‘Brinksmanship’ In Overnight Negotiations to Sell Dow Jones

While you were sleeping, the proposal to sell Dow Jones, Inc. to Rupert Murdoch's News Corp. got more complicated.

The Bancroft family, which controls Dow Jones Inc., missed a self-imposed deadline yesterday to line up enough votes to agree to sell the company to Rupert Murdoch's News Corp.

This morning The Wall Street Journal describes yesterday "as a tense day in which some family advisers and Dow Jones board members scrambled to line up enough votes to ensure the sale. A 5 p.m. deadline set by the family came and went amid apparent brinksmanship in both camps."

But they're still working on it.

Late last night, The Journal reports, the Dow Jones board was trying out a proposal that would, basically, cover all of the consulting fees the Bancrofts have accrued over the last several weeks deciding whether to sell to News Corp.:

The late-night proposal under discussion was for the Dow Jones board to create a fund to cover payments to firms advising Bancroft family members, including Merrill Lynch and the law firms Hemenway & Barnes and Wachtell, Lipton, Rosen & Katz. News Corp. would assume these liabilities if it bought Dow Jones. The fees could total at least $30 million, according to people familiar with the situation.

Dow Jones is expected to argue that the Bancrofts deserve help with their advisory fees because their trusts are so complicated. Common shareholders don't face many of these fees.

The problem is that holdouts who have opposed the deal–for different reasons–are still holding out. Christopher Bancroft, who had been trying to find ways to keep Dow Jones in the family by buying out family members who were in favor of a deal, has largely argued against the sale on journalistic grounds. The Denver law firm of Holme Roberts & Owen appears to be holding out for more money, which Rupert Murdoch has said he would not consider.

Rupert Murdoch's been getting frustrated. He's said that he wants a deal soon, and also that he was unwilling to submit his bid to a vote before the full Dow Jones board until the Bancrofts, who control 64 percent of Dow Jones votes, can deliver him a majority. But he has not yet pulled his offer. 

So, what's next?

A News Corp. board of directors meeting is set for 4 p.m. today and a decision by the company on whether to proceed and seek a full Dow Jones shareholder vote to approve a deal is expected to come then, if not sooner. Dow Jones's board was planning to meet today at 7 p.m.

If a majority of the Bancrofts vouchsafe their support for a deal before a Dow Jones board meeting this evening, the headlines will be "News Corp. Buys Dow Jones." If not, and if News Corp. decides at 4 p.m. to pull the deal, the headlines will be "Rupert Murdoch Pulls Dow Jones Offer." If there is no definitive demonstration of support from the Bancrofts, but News Corp. does not pull its bid at 4 p.m., and if the offer then comes before the Dow Jones board for a vote, then we'll have some down-to-the-wire drama.

Or everyone could shirk their promises, have their bluffs called, blow their deadlines, etc. etc., and the deal could still be in suspended animation for the rest of the week.