In the New Yorker many issues back, it had a feature about the selling of the Wall Street Journal, and how the editor in chief / publisher secretly met with Rupert Murdoch and planned it out.
The New yorker then mentioned that the Wall Street Journal was finished anyway financially, and if not sold to Murdoch, would have been ruined and was unsustainable.
Why is that? What was so bad about the Journal? Didn’t it have millions of subscribers, and a near-captive audience of wealthy financial industry types?
The print business is dying everywhere. Even though the WSJ had a lot of subscribers, it had a lot of costs (all of those reporters) so I doubt that it was profitable. So perhaps (speculation here) when Rupert Murdoch offered the Bancroft family five billion dollars, they decided that the best thing was to sell out.
Here is one of several articles from the New York Times on the sale.
In particular, it says, “The $60-a-share price is worth about $1.23 billion to the family, which has controlled Dow Jones for 105 years, and represents a 65 percent premium to the Dow Jones closing price on April 30, a day before the bid was made public.”
It also says, “Experts in trusts and estates said that if the Bancrofts rejected the offer, it might lead to lawsuits pitting family members against each other. They said that people who wanted to sell but had little or no voting power over their shares could have strong cases against trustees who voted against the deal.”
Various wealthy families have been torn apart over decisions about the family business, such as the Binghams of Louisville, Kentucky. And Liesel Pritzker sued her own father because she felt that she was didn’t receive what she felt she was owed of her family fortune. (She was 18 at the time and a Columbia freshman.)
The Binghams in Louisville, Cowles family in Des Moines, Pulitzer family in St. Louis, Hobby family in Houston, etc.
Once the founder dies, the estate starts getting split up among the heirs. The heirs who aren’t directly involved with the family business (in this case, the newspaper) decide they want cash. The heirs still involved in the business don’t have enough money to buy everyone out, so the business gets sold.
It’s really just a giant-size version of parents dying and leaving their house to the kids. One kid may want to keep the house and live in it, but unless he has enough cash to buy the others out, the house is sold and the proceeds are split up.
For most of my 62 years, the Wall Street Journal’s integrity in straight news and business news was unquestioned. On the editorial pages, the WSJ was very conservative, but outside of that, if you read it in the Wall Street Journal, then By God it was true.
This is General Questions, so that’s all I will say.
BTW, a nitpick on the thread title, “Why did Dow Jones have to sell off the Wall Street Journal?” Dow Jones didn’t sell the WSJ; instead the Bancroft family (and the other shareholders) sold Dow Jones, although the WSJ was the biggest part of the company.
With respect, I think all of those sentences are wrong. Some print papers are not only surviving but growing, and the WSJ is one of them. Murdoch made an unsolicited offer to buy the paper at a price that was substantially higher than it’s stock price (almost double). He did that largely because of how well the WSJ was performing in terms of revenues. And it’s worth noting that in addition to growing their print circulation, the WSJ is phenomenally profitable with it’s online version, which has something like 400k paid subscribers.
Everyone’s entitled to their own opinion, but they have won two Pulitzer’s in the three years since Murdoch took over.
Their public comments suggest that the amount of the offer was what prompted them to sell. Murdoch paid $60 a share when the stock was trading at around $33 – which represented a premium of about $2.5 billion. That was simply an overwhelming offer.
The family members were not unanimous in their desire to sell, with many expressing disdain for Murdoch’s reputation as a journalist and fears of what affect he might have on the Journal’s reputation.Recent interviews have offered some insight into the family’s thought process.
As to the OP’s question, I have not seen the New Yorker article in question, but would be interested in a link. I think suggestions that the paper was teetering on the edge of solvency are very curious.