The board of Dow Jones & Co., owner of The Wall Street Journal voted on Tuesday to approve News Corporation's $5 billion bid for the company, with two directors abstaining from the vote and one leaving the meeting early, according to people familiar with the matter.
Leslie Hill, a member of the Bancroft family, which has control of 64% of the voting shares, and Dieter von Holtzbrinck abstained from the vote, while Christopher Bancroft -- who has been actively seeking alternatives to the News Corp. bid -- left the meeting early, according to The Wall Street Journal. One person familiar with the deliberations said that legal liability prevented the two Bancroft members from registering "no" votes, but that their sentiment was against the deal.
The support of the the 16-member board sends the offer to the Bancroft family, for a final vote. The family is set to meet Monday and will be given several days to consider the deal.
Dow Jones Chief Executive Richard F. Zannino, Bancroft family trustee Michael B. Elefante and Bancroft family member Lisa Steele voted to recommend the offer. Zannino had previously said he took no position on the deal.
The board of Dow Jones issued a statement saying it "would be prepared to approve, and recommend to the Dow Jones stockholders, including the Bancroft Family stockholders," the News Corp. proposal at $60 a share.
Dow Jones said in its statement that News Corp.'s board would authorize the deal if enough members of the Bancroft family "indicate promptly" their support for a deal by signing voting agreements. Heading into the meeting, Dow Jones, which publishes The Wall Street Journal, and advisers to the family saw family approval as too close to call, said people familiar with the situation. Family advisers estimated that they would need less than half of the family's voting power -- or about 30% of the total voting power in the company -- to win approval of a deal because they expected a high number of nonfamily holders would support the transaction.
US Newspaper Advertising Continues to Fall
The Wall Street Journal says that even as News Corp. negotiated to buy Dow Jones & Co. over the past few weeks, a grim reality was increasingly evident to executives on both sides of the discussion: The downturn in the newspaper industry is getting worse.
Last autumn, newspaper executives and analysts were caught by surprise by the severity of a slump that took hold last summer. Since the beginning of this year, the rate of decline in advertising revenue has accelerated. Total print and online ad revenue was down 4.8% to $10.6 billion in the first quarter from a year earlier, according to the Newspaper Association of America, compared with its full-year decline in 2006 of 0.3%.
Publishers have reported sharply lower ad revenue for April and May, with a sharp fall in real-estate advertising. The depth of the downturn is expected to become clearer as many companies report second-quarter earnings in coming days. Gannett Co. plans to report today, and Dow Jones, publisher of The Wall Street Journal, and McClatchy Co. tomorrow.
In the first quarter, revenue for every major ad category -- classified, national and retail advertising -- was down. The sharpest declines were for classifieds, where spending dropped 13.2% -- not so much a result of competition from the Web as of economic woes affecting certain categories of advertisers. Real-estate classifieds, until recently a bright spot for the industry, have plunged along with the property market. Auto and employment classifieds are also sinking. Financial-news outlets such as the Journal are being hurt by a slump in technology advertising.