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INTERNET ENTREPRENEUR DETAILS DOW JONES PROPOSAL
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| By Kenneth Li and Robert MacMillan
Fri Jul 20, 10:46 PM ET
NEW YORK (Reuters) -
Internet entrepreneur Brad Greenspan
outlined a new proposal on Friday to keep Dow Jones & Co Inc
(NYSE:DJ - news) out of Rupert Murdoch's hands, saying his plan could
help boost the stock price to above $100.
Urging shareholders to reject Murdoch's $5 billion takeover
bid, Greenspan offered to lend members of the Bancroft family,
which controls Dow Jones, $400 million to $600 million to buy
out other Bancrofts who want to cash out at $60 per share --
the price Murdoch's News Corp (NYSE:NWSA - news) has offered.
In exchange, Greenspan said he would get two board seats
and the rights to all value created in the stock above $60 per
share.
"It's an oddball proposal," said Ken Doctor, a media
analyst at Outsell Inc. "It's very late in the game."
The plan comes days before a Bancroft family meeting on
Monday in Boston to consider Murdoch's bid. The Bancrofts
control the publisher of the Wall Street Journal newspaper by
holding 64 percent of the company's voting stock.
"We are engaged with Bancroft shareholders," Greenspan said
in a phone interview, in response to a question about whether
some Bancroft shareholders were familiar with the plan. "The
reason I wanted to put out a statement was that I felt I didn't
get a chance to get out the financial data we put together."
Family members are expected to signal whether they support
the deal on Monday, but the outcome is uncertain as an
undetermined number of Bancrofts worry Murdoch would meddle
with Dow Jones's news operations in an attempt to further his
business interests.
Experts said the proposal by Greenspan, an early investor
in MySpace, could gain traction among the Bancrofts.
"Having a financial alternative for those who are feeling
price pressure to sell to someone they perhaps don't approve of
is going to put a lot of pressure on the deal as a whole," said
Gordon Kaiser, head of the corporate practice at law firm
Sanders, Squires & Dempsey.
Newspaper analyst John Morton agreed, "assuming it's real
and he's got the money to back it up."
Greenspan declined to name his financial backers, but said
"I've got a group of investors. One of the things I'm focused
on is introducing them to different Bancroft folks to get them
comfortable."
He added, "The capital is not the issue."
"If what is left are Bancrofts who are either adamantly
opposed to Murdoch or fairly opposed to him, it could be the
end of this whole saga," he added.
Greenspan said his proposal triggered interest among
several unidentified Bancrofts, according to the Wall Street
Journal.
Greenspan's vehicle for the deal is Journal Investment
Group, but it was unclear if he had partners. A spokesman for
Greenspan's entity could not elaborate. Greenspan could not
immediately be reached.
CNBC RIVAL
Greenspan also called for Dow Jones to take on an estimated
$2.5 billion in debt to buy back 50 percent of its outstanding
shares at $60 per share and to take on another $500 million in
debt to fund a digital expansion.
In a letter to Dow Jones shareholders, he talked about
creating a cable and satellite financial news channel to rival
CNBC and News Corp.'s planned Fox business channel, and a new
online video venture.
He said these two strategies would generate $288 million in
incremental operating profit in 2009 and help more than double
2009 earnings per share to $3.91, assuming existing businesses
are stable.
Greenspan said in the interview his plan would call for the
hiring of seasoned television journalist, whose reports would
be bolstered by Dow Jones editorial.
He said his plans would help Dow Jones earnings grow at a
compound annual rate of 60 percent from 2007 to 2010 and
forecast the stock would be worth more than $100 a share.
"I can assure you, News Corp has similar designs on
monetizing the Dow Jones digital media assets. Why let Fox
Corp.'s shareholders reap the benefits while Dow Jones
shareholders down the road will question why they only received
$60 a share?" the letter said.
The proposal revises an offer Greenspan made in June to buy
a 25 percent stake in Dow Jones at $60 per share in what he
described as a partial buyout, for a total of $1.25 billion.
Dow Jones, News Corp. and a Bancroft family spokesman
declined to comment. Christopher Bancroft, who had been seeking
alternate proposals, and the Dow Jones employee's union did not
return telephone calls.
"The heart and soul of the company are saying we don't want
to be bought," Greenspan said, adding that he believed he would
likely have the support of the employees union, whose
representative he has met. "The upside is you're helping a huge
group of employees to be an employee friendly transactions."
Dow Jones shares closed 40 cents lower at $55 on the New
York Stock Exchange on Friday.
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