Rupert's Big Bid

Today, Rupert Murdoch's News Corp. made a $5 billion takeover offer for Dow Jones & Co., parent company of The Wall Street Journal. The bid comes at a critical time in the newspaper industry, when defections of readers and advertisers to the Internet has sharply eroded newspaper profits and raised doubts about the industry's long term future. In the past year two newspaper empires, Knight Ridder Inc. and Tribune Co., have put themselves on the market after pressure from restive shareholders. Knight Ridder ended up being bought by McClatchy Co. while Tribune decided to go private in an $8.2 billion transaction backed by real estate magnate Sam Zell.

The mere possibility that News Corp. owner Rupert Murdoch could get control of The Wall Street Journal is almost certain to spark a firestorm of controversy. Critics are likely to see his potential acquisition of one of the nation's most influential newspapers as an unacceptable extension of his already formidable media sway. Almost certain is that Murdoch has an aggressive strategy to expand his Internet kingdom. He already owns Myspace and The Wall Street Journal, reported 30% growth in online ad revenue in the first quarter, up from 26% a year earlier. Surely Mr. Murdoch would not pay a 67% premium over the current trading price without knowing exactly where he is going.