Dow Jones approves sale to News Corp for $5bn

International media magnate Rupert Murdoch has sealed a deal to buy Wall Street Journal publisher Dow Jones & Co. for US$5bn (€3.7bn), ending a century of family ownership and adding a new crown jewel to his global media empire, News Corp.

The companies today announced they had signed a definitive merger agreement after the deal won sufficient support to pass from a deeply divided Bancroft family, which has controlled the storied newspaper publisher for generations.

Mr Murdoch is getting one of the great trophies of US journalism and a newspaper that is considered required daily reading among the business and power elite.

The deal will also expand Mr Murdoch’s already massive global media and entertainment empire News Corp., which owns the Fox broadcast network, Fox News Channel, the Twentieth Century Fox movie and TV studio, MySpace, newspapers in Australia and the UK, and several satellite TV broadcasters.

Dow Jones and News Corp. said in a statement that Bancroft family members and trustees representing 37% of the company’s shareholder vote have agreed to support the deal.

Combined with the 29% of the vote held by public shareholders, who are very likely to support Mr Murdoch, the deal is now assured of passing.

The Journal reported that a key Bancroft family trust had reversed itself and decided to support the deal, meaning that votes representing about 37% of Dow Jones’ shareholder vote were now in favour of selling to Murdoch.

A Denver-based family trust with about 9% of the company vote had been holding out for a higher price but agreed to the deal after Dow Jones’ board said it would set aside funds to pay the Bancroft family’s advisory fees, which could total at least US$30m (€22m), the paper reported.

Combined with the 29% of Dow Jones shares that are publicly held and very likely to support Mr Murdoch, the deal appeared to have critical mass.

The deal comes as newspapers across the US face a deepening crisis of slumping revenues as readers flock to the Internet for information and entertainment, and advertising dollars chase them there.

The deal for Dow Jones represents the third time in just over a year that a major newspaper publisher has been pushed into a sale. Last year, Knight Ridder was forced to sell itself following shareholder pressure, and this year Tribune Co. agreed to a going-private transaction orchestrated by the real estate magnate Sam Zell.