Murdoch wants to read 'em and reap
The $5 billion News Corp.
The market was valuing Dow Jones as a $3 billion company, and its prospects were shrinking as quickly as the size of its Barron's and Wall Street Journal publications. With traditional newspapers scaling back, only Rupert Murdoch seems willing to value Dow Jones at 40 times forward earnings.
Why Murdoch? Well, the company is gearing up to launch a business news television network later this year. It will take on General Electric's
Folks count on the Journal for daily business dissection. They are glued to the Dow Jones Newswire service for breaking stories. They head over to MarketWatch for financial data and commentary. Even at the end of the day, how many mainstream news channels refer to the Dow Jones Industrial Average close instead of the more accurate S&P 500 gauge? Having Dow Jones in its arsenal would be potent ammo to take on CNBC.
It would also provide great advertiser leads, given all of the existing online and print-ad relationships with leading financial-services providers. The move would help Dow Jones, in turn, by wooing sponsors with the complete marketing package of print, television, and cyberspace.
It's a perfect match. It is probably also the only match. Even courageous private-equity firms are unlikely to approach the lofty $60-per-share price for Dow Jones. They may offer $4 billion, but only in turn to flip it to Murdoch for $5 billion.
The Bancroft family has to see this. It's the right business decision to make, and this is a company that should know as much from all of the great business decisions that it profiles in its pages. Murdoch doesn't have to raise his offer because he knows that no one else is going to hold up a bid card at this price. His only competition is a family with a controlling interest that would be ill-advised to favor letting the stock fall back to the $3 billion valuation where it came from.
Maybe there's a compromise. Maybe Murdoch buys just the Journal. That's what he really covets the most, it seems. And it would allow both parties to save face in this silly poker game.
She blinded me with market science
There is a financial angle to the hubbub over D.C. Madam Deborah Jeane Palfrey's recent indictment. She asked a judge to unfreeze her assets long enough to sell shares of Dolby Labs
Well, apparently she is better at calling "massage" customers than calling tops. A couple of days later, the stock soared after posting sharp quarterly results. Still, she has made some good money on the Stock Advisor recommendation. If anything, I'm glad to see that her portfolio is diversified enough to include a sound technology leader like Dolby.
Some would have probably assumed that her holdings would have included randy stocks like Rick's Cabaret
Until next week, I remain,
Rick Munarriz
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Longtime Fool contributor Rick Munarriz recommends windshield wiper fluid when trying to look back. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. He does not own shares in any of the companies in this story. The Fool has a disclosure policy.
