News Corp board OKs deal to buy Dow Jones

NEW YORK (Reuters) - Rupert Murdoch was one step closer to fulfilling a decades-long dream of running the venerable Wall Street Journal on Tuesday after the News Corp board approved his $5 billion bid for Dow Jones & Co Inc.

Members of the Bancroft family holding at least 38 percent of Dow Jones' voting shares are in favor of the deal, a source familiar with the matter said after the News Corp board meeting ended.

That level of support represents more than half of the 64 percent voting shares held by the family.

Outside shareholders own 29 percent of voting shares and are expected to overwhelmingly support the deal. Another 7 percent is controlled by former Dow Jones board member and executive Jim Ottaway Jr. and his immediate family, who oppose the deal.

The board of Dow Jones -- which also owns the Barron's financial weekly and Dow Jones Newswires -- is meeting at 7 pm ET on Tuesday (2300 GMT) to review Murdoch's proposal, another source familiar with the matter said.

Earlier Tuesday, a senior executive at Dow Jones also said he received an internal e-mail that said the Bancrofts had agreed to the $5 billion deal.

"Up-to-date purchase news: it appears that the Bancroft family has accepted and we're going to be part of News Corp. That just in," John Prestbo, editor and executive director of Dow Jones Indexes, told reporters in Chicago.

Dow Jones shares closed up 11.3 percent, or $5.82, at $57.38 in anticipation of the deal, trading closer to Murdoch's bid price of $60.

A Bancroft family spokesman declined to give any details on the vote tally, saying "any suggestion that the process has been completed and/or that a particular level of support has been established is at this point premature."

Dow Jones also declined to give details and a spokeswoman for the company said there was no internal memo on the deal.

News Corp. and Dow Jones were expected to reach a definitive deal later on Tuesday, capping Murdoch's three-month pursuit of the company, a source familiar with the matter said.

The Bancrofts have been deliberating over whether to accept Murdoch's buyout bid, first announced in early May.

Some members of the family had said they opposed Murdoch's bid because they believed he would interfere with Dow Jones's news operations. Others were seeking an even richer premium than the 65 percent offered by News Corp.

MEETINGS SCHEDULED

Dow Jones was discussing a plan to have News Corp cover the legal fees incurred by the Bancroft family, amounting to at least $30 million, a source familiar with the matter said on Tuesday, confirming published reports.

"After all the high-minded concerns about editorial interest and journalistic excellence, it gets down to who pays the legal fees for the Bancrofts," Benchmark & Co analyst Ed Atorino said.

"And some of the trustees bailed, fearing they'd get sued by some of the younger trust beneficiaries if they voted against the deal -- so much for principles."

Steven Yount, president of the Dow Jones employee's union, said the union was disappointed.

"We were heartened that several prominent Bancroft family members remain opposed to the sale on grounds that it will irreparably damage the quality and independence of The Wall Street Journal and all Dow Jones publications," he said.

On Monday, a News Corp spokesman said Murdoch was "highly unlikely" to proceed with the offer unless more than a reported 28 percent of the voting shares owned by the Bancroft family supported the deal.

By Tuesday, it appeared Murdoch had gained more than enough support.

Representatives of News Corp and Dow Jones were not immediately available for comment on Bancroft support.

Reuters competes with the Dow Jones Newswires.

(Additional reporting by Sam Nelson in Chicago and Megan Davies in New York)

(Editing by Gerald E. McCormick, Maureen Bavdek, Gary Hill and Andre Grenon; Reuters Messaging: kenneth.li.reuters.com@reuters.net +1-646-223-6224; e-mail: kenneth.li@reuters.com))