Why did News Corp offer $60 a share for The Wall Street Journal's parent, Dow Jones & Co at a premium of 66% over the stock price at the time of the bid that some media watchers figure was fully valued at $36?
1. The Godfather Principle: make an offer that cannot be refused (or transcended by rivals).
2. A quest for respectability: News Corp mostly owns low- and middle-brow media properties—from the New York Post to Fox News. It would be most fulfilling to have the most respected business newspaper in America.
3. Liquidity: News Corp has amassed an $5.4 billion cash hoard after generating $2.3 billion in net income on $25.3 billion in revenues, both up from the previous year.
4. A Healthier Quarry: the new CEO has done a good job of engineering a turnaround at Dow Jones.
5. A Masterplan that makes the Dow Jones assets worth more than they would in anyone else's hands:
a) In a globalized world where financial information is the coin of the realm it would be wise to exploit the newspaper's high-caliber business journalism and deploy it to nourish News Corp’s online, satellite, and television properties, which this autumn will include the Fox Business Channel
b) The Journal could be an invaluable tool of influence in shaping the debate on the world's pressing issues.
c) It could launch Journal-branded TV programs across the globe.
d) It could even brand its new cable-TV business channel as the Wall Street Journal TV.
e) Dow Jones' higher-end readership could be exploited by a recent acquisition made by Fox Interactive Media, a behavorial tracking firm that helps point advertisers to certain groups with particular habits and tastes.
f) Dow Jones' properties will it give the opportunity to sell really compelling cross-platform advertising packages, which are in vogue with advertisers. This could provide advertisers with access to powerhouses across all types of media. Within the business sector, there's nobody like that.
When there is revenue, pride and honor at stake, the offer should reflect it.
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