Pearson Plc.'s (NYSE: PSO) is reportedly interested in making a bid for Dow Jones & Co. (NYSE: DJ) to counter the $5 billion unsolicited offer from Rupert Murdoch's News Corp. (NYSE: NWS). The problem is that the U.K. company can't beat Murdoch on its own and will have difficulty finding partners willing to take on the Australian media mogul.
The Wall Street Journal says that the owner of the Financial Times as been trying in recent weeks to recruit partners to pursue a bid for Dow Jones though a formal offer is a "long shot." General Electric Co.'s (NYSE: GE) NBC Universal has rebuffed Pearson which also approached Hearst Corp., the paper said.
Since nothing has actually happened yet, the question arises about who leaked the story. Was it the Bancrofts who control Dow Jones trying to find a white knight to rescue them from the evil Murdoch? Maybe it was a Pearson banker or a banker from one of the companies that was approached by the publisher.
Investment bankers have been known to leak information about deals that they hope might happen to drum up business. Pearson also could have floated a trial balloon to see how shareholders would react to the leak.
Their answer was pretty clear. Shares of Dow Jones rose a whopping 1.9 percent Friday to $59.01. Wall Street is holding its breath for a counter offer.
I suppose combining the Financial Times and Wall Street Journal would create a financial news juggernaut. The FT's strength in Europe would compliment the Journal's strength in the U.S. The problem is that it doesn't make much sense financially.
As the Journal points out, News Corp's $60 a share offer for Dow Jones values the company at 40 times 2007 earnings, less than half of the valuation of the U.K.-based publisher. That would dilute Pearson's shares significantly.
News Corp's has a market cap of $70.3 billion compared with $13.9 billion for Pearson. In boxing terms, this would be like a middleweight taking on a heavyweight. The contest wouldn't even be close.
The problem that Pearson or any other potential rival to Murdoch faces has nothing to do with money. Murdoch wants to own the Journal badly enough to pay an outrageously high price for the company that owns it. The odds of Pearson being able to find a deep-pocketed partner willing to join it in bidding for Dow Jones are slim to none.
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Reader Comments (Page 1 of 1)
6-16-2007 @ 7:52AM
bat said...
yup vivus is still a bow wow
6-17-2007 @ 7:17PM
Michael Schneider said...
A few weeks ago at Blogging stocks, Hilary Kramer pointed out that if Rupert Murdoch did not succeed in his bid for Dow Jones he might go after Pearson. Pearson's interest in Dow Jones was a surprise but Hilary Kramer was right in placing Pearson in the mix. Now it looks as though Murdoch may win out and leave Pearson in the cold. However, the matter isn't over until its over and there are both obstacles to the Murdoch bid and other interested parties in Dow Jones and possibly Pearson. There have been surprises in the print media consolidation as we have seen with Sam Zell's last minute entry in bidding for Tribune. There could be more interest in Dow Jones because of its strength on the Internet- and notice that Wall Street Journal subscriptions will be rising. If Rupert Murdoch does acquire Dow Jones at his initial bid I think it will, in time, look like a brilliant move.
Dr. Michael Schneider is webmaster at http://www.Barrelomedia.com and other Web sites. http://www.Barrelomedia.com contains many items on media moguls such as Rupert Murdoch and Phillip Anshutz as well as free lists of Weird Media Stocks for your perusal.