GE/Pearson consider Dow Jones bid

NEW YORK (Reuters) - Talks between General Electric Co. (GE.N) and Pearson Plc (PSON.L) about challenging News Corp.'s $5 billion bid for Dow Jones & Co. DJ.N are ongoing, but it was unclear whether they would lead to an

offer, a source familiar with the situation said on Monday.

One possibility being considered could see the controlling Bancrofts keep an interest in Dow Jones, which owns the Wall Street Journal, that source said. That confirmed earlier reports by the Financial Times and the Wall Street Journal.

General Electric owns the CNBC business television channel, and faces competition from News Corp.NWSa.N, which is launching a business news channel of its own. Pearson owns the pink-paged business paper the Financial Times and competes with the Wall Street Journal.

Rupert Murdoch's News Corp. in May offered to buy Dow Jones & Co. for about $5 billion, or $60-a-share bid -- a 65 percent premium to the company's closing price the day before the bid.

The Bancrofts, who control 64 percent of Dow Jones's voting power, initially rebuffed the offer but later said they would consider such a sale and would also look at offers from other bidders. That led to a meeting between Murdoch and the Bancrofts which Murdoch described as "constructive."

Dow Jones' shares closed up 2 cents at $59.03 on Monday.

Since the Bancrofts effectively opened the bidding up, other potential interested parties have surfaced.

Earlier this month, Christopher Mackin, founder of consulting firm Ownership Associates Inc. and an adviser to the Dow Jones employee union, said that a "Wall Street group" and an Internet entrepreneur have expressed interest in mounting a counter bid, although he declined to give details about the parties.

Mackin also said that Yucaipa Cos., the investment firm run by Los Angeles billionaire investor Ron Burkle, was working with the union, but "has not committed funding or financing."

Fortune publication, however, said on Monday that Burkle was working with Dow Jones' union and could go public this week with a long shot offer for Dow Jones, citing "a source in the Burkle camp." Burkle's representative was not immediately available for comment.

GE Chief Executive Jeffrey Immelt, meanwhile, has taken a serious interest in the possibility, according to The New York Times. Executives from NBC and CNBC, who were set to attend a conference in London this week, stayed behind in part because of the talks with Pearson, the Times said.

Under a scenario that has been discussed, CNBC, the FT and Dow Jones would be combined in a privately held joint venture, the Journal reported. The venture would be owned in equal parts by GE and Pearson, with the Bancroft family holding a minority stake in the new company, the Journal said.

Such a structure could allow some of the family members to sell their stakes while letting others roll their Dow Jones stock into the new company.

The Journal reported that one family member said the Bancrofts had agreed they would give serious consideration to an offer that was lower than the $60 per share on offer from News Corp if they felt the buyer could better protect The Wall Street Journal's integrity.

A Bancroft family spokesman and a General Electric spokesman declined to comment. Pearson officials were not immediately available. Bancroft family members did not return telephone calls seeking comment or declined to comment.

Dow Jones also owns the Marketwatch.com business news Web site, the Factiva electronic news archive and Dow Jones Newswires, which compete with Reuters Group Plc in providing business news.

Pearson has also sounded out Barry Diller's IAC/InterActiveCorp (IACI.O) and privately held newspaper and magazine publisher Hearst Corp. as partners, the Financial Times reported. An IAC spokeswoman declined to comment.