Was There a Murdoch “Jerk Premium”?

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

parent company.

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.

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