May 9 (Bloomberg) -- Rupert Murdoch tried today to persuade the Bancroft family to sell him Dow Jones & Co. by offering appeals to their pride.
What he didn't offer is more money.
``We admire the Bancroft family and the Dow Jones management,'' Murdoch told analysts on a conference call after News Corp., the third-largest media company, reported quarterly earnings. ``If we didn't have such strong confidence in our business, we wouldn't have made such a generous offer.''
Murdoch told analysts that News Corp.'s $60-a-share bid for the publisher of the Wall Street Journal ``is a full and more than fair price.'' His efforts to sway the Bancrofts have so far failed. Family members controlling 52 percent of the votes rejected the bid and Lehman Brothers analyst Craig Huber said today he sees an 80 percent chance the attempt will fail.
Shares of New York-based Dow Jones had the biggest drop in more than four years on concern Murdoch's statements mean he won't increase the offer. The stock fell $2.60, or 4.7 percent, to $52.40 at 4 p.m. in New York Stock Exchange composite trading. The shares traded at $36.33 the day before Murdoch's approach was made public on May 1.
``So he's not going to raise his bid, for now,'' said Ed Atorino, a New York-based analyst with Benchmark Co. ``The fact that he said what he said makes it look like he's standing pat.''
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Class A shares of News Corp. fell 42 cents to $21.33. They are little changed this year.
Murdoch spoke after New York-based News Corp. reported a 6.2 percent rise in third-quarter net income to $871 million, or 27 cents a share. The company's Fox News cable-television network and box-office hits such as ``Night at the Museum'' drove the gains.
News Corp.'s results illustrate why Murdoch was able to make an offer that was 65 percent more than Dow Jones' stock market value. Dow Jones also owns Dow Jones Newswires and Barron's.
The Bancrofts rejected the bid last week and the company's board said on May 2 it wouldn't act because of the family opposition. Michael Elefante, a lawyer for the Bancrofts, declined to comment.
Murdoch also faces resistance from the Ottaway family, which controls 6.2 percent of the company.
Murdoch, 76, wants control of the Wall Street Journal, the largest U.S. business newspaper, to bolster News Corp.'s planned Fox Business Channel with resources from the publication, wsj.com and Dow Jones Newswires.
Rejection Likely
Wall Street firms became more pessimistic that Murdoch will succeed. Lehman's Huber said investors are underestimating the resolve of the Bancroft and Ottaway families, who want to keep the newspaper independent.
A competing bid is also unlikely, Huber wrote in a note to investors. He rates the stock ``underweight'' and said shareholders should sell in the mid $50s.
UBS AG analyst Brian Shipman today placed a 60 percent chance on the deal failing.
The Bancrofts will probably ``remain resolute,'' Shipman wrote in a report to clients. News Corp.'s failure would send the shares tumbling below their pre-offer price because it would signal that the Bancrofts have no intention of selling at any price, Shipman said.
``Rejection of such a compelling bid is tantamount to confirming that the company is simply not for sale ever and that no deal will be done anytime soon,'' Shipman wrote. He has a ``neutral'' rating on Dow Jones stock.
A rival suitor, or ``white knight,'' is unlikely to make a bid as most companies would be reluctant to pay such a high price, Shipman said.
Newspaper Combination
News Corp. would combine Dow Jones with its own newspaper division, which publishes more than 175 newspapers including the Times of London, the New York Post and the Australian. The unit posted a 2 percent rise in profit to $156 million in the quarter ended March 31, helped by higher advertising and circulation revenue at News Corp.'s Australian newspapers.
``This is going to be one of the hot-button issues because of their Dow Jones offer,'' said David Joyce, an analyst at Miller Tabak & Co. in New York. He rates the stock ``buy,'' according to Bloomberg data.
To contact the reporter on this story: Cecile Daurat in New York at cdaurat@bloomberg.net
