News Corporation's Acquisition of Dow Jones
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Case Code: BSTR301 Case Length: 20 Pages Period: 2007-2008 Pub Date: 2009 Teaching Note: Available |
Price: Rs.400 Organization: News Corporation, Dow Jones Industry: Media & Newspaper Publishing Countries: Global; USA Themes: Growth Strategy, Merger & Acquisitions, Corporate Valuation |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
The Proposal
News Corp. was planning to aggressively expand into the business news segment and launch a business news channel in 2007 and compete with other major business news channels like the CNBC . The expansion into the financial news business was part of a strategic plan to diversify into other niche news segments rather than being a pure general news player. Murdoch has been eyeing Dow Jones for quite a while both as part of his strategy to expand into the business news segment and to own a journalistic megabrand like the WSJ...
The Deal
Seeing the initial strong opposition to the deal from various quarters, News Corp. focused on convincing the Bancroft family and other skeptics that the WSJ's independence would be maintained under News Corp.'s ownership. To allay the fears of the Bancroft family regarding the reputation of the WSJ, Murdoch wrote a letter to them stating that post acquisition, he would set up an independent, autonomous editorial board for the newspaper. In early June, the Bancroft family buckled under pressure and started talks with News Corp...
The Aftermath of the Deal
Heads started to roll at Dow Jones even before the acquisition process had been completed. A director of Dow Jones, Dieter Von Holtzbrinck (Dieter), had abstained from voting when the board had voted in favor of the bid on July 17, 2007.
By abstaining, he was seen as openly siding with the people who were arguing about the independence of WSJ under Murdoch. Dieter later said in his resignation letter, "Although I'm convinced that News Corp. offer is very generous in financial terms, I'm very worried that Dow Jones' unique journalistic values will long-term strongly suffer after the proposed sale."...
Looking Ahead
Analysts opined that despite the reputation enjoyed by Dow Jones in the financial news arena, it was one of the smaller companies in the world media industry. With revenues of just US$1,784 million for the year 2006 it could not diversify into other new channels such as the Internet and mobile phones more aggressively all by itself...
Exhibits
Exhibit I: The World's Top Ten Media Companies for the Year 2006
Exhibit II (A): News Corp.'s Consolidated Statements of Operations
Exhibit II (B): News Corp.'s Consolidated Balance Sheets
Exhibit III: Some of the Key Assets of News Corporation
Exhibit IV(A): Dow Jones' Consolidated Statements of Operations
Exhibit IV (B): Dow Jones' Consolidated Statements of Operations
Exhibit V: Key Facts of Dow Jones and News Corporation at the Time of Takeover
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