Dow Jones premium price likely a one-time deal

By Megan Davies

NEW YORK (Reuters) - News Corp.'s (NWSa.N: Quote, Profile, Research, Stock Buzz) $5 billion bid for Dow Jones & Co. Inc. DJ.N may have fueled a modest rally among newspaper stocks but it's unlikely to spark similar deals or push publishing sector takeover values higher, analysts say.

The $60-a-share bid by Rupert Murdoch's media conglomerate in May was a hefty 65 percent premium to Dow Jones' closing price the day before the offer -- way above the 19.4 percent premium that research firm Dealogic calculates is the 2007 average so far for U.S. takeovers. It is also a high multiple compared with how other newspaper stocks are valued.

But the move doesn't signal the start of a run of high premium bids for newspaper assets, say analysts.

"The Wall St Journal is one of those international papers of record that really is so significant a property ... that it is unique and defies description in terms of how it gets priced," said Murray Schwartz, a mergers and acquisitions lawyer with Katten Muchin Rosenman LLP. "It's like buying a Picasso," said Schwartz. "I don't think it will have any bearing on any other newspaper deal in the world."

Benchmark Co. publishing industry analyst Ed Atorino voiced a similar view. "The News Corp. move to take over Dow Jones has nothing to do with the newspaper publishing business whatsoever -- it has to do with the brand name and the financial position of the Wall Street Journal," Atorino said.

The asset also attracted interest from other parties. General Electric Co. (GE.N: Quote, Profile, Research, Stock Buzz) and Financial Times-owner Pearson Plc (PSON.L: Quote, Profile, Research, Stock Buzz) looked at a deal but said on Thursday they had decided against pursuing it.

Since News Corp.'s offer for Dow Jones was made public at the beginning of May, publishing stocks have risen modestly, with the Dow Jones publishing index .DJUSPB up 2.4 percent.

Goldman Sachs analysts wrote in a recent research note that newspaper stocks had staged a modest rally recently, fueled in part by the News Corp. bid and speculation that Dallas Morning News publisher Belo Corp. (BLC.N: Quote, Profile, Research, Stock Buzz) may spin off its broadcast division. But they point out "very weak current revenue trends" for publishing.