Dan Gross reckons
that Rupert Murdoch paid a "jerk premium" of "somewhere
between $760 million and $1.22 billion" to take over Dow Jones and the
Wall Street Journal. Anybody else, he says, could have bought it for less:
Sometimes a buyer’s reputation is so toxic that sellers might charge a higher
price to compensate for the icky feeling the transaction gives them. That
sure seems to be the case with Murdoch’s acquisition of the Wall Street Journal’s
I’m not convinced that "icky feeling" premiums really exist in the
realm of multibillion-dollar deals. It’s like selling your house: you’ll sell
to the highest bidder, even if you don’t like them, because it’s more money
for you and because a lower bidder could always just flip to property to the
overbidder in any event.
And Murdoch has always been very open about the fact that he has coveted the
Journal for many years. If Dow Jones ever found itself in play, everybody in
the media world knew that Murdoch would put in a bid. And if Murdoch put in
a bid, any rival bidder would have to beat it. So no, GE or Pearson or the New
York Times Company or any of the other potential bidders could not
have bought Dow Jones at a lower premium, because there’s simply no chance Murdoch
would have sat quietly on the sidelines and let such a deal go through.
Meanwhile, Jimmy Lee reckons that Murdoch, and Murdoch
only, had the ability to buy Dow Jones.
Speaking to The Times, James B. Lee of J.P. Morgan Chase & Company, who
has represented clients in some of the biggest deals in history, said of Mr.
Murdoch: “Nobody else I have ever banked could have pulled it off.”
Remember that this deal was painstakingly put together over a very long period
of time, with Murdoch, a consmmate dealmaker himself and the patriarch of the
Murdoch family, teaming up with bankers at Allen & Co who are experts in
dealing with family-owned companies. There was much, much more to this deal
than simply making an offer and waiting to see whether it was accepted, and
it’s not clear how many other people have the nous and the patience –
not to mention the cash – to make it happen.
Did Murdoch pay a high premium to buy the WSJ? Of course. But could anybody
else have bought it at a lower price? That’s much more doubtful.