NEW YORK, (AP) -Rupert Murdoch’s News Corp. has reached a tentative agreement to buy Dow Jones & Co., publisher of The Wall Street Journal, the Journal reported on its Web site.
Negotiators from the two companies on Monday reached an agreement in principle for the original $5 billion that Murdoch had offered, and it will go to Dow Jones’ board Tuesday for its approval, the Journal said, citing unnamed people familiar with the situation.
The deal would still need approval from Dow Jones’ controlling shareholders, the Bancroft family, which has been divided on a sale to News Corp. because of concerns over whether the Journal would maintain its editorial independence.
Christopher Bancroft, a Dow Jones director, recently has been approaching major stockholders in an attempt to buy enough shares of Dow Jones to block a sale.
Michael B. Elefante, the Bancroft family’s lead trustee, has scheduled a meeting for Thursday to present the agreement to the family and is expected to give the family members several days to make a decision, the Journal reported.
Representatives of Dow Jones and News Corp. did not immediately return telephone messages seeking comment.
Murdoch, News Corp.’s chairman, resisted pressure from Dow Jones to raise his initial $60 a share offer, which represented a premium of about 65 percent over the mid-$30s level that Dow Jones stock was trading at before the proposal became public in early May.
Dow Jones shares fell 54 cents to $56.95 Monday.
Murdoch has long wanted to own the Journal, which has tremendous clout in the business world and wins many prizes for editorial excellence. Murdoch has said he would invest in the Journal’s online and overseas operations, and tap its resources to help build a business-themed cable news channel that would rival General Electric Co.’s highly profitable CNBC network.
A union representing Journal reporters and other Dow Jones employees has objected to Murdoch’s bid, saying he would downgrade the quality of the paper’s coverage and tilt its stories to suit his business interests.
The Bancrofts originally rebuffed Murdoch’s approach but then reversed themselves and agreed to meet with him in early June to discuss their concerns about keeping the Journal’s coverage free from corporate interference. The talks led to an agreement to create a committee that would have to approve the hiring or firing of top editors at the Journal.
Dow Jones directors have been searching for rivals to Murdoch’s $5 billion bid, but it seemed unlikely that anyone would top it.
A committee of Dow Jones directors, including a representative of the Bancroft family, met last week with supermarket billionaire Ron Burkle and Web entrepreneur Brad Greenspan to explore a competing deal, but it wasn’t clear whether a solid alternative to Murdoch’s offer would emerge.
Besides the Journal, Dow Jones also owns Dow Jones Newswires, the Factiva news database, Barron’s, a group of community newspapers and several well-known stock market indicators including the Dow Jones industrial average.
News Corp. owns the Fox broadcast network, Fox News Channel, newspapers in the United Kingdom, Murdoch’s native Australia and the New York Post, the Twentieth Century Fox movie and TV studio and MySpace, the online social hangout site.
The Bancroft clan trace their ownership of Dow Jones to Clarence Barron, a Dow Jones correspondent who bought control of the company in 1902. Over the years, their ties to Dow Jones have become more remote, and currently none of them works in the company’s day-to-day operations, but they control the company through a special class of shares that has powerful voting rights. Despite owning just 25 percent of the company, they exercise 64 percent of the shareholder vote.
Other newspaper publishers also have two classes of stock that allow families to retain control, including The New York Times Co. and The Washington Post Co., but in those two cases the families have greater involvement in day-to-day affairs.