OLD Media Moves

Gross estimate: $1.2 billion

August 3, 2007

Posted by Chris Roush

Newsweek business columnist Daniel Gross estimates on the Slate web site that News Corp. CEO Rupert Murdoch paid as much as $1.2 billion more for Dow Jones & Co., the parent of The Wall Street Journal, than other recent major acquirers of companies simply because he’s Rupert.

SlateMurdoch, noted Gross, paid a 65 percent premium above Dow Jones’ stock price. Other recent deals have paid a lower premium.

Gross wrote, “Given the dynamics in the industry, it’s plausible to think that a company that is not News Corp.—that is, a company not synonymous with right-wing bias, shoddy journalism, and a meddling boss—could have taken Dow Jones for a 25 percent premium to the $36.33 per share price—$45.41 per share, or about $3.78 billion. Assume a more generous 40 percent premium—this is the Wall Street Journal, after all—and a non-Murdoch buyer could have bought Dow Jones for about $50.86 per share, or $4.24 billion. Again, this is highly speculative, but it’s likely that Murdoch would not have won over the Bancrofts had he not put such a rich offer on the table.

“So it’s not unreasonable to assume that Murdoch was forced to pay somewhere between $760 million and $1.22 billion more for Dow Jones just because of his reputation.

“If Murdoch weren’t Murdoch, he wouldn’t have had to pay so much to control the Wall Street Journal. But if Murdoch weren’t Murdoch, he wouldn’t have wanted to.”

Read more here.

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