Tuesday, May 01, 2007

News Corp Acquisition of Dow Jones Is A Great Fit

News Corp (NWS) has made a $60 unsolicited bid for Dow Jones & Co. (DJ). I believe that this is a genius move on the part of Rupert Murdoch. Here’s why:

  • DJ owns the Dow Jones indexes of which the Dow Jones Industrials 30 stock index is the most recognized index in the world. It may not be the most tracked index or the benchmark of choice for performance measurement but it does carry a significant amount of brand recognition.
  • DJ has failed to exploit its indexes. On the other hand, McGraw Hill (MHP) has successfully marketed its Standard & Poor’s brand of indexes of which the S&P 500 (SPX/SPY) is the most widely known index and index of choice for stock advisor performance benchmarking. NWS will certainly expand the Dow Jones brand of indexes doing for Dow Jones what MHP has done for S&P.
  • NWS is busy preparing to launch its own cable business channel. With the Dow Jones indexes, NWS will have a crown jewel index to help integrate and cross-promote its many media holdings including the yet to be launched business channel.

While the NWS bid for DJ is high, nevertheless this will cause some consternation by General Electric (GE) owner of CNBC and Time Warner (TWX). TWX is in no position to make a large scale acquisition just yet. Thus with only the Dow Jones and Standard & Poor’s brands of indexes available to media conglomerates this leaves GE to make a higher big for DJ or set its sights on MHP to parry Murdoch’s move

At the time of this Blog entry Scott Rothbort, his family and or clients of LakeView Asset Management, LLC were long shares of SPY --- although positions can change at any time.

3 comments:

Howard said...

Agreed . Good post Scott

SCOTT ROTHBORT said...

I nibbled on some Dow Jones (DJ) stock yesterday afternoon subsequent to writing this blog entry.

At the time of this Blog comment Scott Rothbort, his family and or clients of LakeView Asset Management, LLC were long shares of DJ --- although positions can change at any time.

Scott Moeller said...

I agree with this as well, Scott, having looked at many other media deals. This kind of consolidation will continue -- this one isn't the last.