Sometimes investors behave like sheep. That’s evident from the sharp rise in the price of US newspaper stocks following Rupert Murdoch’s $5 billion (Rs20,500 crore) bid for Dow Jones &Co. But Murdoch’s play for Dow Jones is a unique situation, rather than a precursor to buyouts of other newspaper companies.
The most fanciful increases occurred in the shares of The New York Times and The Washington Post, which jumped 5% and 3%, respectively. To be sure, they are publishers of prestigious and influential newspapers that belong alongside The Wall Street Journal in the pantheon of journalism. And like Dow Jones, they also have two classes of voting stock in place to maintain family control and editorial independence.
But that’s where the similarity ends. At Dow Jones, some members of the Bancroft family are interested in selling.
Not so at The Times and The Post, where the Sulzberger and Graham families, respectively, are united in their opposition to ceding control to outsiders. Washington Post CEO Don Graham even went so far as to pen an op-ed piece recently in The Wall Street Journal defending the Sulzbergers’ right to keep two classes of stock, despite shareholder pressure to relinquish control.
Murdoch may or may not win Dow Jones. And he can’t stop the Internet from sucking ads, readers and profits from print. But for a day anyway, his takeover bid did something that the CEOs of Gannett, Lee Enterprises, McClatchy Newspapers and various others have been unable to do: he made their stock prices soar.