If you think about publishers of newspapers one of the names you will easily come up with is Rupert Murdoch. His News Corp owns the New York Post, Fox News, Wall Street Journal, papers in England and Australia and HarperCollins, and other media companies. How did Mr. Rupert go from an Australian publisher to a global media baron? Micheal Wolff wrote the book The Man Who Owns the News published by Random House, NY, 2008.

Weaved in the story of Mr. Murdoch and his family is their takeover of the Wall Street Journal. The paper ownership was held in trusts and for two generations it worked reasonably well. The trustees looked after the paper, the dividends satisfied the Bancroft beneficiaries. The third and fourth generation began to ask questions about the newspaper and the value of being dependent upon the media asset. These questions about control would eventually lead to the paper being sold and for a number of years, Mr. Murdoch was being prepared to buy it.

There was a number of issues which allowed Mr. Murdoch to buy the Wall Street Journal and the first is the thing that is reported in the paper – prices of stock. The bid was twice that the stock was trading at which automatically makes everyone just a little bit more anxious to sell. In the stock market if you can double your money, that is great but you need to cash out. In the case of the bid, if the bid is withdrawn what will the price fall to and when will it get back to the bid price? It is no wonder people wish to sell. Who are the alternatives to buying the company? if not them, who?

The next issue is when the markets were relatively stable, the company that owns the Wall Street Journal saw themselves as printing the quotes and offering business stories. As other companies saw the average person was somewhat interested in business stories they offered similar section. The Wall Street Journal could have been the business information source similar to Bloomberg News and quotes; but they looked down at that side of the business and left doors open. In order for the company to gain the share price which the bid was, things were going to have to change and who was going to do that?

Another issue is the trust world. trusts work well for a two generations because everyone remembers why they were set up and often who set them up. By the time the 3rd and 4th generation comes, the money is generally less and the connection to the company is more remote. If the trustees have not been consulted to what they consider to be worthwhile, then it is highly likely when higher bids come – whether they like the person or not, they will be open to bids.

In all growing companies, the President and some senior executives need to look into the future at the companies existing and have ideas about expansion. Who do we want to work with? who will work with us? where is our industry going? who is the next generation of leaders in the industry? what companies do we what to control? who can we work with? when we are at industry conferences who can we connect into?  Mr. Murdoch exercised patience to move from the bit players to the main street players to the premium players in the industry.

Linking to dividend paying stocks, when you buy these shares you hope and can get a reasonable idea of what the President and his team believe will happen in the future. You are primary interested in the dividend or ensuring the company is profitable, but how does it stay there while you own the shares is what the President will tell you. Are they caretakers or doers? What connections and what actions can they do?

There are more questions than answers, till the next time – to raising questions.