Possible Dow Takeover by News Corp. Unlikely to Face FCC Hurdles
News Corp. is unlikely to face significant regulatory hurdles if it gets an agreement to buy Dow Jones (CD May 2 p12), broadcast lawyers and a media activist agreed. At first glance, the FCC seems to have little ground to block such a deal, since broadcast/newspaper cross-ownership rules wouldn’t be triggered, said the attorneys and Media Access Project Pres. Andrew Schwartzman. Analysts cheered the bid, saying News Corp.’s cable and broadcast properties would benefit from joining with Dow’s extensive online operations. A deal is anything but certain, however, as Dow Jones’ controlling Bancroft family rejected the $5 billion effort late Tues.
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News Corp. ownership of TV stations in cities including N.Y. doesn’t preclude it from owning Dow Jones’ flagship publication, the Wall Street Journal, because it’s deemed a national newspaper, said Schwartzman and industry lawyers including Erwin Krasnow. FCC cross-ownership rules bar one company from owning a paper and TV station in the same market. The FCC makes an exception for national publications, letting Gannett own TV stations and USA Today because that paper is considered a national publication, the lawyers said.
With its ample cash and the ability to borrow, News Corp. faces no financial barriers to buying Dow Jones, said analysts and ratings agencies. News Corp. probably has the cash to buy without borrowing, UBS analyst Michael Morris said. But the company might have to borrow money to buy back stock, he said.
Dow Jones probably will accept News Corp.’s offer, Sean Egan, Egan-Jones managing dir., said: “We think the probability is fairly high… Prior to this bid, Dow Jones’ share price hasn’t done much at all and the value of this property is much greater in News Corp.’s hands than as an independent.” The deal’s biggest hurdle is Bancroft family approval, Egan said. But family members have been selling the stock for years and might agree to a deal if News Corp. sweetens its offer, analysts said. - Jonathan Make, Josh Wein