GE, Microsoft Discussed Buying Dow Jones
By SARAH ELLISON and DENNIS K. BERMAN
General Electric Co. and Microsoft Corp. were in discussions in recent
weeks to combine Dow Jones & Co. with some portions of GE's NBC
Universal, parrying a bid by News Corp., but the two sides couldn't
reach an agreement, according to people briefed on the discussions.
Before the idea was abandoned, GE and Microsoft were discussing a
competing $60-a-share offer, these people said. One consideration for GE
appears to be concern that the unsolicited bid by Rupert Murdoch's
company to buy Dow Jones for $60 a share, or about $5 billion, could
help News Corp.'s efforts to field a television financial-news channel
that would compete with GE's CNBC.
Dow Jones has been exploring alternatives to Mr. Murdoch's offer, but
those efforts have yet to yield another serious bidder, the people
familiar with the matter said. The breakdown of the NBC-Microsoft talks
is a further sign that the options for Dow Jones may be narrowing. Dow
Jones wasn't involved in the talks, but they came to the attention of
directors last week. The discussions raise the possibility that GE may
seek another partner. A Microsoft spokesman declined to comment. An
NBC-Universal spokesman said, "These were simply exploratory
conversations that ended more than a week ago."
Dow Jones's controlling Bancroft family recently said it was open to a
possible combination of Dow Jones with another company. Representatives
from the family met with Mr. Murdoch last week to discuss issues of
editorial integrity for The Wall Street Journal and other Dow Jones
properties. Family advisers are currently working on a proposal to
structure an editorial board that would help ensure independence for Dow
Jones's journalism.
GE's interest shows that it is wrestling with how to confront News
Corp.'s fledgling business-news channel. A purchase of Dow Jones would
give News Corp. an important tool for challenging CNBC. And it could
present plenty of contractual wrangling in the years ahead, given that
Dow Jones and CNBC are locked into an exclusive content-sharing deal
until 2012. Under that agreement, The Wall Street Journal provides
content to CNBC.
The business network is a profitable part of NBC Universal, but the
division's NBC network has seen its ratings slide, and GE has faced
pressure from shareholders to turn around its overall entertainment
assets.
In pairing with Microsoft, however, GE showed it was unwilling to make
such a large purchase on its own. Any further move might well require
GE's finding another company with which to make a purchase, according to
one person briefed on the Microsoft-GE talks.
The possibilities are theoretically broad, but with no interested
parties surfacing, the prospects for finding such a partner get slimmer
by the day. NBC could try, for instance, to strike a deal with another
Internet publishing concern or perhaps an old-line publisher. But such
three-party arrangements are bulky and hard to manage. And GE and
Microsoft have the advantage of a long working relationship, given their
history in the MSNBC cable news network.
In an interview with CNBC last month, GE Chairman Jeffrey Immelt said
newspaper publishing is a "separate and distinct business away from our
core competency." He added, "I would say we have no interest in [bidding
for Dow Jones]."
Other efforts to find alternatives to News Corp. have yielded few
results. A consulting firm retained by a union representing some Dow
Jones employees said that it would explore plans for a possible bid with
supermarket magnate Ron Burkle, but so far no offers have resulted.
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