be the media of preference for the majority of readers who want to remain informed," Balding added as the report was released at WAN's annual meeting in Cape Town.

The report said North America was the only continent to show a decline in newspaper sales, with the United States registering a 1.9 per cent drop in daily circulation last year and just over five percent in the past five years.

On the other end of the scale, South Africa saw sales grew by 8.2 percent last year and 43 per cent since 2002.

"Newspapers in developing markets continue to increase circulation by leaps and bounds, and in mature markets are showing remarkable resilience against the onslaught of the digital media," said Balding.

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