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Dow Jones is speaking to Burkle concerning how much he would pay for the company and its Wall Street Journal.
Odds are the Bancrofts just aren't excited about having hot-shot Rupert Murdoch and his sensationalistic media company in charge.
Even if Murdoch's $5 billion bid is high, remember he paid what was considered a high price for Myspace… and now the online site is booming.

Buyout Targets: Murdoch Sees $5 Billion Potential in Dow Jones Company (DJ:NYSE)

Wow, Dow Jones Company (DJ:NYSE) had all of us fooled. Even me. Regardless of knowing that the company was still entertaining competitive bids from other possible buyers, I thought Rupert Murdoch's seduction was complete. But no dice.

DJ announced today that it is in talks with Ronald Burkle concerning his bid for DJ and The Wall Street Journal. If you remember, Burkle is one of the billionaire investors that bid for Tribune Company (TRB:NYSE) before the company decided that Sam Zell's cash was worth more.

One of the highlights of Burkle's possible bid from comes in the form of a proposed employee stock-ownership plan.

Also, without saying as much, the company is sure willing to hear from other interested bidders after Murdoch's $5 billion bid has scared away most interested parties. After all, who would pay that much money for a company so rife with debt?

The head honcho at the Independent Association of Publishers' Employees (IAPE), Mr. Steven Yount, says that the union representing the 2,000 Dow Jones employees has drafted proposals to a dozen potential bidders, including Rupert Murdoch, to petition for any competitive bids to counter Murdoch's.

Buyout Targets: Is Murdoch The Right Buyer?

The New York Times announced prominently in an article on Monday that the Bancroft family and its representatives, including Leslie Hill, a member of the Board of Directors, dislike Rupert Murdoch and his News Corp. (NWS:NYSE) association for the cultural sensationalism that it represents… and they'd much rather someone with a lot less media attention and partisanship than Mr. Murdoch.

Many bids, including the partnership bid between Pearson PLC (PSO:NYSE) and General Electric (GE:NYSE) a few weeks ago, have silently expressed that the value they pin on DJ and its Wall Street Journal falls short of the value that Murdoch places on it.

But believe me, $5 billion is not much to Murdoch, whose company currently holds assets of $62 billion and annual revenues of $28 billion.

Of course, News Corp. and Murdoch received lukewarm reviews when it bought Myspace.com for $580 million in 2005. Today, it's at the center of NWS' $500 million Fox Interactive Media group, and is probably the most successful social networking site in the world.

Then again, Myspace was growing extensively when Murdoch paid $580 million for it. Even though it was considered a flash in the pan, another fad Internet idea (even by a few colleagues of mine), time has shown that Myspace was actually undervalued at its purchase price.

Buyout Targets: Murdoch's Valuation Means He Has Something Up His Sleeve

The Wall Street Journal and Dow Jones is a different story. One of many in a fledgling industry that's being taken over by Internet savvy media companies, DJ has $508 million in debt. Its quarterly earnings year-over-year are at -63.30%.

But who better to bring the newspaper and the Bancroft family into the future than Murdoch? He has the know-how to bring the company into the light, increase advertising revenue, and increase its online presence.

It's not the current valuation that Murdoch puts on the table to buy companies. It's what his vision entitles him to value the company. And if Murdoch believes paying $5 billion is a good deal, he knows why it's a good deal. Any other company or investor will most likely drive the company into the ground.

If you ask me, Murdoch is a surefire winner for this deal. I just wish the Bancrofts could see that and retire happily.

***

Ann Sosnowski is a small and mid-cap stock analyst for Taipan Financial News. She is the editor of Diligent Investor, a monthly newsletter that balances conservative and moderately risky investments that pertain to current market trends. She is also the editor of Diligent Investor Micro-Cap Hot Sheet, a monthly newsletter that finds the hottest penny and micro-cap stocks on the market.

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