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16:04 July 19th, 2007

You gotta pay to play with Rupert

Posted by: Robert MacMillan
Tags: Uncategorized

Dow Jones hasn’t even accepted Rupert Murdoch’s $5 billion buyout bid and already shareholders are paying the price.

The company’s second-quarter earnings report, released on Tuesday, showed a drop in net profit. It was dragged down by a 13-cent charge for “incremental stock-based compensation expense as a result of an increase in the company’s stock price resulting from the announcement of News Corporation’s proposal to acquire the company at $60 a share.”

Wow, so the bid is already costing shareholders money. On the other hand, it is $60 a share, so maybe a 13-cent sucker punch is a small toll to pay on the road to the big money.

This isn’t the first time this week Murdoch’s bid has caused some tremors at Dow Jones. If it hadn’t been for his bid, most of us wouldn’t have heard of David Li on this side of the world. He’s the Dow Jones board member who is being investigated by the U.S. Securities and Exchange Commission over an insider trading case linked to the bid.

Then there was the late Thursday announcement that Dieter von Holtzbrinck resigned from the Dow Jones board in protest over Murdoch’s bid. In a letter to the board, he wrote, “Im very worried that Dow Jones unique journalistic values will long-term strongly suffer after the proposed sale … I do not believe that the ‘Special Committee’ can finally prevent Murdoch from doing what he wants to do, from acting his way. ”

Are these the eggs you have to break to make an omelet?

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