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May 03, 2007
T. Rowe's Take On DJ
If you read this week's cover story, you'll see that I interviewed John Linehan, manager of the T. Rowe Price Mid-Cap Value and T. Rowe Price Value funds. Together with Brian Rogers, manager of the T. Rowe Price Equity Income Fund, T. Rowe Price owns of 15% of Dow Jones stock, making the Baltimore asset management company the largest outside shareholder.
Here are edited excerpts from our conversation on Tuesday after the market closed:
Q. Do you think the Bancrofts are crazy to reject this?
A. I don?? know if $60 is a final bid or just a starting bid. It?? a reasonable bid that deserves the consideration of the board. That being said, we see significant synergies between DJ and a variety of different companies. We want to be patient and see how this unfolds. Other companies may see the value Rupert and others see.
Q. How did you hear the news of Murdoch's bid?
A. I was checking just to see fund doing (Tuesday) morning, and I saw DJ was up to $60. I thought it was a rogue quote. Then I checked the news, and I saw that it was real. My fund is up 60 basis points. It?? one of my better days.
I?? not surprised. The message we??e been trying to give is that there really is some unique content in the Wall Street Journal and the collection of assets that comprises Dow Jones. The Wall Street Journal is similar to ESPN. It?? a way of reaching a very elusive demographic base. If you think of sports, ESPN reaches that 25- to 49-year-old male. The Journal reaches the affluent male that you can?? get by other types of advertising. It is a unique property. There are a great deal of synergies with content and a demographic base that will fit well with a variety of different companies.
Q. What does this mean for the newspaper biz?
A. I don?? think it means a great deal for the newspaper business. With the auction of the Tribune, there was no premium.
Content becomes increasingly important in a world in which you see digital and print converge, or a bunch of different media converge. One of the appeals for News Corp. is the convergence of print and television that Dow Jones can offer. It?? a way of driving eyeballs. That?? why I don?? think the Tribune auction generated much interest.
It doesn?? surprise us at all. It?? always out of the blue when you see it, but it makes a lot of sense for Rupert. This is a once in a lifetime opportunity for a number of companies.
Q. Will Murdoch prevail?
A. The fact that Rupert is involved sale means there is going to some unpredictability in the mix. There?? a lot of game theory right now: You??e got family dynamics. You name it, it?? there.
One of the other things no one is talking about is that the Bancroft family has been systematically selling shares for quite some time to diversify their holdings
Q. Why now?
A. I don?? think the timing is accidental. Peter Kahn left two weeks ago. Rich Zannino has done a good job of engineering a turnaround, but we are in the early innings of it. So far, he?? done a lot of blocking and tackling. MarketWatch was a reasonable acquisition. They??e been good about trying to amalgamate the sales force to sell both digital and print media. They changed the look of the paper without changing content a great deal, and they??e cut costs. They??e put all this investment in the Saturday edition, but the payoff is still a year or two away. The trajectory is favorable and Rupert saw that. You?? rather make a bid early, rather than late in the game.
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