Murdoch’s tilt at Dow Jones, and by extension the Wall Street Journal, left some in the world of online finance blogs scratching their heads. Not at the old rogue’s game plan – that, thinks Abnormal Returns, looks to be genius:
“A $60 bid is high enough to quickly force the hand of any number of potential players. This includes the Bancroft family, General Electric the owners of CNBC, Bloomberg and even Warren Buffett an oft-rumoured buyer of Dow Jones. In short, we will quickly learn who is a player in this high stakes game and who is not.”
On that subject, Paul Kedrosky and Barry Ritzholtz think CNBC should be getting down on their knees and begging GE to get involved – the combination of Fox with the WSJ, DJ and Marketwatch looks pretty unappealing for the business channel.
But no, the real talking point is the market’s frenzied reaction to the news that the WSJ was on the block. Journal Register, described by 24/7 Wall St as “one of the worst run newspaper companies,” was a big gainer. New York Times shares gained, as did Gannett and others.
“Most of these stocks had been market laggards in the past year, as newspapers struggled to maintain circulation and online news publications and television continue to grab market share ,” wrote David Gaffen at Marketbeat.
Douglas McIntyre at 24/7 Wall St is perplexed. “Murdoch & Company want the publisher of The Wall Street Journal for some specific reasons. The two most important are to pick up a stable-mate for Fox’s new business channel; the other is that Murdoch can pretty much buy what he wants, even if he overpays. And, he will be overpaying for Dow Jones…..Dow Jones is a special situation. The value of the rest of the industry has not gone up by a dime.”
The “old media is undervalued” camp – not, as you might expect, always hugely well-staffed in blogland – got a nod from Howard Lindzon. Noting a recent outburst of newspapers are dead blogging, he writes: “As usual, when the noise in Techmeme and the nerd blogosphere gets too loud it pays to fade (do the opposite)….Old Media continues not to be dead.”
Abnormal Returns unearths a new (to them and us) blog, Zero Beta, that sees the Dow Jones bid as one more strand of its seemingly well-entrenched theme: Tech Bubble, 1996 to 2000, Financial Bubble, 2003 to ????. Most bubbles, ZB writes, have one big deal that signifies the top. “The Tech Boom was identified by Time Warner’s acquisition of AOL. Although much different and a much better acquisition in my eyes and may even pay off – symbolically I believe it is a sign of our Financial Liquidity Bubble.”
Finally, from inside the guts of the target itself – Deal Journal looks at heavy trading in Dow Jones options in the run-up to the news. The board are reported to have known about the putative deal for weeks.
“Trading was particularly heavy April 17 – the day we’re told the approach from Murdoch was made – and last Wednesday, according to Track Data. Monday, more than 4,300 Dow Jones call options changed hands, bringing the total for the month to a little more than 10,000 contracts. That compares with about 7,000 over the first three months of the year…..[Monday's] buyers of the September 45 calls accomplished something that few investors in the newspaper industry have managed to do in these times. They made a killing, with their investment surging 31-fold.“
The WSJ blog also (wistfully?) sizes up the possible rival bidders, including this gem.
“Pearson – A purchase by the owner of the Financial Times would put the twin pillars of financial journalism under one roof and could make a powerful transatlantic combination with a market value of nearly $20 billion.”
Well who knows. Makes a change from the Pearson as a seller line.
But analysts at Dresdner Kleinwort, emboldened by the sudden popularity of trophy media assets stateside, on Wednesday was right back on the usual message. “We met Robin Freestone, FD of Pearson last night who reaffirmed that there was no sentimental attachment to the Financial Times or any other asset at Pearson and that they would be prepared to sell it if the right asset price was on offer.”