The fledgling Fox Business Network got a big boost when parent News Corp. received all the votes needed to pull Dow Jones and its flagship, The Wall Street Journal, into the fold.
News Corp. on Tuesday secured support from Bancroft family members representing 37% of the voting power in Dow Jones. Combined with the 29% from public shareholders, enough votes were collected to allow News Corp. to gain control of the company in a $5.6 billion deal.
The merger agreement came after three months of haggling over the offer price and safeguarding the editorial integrity of the Journal. In the end, News Corp. Chairman Rupert Murdoch won out with the same offer originally pitched, $60 per share, and a pledge to establish a special editorial committee to ensure the paper’s journalistic independence.
The deal is expected to close in the fourth quarter and is subject to Dow Jones stockholder and regulatory approval.
The transaction was an essential step in Murdoch’s quest to build a global business news powerhouse spanning virtually every major media outlet. The company’s portfolio will now include the print and on-line WSJ properties, Barron’s, Dow Jones Newswires, MarketWatch and its planned cable channel Fox Business Network (FBN).
Indeed, having the Wall Street Journal in the stable is real boost for FBN, which launches on October 15. The network will go head-to-head with heavily entrenched incumbents CNBC, which reaches 346 million households worldwide, and Bloomberg Television, which reaches 200 million households. When FBN was formally announced in July, it had deals struck with distributors such as Comcast, Time Warner Cable and DIRECTV, netting the channel an initial 30 million subscriber base.
The Journal brand confers instant credibility and will help the channel’s carriage growth. While Murdoch has floated hints that some Journal elements could be implemented into network coverage, he has not offered details on how the assets might be incorporated. But in an interview earlier this year on his own Fox News channel, Murdoch hinted that the Journal would benefit from a wider audience.
While FBN would certainly benefit from easy access to Journal staff, reporters and editors currently appear on CNBC on a regular basis under a deal that runs through 2012. Murdoch has intimated that the two channels could live peacefully with the deal intact, but the potential for conflict seems inevitable and the situation could be a flash point in the future.
But CNBC says it has no intention of cutting short its deal with The Journal. "We expect it to be honored," a spokesman says, emphasizing that there is no room for compromise regardless of who owns the paper.
CNBC also cited its current massive hold on the business news audience, with a reach of more than 95 million homes in the U.S. after launching nearly 20 years ago.
Additional reporting by Jim Benson