Gotcha: Murdoch wins Dow Jones

Rupert Murdoch is poised to get his hands on the biggest prize in his long career in newspapers, after members of The Wall Street Journal's controlling family abandoned their opposition to his $5bn (£2.5bn) takeover of Dow Jones, its parent company.

The Dow Jones board was meeting last night at the end of a day of wheeler-dealing which persuaded key members of the Bancroft family to change their minds and support a bid for the company. His takeover of the Journal reshapes the media landscape in America, adding the country's paper of record for the business community into a portfolio of assets that includes the New York Post and the Fox News channel, and a Fox business channel that launches later this year.

The clincher yesterday appeared to be News Corp's agreement to take on some of the legal costs that Bancroft family trusts have incurred over the four months since he first made his audacious approach.

A trust representing a branch of the family based in Denver said last week it was voting against the deal unless Mr Murdoch agreed to pay more, but the Journal itself reported at lunchtime that the trust would now use some or all of its 9 per cent share of the vote to support the sale.

That put family members controlling at least 38 per cent of the vote into Mr Murdoch's camp, more than enough to guarantee he will win a poll of all shareholders. The Bancrofts, descendants of the Dow Jones founder Clarence Barron, control 64 per cent of the company, through a special class of share with extra voting power. A further 7 per cent is owned by another family, the Ottoways, who oppose Mr Murdoch, but the remaining 29 per cent is now largely in the hands of hedge funds expecting to pocket the offer price.

Many family members agonised over Journal reporters' concerns that he would interfere with their editorial decisions to further News Corp's business interests. A meeting of the clan in Boston last week ended without agreement and a deadline for family votes on Monday was also missed.

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

Mr Murdoch repeatedly expressed his irritation with the Bancrofts' indecision, as they feuded among themselves about whether the Journal would be better off inside News Corp. He has promised to invest in expansion, even though demand for advertising space in the paper is falling, and he has also agreed to set up a board of journalistic grandees to guarantee the Journal's editorial independence.

However, he calculated correctly that News Corp need not raise its $60-a-share bid, which was already a 67 per cent premium to the previous Dow Jones share price. Efforts to block the deal were led by Christopher Bancroft, an investment banker and director, and his cousin Leslie Hill, also a director, but neither were able to come up with credible alternative bidders at Mr Murdoch's price. The supermarket magnate Ron Burkle and the internet entrepreneur Brad Greenspan expressed interest but failed to make concrete proposals. General Electric, owner of the business channel CNBC, and Pearson, owner of The Financial Times, explored a joint bid but could not justify the price.

The News Corp board had scheduled a board meeting for 4pm, New York time, yesterday to review the latest commitments by the various Bancroft family trusts. Dow Jones followed with a board meeting at 7pm.

How takeover saga unfolded

29 March Rupert Murdoch broaches a takeover with Dow Jones chief executive Richard Zannino

17 April News Corp makes its $5bn offer formal

1 May News of the offer leaks, though a blocking majority of the Bancrofts say they oppose a deal

20 June Dow Jones board takes over negotiations

17 July News Corp takeover recommended by Dow Jones board, but the three Bancroft family representatives abstain

31 July News Corp seals support of key members of Bancroft family