UPDATE 7-News Corp. makes $5 billion bid for Dow Jones

(Adds Dow Jones share price gain)

By Kenneth Li

NEW YORK, May 1 (Reuters) - Rupert Murdoch's News Corp. NWS.N offered to buy Wall Street Journal owner Dow Jones & Co. Inc. DJ.N for about $5 billion, but a representative of the publisher's controlling shareholders said they would vote against the bid.

Murdoch, whose $60-a-share bid represents a 65 percent premium to Monday's closing price, would gain the powerful Wall Street Journal brand ahead of his planned fourth-quarter launch of a business news cable channel.

Dow Jones could provide the new Fox Business Channel with a steady stream of real-time news from Dow Jones Newswires, a growing Internet presence, and analysis from Wall Street Journal and Barron's reporters.

News Corp., which made the offer a few days ahead of Dow Jones' April 18 annual shareholders meeting, called the proposal a "friendly" offer.

The takeover would make Murdoch a major player in global financial news. A deal would be controversial as Murdoch is known to intervene in the editorial process, leading to questions on whether the Wall Street Journal's news pages would keep their independence.

Dow Jones said it was informed by a representative of the Bancroft family, which holds 64.2 percent of voting power, that it would cast slightly more than 50 percent of the outstanding voting power against the proposal.

In a live interview on his own Fox News moments after Dow Jones' statement, Murdoch said his offer was generous.

"We were hearing last week first that (they) were running against us, then we heard that they decided to pursue it," he said on Fox News Channel's "Your World with Neil Cavuto." "Frankly, I don't even know if the whole family has been consulted yet. But there is plenty of time."

Murdoch added, Dow Jones "is a family newspaper. We are a family company." He said the vast resources of his company could also help boost the Wall Street Journal's circulation.

'KNOCKOUT PUNCH'

The proposed deal places Dow Jones' enterprise value -- its market value plus debt minus cash -- at a lofty 15 times estimated 2007 earnings before interest, taxes, depreciation and amortization, well ahead of the newspaper group's average 8 to 10 times valuation, Benchmark Co. analyst Ed Atorino said.

The news pushed up Dow Jones shares by 54.7 percent and sparked a rally in other publishers and newswires. News Corp. shares fell 4.2 percent as analysts said more exposure to the slow-growing newspaper industry would weigh on financials.

The "strategic rationale, which, while dilutive, solidifies a new growth driver for News Corp.," Richard Greenfield, analyst at Pali Capital said. "It would create a multiplatform business news giant spanning online, print and television."