Continuing Coverage of the Dow Jones Story
Saying the deal for Dow Jones & Company (DJ) doesn't make economic sense, Microsoft (MSFT) and NBC (GE) broke off talks to acquire the business news media company. Microsoft was the company initiating the comments, with NBC saying they agreed with that assessment.
What doesn't make economic sense is the price tag for most companies that would be interested. While Dow Jones has $1.8 billion in annual revenue and $400 million in profits, the price tag of $5 billion would take over 12 years to pay off, based upon their profits. That and the drop last year in advertising revenue of 12 percent makes this a risky takeover.
When you consider that two companies the combined size of Microsoft and NBC consider this a risk (the reason they were looking at doing it together), shows you what other smaller players in the field would face.
NBC is obviously worried about the prospects of Rupert Murdoch and News Corp. (NWS-A) getting the instant credibility and access to content and resources that would come with the Dow Jones acquistion. Even though they see the problem with the economics, they also see what happened to CNN when Fox entered the picture. They're obviously concerned about how it will impact their CNBC business channel. There's a good chance that NBC may pursue other potential partners in a deal for the company.
While the continuing story is who will get Dow Jones, I think the best company that could get it and help to increase its revenue and profits is the one that already made a bid for it. A lot of the pieces of the puzzle could be integrated in a way that would greatly benefit both News Corp. and Dow Jones. Who could improve upon it?
Related Coverage:
More Suitors for Dow Jones than Men Saying They were Father of Anna Nicole Smith's Baby
Brian Tierney Interested in Dow Jones
Union for Dow Jones Employees Claims Ron Burkle Joined Them to Battle Rupert Murdoch
Journalists Threaten to Walk Out if Murdoch Gets Dow Jones: Who Cares?
Why the Bancrofts Need to Sell Dow Jones & Company
Murdoch Family, Meet the Bancrofts!
Dow Jones & CO.'s Controlling Family to Meet with Rupert Murdoch
Battle for Control of Dow Jones may Eventually become a War
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Saying the deal for Dow Jones & Company doesn't make economic sense, Microsoft and NBC broke off talks to acquire the business news media company. [Read More]
Tracked on: June 11, 2007 5:20 PM | Permalink to Trackback