Rupert Murdoch, the CEO of News Corp. (NWS) met with the Bancroft Family, the controlling entity of Dow Jones & Co. (DJ), on Monday. Murdoch emerged from the talks calling them “constructive” as the two parties seem to gravitate closer to an agreement.
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In April, News Corp. made an unsolicited $5 billion offer to buy Dow Jones. The most contentious aspect of the deal, if it goes through, is Murdoch would own a controlling share of the Wall Street Journal. He would also have ownership over other highly respected financial media such as Barron’s and marketwatch.com.
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The Bancroft family’s initial public reaction was they were unwilling to consider selling to Murdoch. However, last week they had a change of heart and announced they were willing to talk, at least, with Murdoch regarding the sale. They have also indicated they are willing to entertain offers from others interested in buying the company.
The Wall Street Journal reported the Bancroft’s, in a nebulous statement, said through a spokesman, “The parties had a constructive dialogue and have gone back to consider our positions.”
The AP reported Murdoch leaving the meeting encouraged and saying, “We had a very long, constructive meeting and both sides want a way to consider both sides.” Murdoch is anxious to meet with the family again, and another meeting is expected in the coming months.
Journalistic integrity of the Bancroft’s properties seems to be a primary topic of negotiations. The Bancroft family, who control 64% of the voting rights of Dow Jones, is concerned Murdoch will compromise the independence of the editorial boards of their media properties.
It has been reported one scenario they are considering is to require Murdoch to allow the editorial staffs to report up through a separate command structure outside of News Corp.
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|PowerOptions covered call New Corp and Dow Jones (47 days)|
|NWS||$24.10||NWSGE||07 JUL $25.00||$0.35||1.50%||1.50%||1.50%|
|DJ||$60.16||DJGL||07 JUL $60.00||$3.60||6.00%||6.10%||6.10%|
|DIA||$136.56||DAZGG||07 JUL $137.00||$2.30||1.70%||1.70%||2.00%|
|SPY||$154.10||SYHGX||07 JUL $154.00||$2.80||1.80%||1.80%||1.80%|
|IVV||$154.33||IVVGY||07 JUL $153.00||$3.60||2.30%||1.50%||1.50%|
NWS – The News Corp trade involves the July $25 call option and offers 1.5% downside protection and 1.5% potential profit if the stock is above the $25 strike price at the end of the option period.
Competitors for NWS include: Time Warner Inc. (TWX), Walt Disney Co. (DIS), and Bertelsmann AG (private).
DJ – The Dow Jones trade involves the July $60 call option and offers 6.0% downside protection and 6.1% potential profit if the stock is above the $60 strike price at the end of the option period.
Competitors for DJ include: Reuters Group Plc (RTRSY), Bloomberg L.P. (private), Financial Times Group (private), Gannett Co. Inc (GCI), New York Times Co. Class A (NYT), and Tribune Co. (TRB).
ETF Trades – These trades all return a modest 1.5 to 2.0% with 1.7 to 2.3% downside protection. DIA tracks the DJIA and the other two; SPY and IVV track the S&P 500. In this case it is good to look at both IVV and SPY – you may find the options pay different percentages for what amounts to the same trade.
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