Accord Seen on Oversight of Journal

Negotiators reached an agreement in principle yesterday on protecting the editorial independence of The Wall Street Journal, an important step toward a purchase by the News Corporation of The Journal’s owner, Dow Jones & Company, people briefed on the talks said.

That clears the way for discussion of the price that the News Corporation would pay, a matter that has so far taken a back seat to the question of how much control the company and its chairman, Rupert Murdoch, will have over the pages of The Journal.

The tentative agreement includes a framework for selecting the top editors at the paper. But people familiar with the talks cautioned that several pieces of the accord remained sketchy or not yet written, and some people said they were reluctant even to call it an agreement yet.

“The nuts and bolts are there, but not all the details,” said one of those people, all of whom insisted on anonymity because they were not authorized to discuss the talks.

The terms on editorial independence, worked out primarily by lawyers and bankers for the two sides, have been disclosed to members of a special negotiating committee of the Dow Jones board: M. Peter McPherson, the chairman; Richard F. Zannino, the chief executive; Michael B. Elefante, the primary trustee of the Bancroft family trusts that hold most of their stock; Harvey Golub and Lewis B. Campbell.

But people close to the talks said the agreement has not yet been described to the whole board or to more than a handful of the Bancrofts, if that many. They said the family would be formally briefed by Mr. Elefante only when there is a tentative deal on all issues — including newsroom control and price — that the Dow Jones board and the News Corporation each think it can accept.

It is not clear how the current accord differs from the conditions laid down last week by the Bancroft family, owners of a controlling interest in Dow Jones — terms that Mr. Murdoch dismissed as unacceptable. Nor is it clear whether the family, which has veto power over any deal, would accept the changes.

The elder Bancrofts, who control most of the stock, have deep reservations about parting with a company that has been in the family since 1902 and a newspaper they revere. In particular, many of them are reluctant to sell to a company whose journalism they see as sensationalist and slanted to suit Mr. Murdoch’s business interests and right-wing politics.

But News Corporation’s $60-a-share offer, a 67 percent premium to the stock price before the bid became public knowledge, and Dow Jones’s uncertain prospects if it continues on its own, have pushed the Bancrofts closer to a sale.

The only other offer on the table is a partial bid made by Brad Greenspan, an Internet entrepreneur. This week, he will meet with representatives of Merrill Lynch, financial advisers to the Bancrofts, and Goldman Sachs, advisers to Dow Jones, people close to the talks said.

Mr. Greenspan, a creator of the MySpace social networking site — now owned by the News Corporation — has said that he leads an investment group prepared to buy 30 percent of the stock and keep the company out of Mr. Murdoch’s hands.

For weeks, family members labored to reach a consensus among themselves on what kind of controls on editorial independence would make a deal with News Corporation palatable. Last week, they produced a plan and turned negotiations over to the Dow Jones board. But Mr. Murdoch reportedly found the family proposal unacceptable, and since then, Dow Jones’s negotiators, consulting with board members, have been trying to reach a compromise.

The Bancrofts’ plan was intended to prevent the News Corporation from ever being able to hire or fire the top editors in The Journal’s newsroom, its editorial page and Dow Jones Newswires, along with the paper’s publisher. They proposed giving those powers, and some control over newsroom budgets, to an independent committee composed primarily of people chosen by the Bancrofts.

Mr. Murdoch has offered an arrangement like the one he accepted in buying The Times of London in 1981, under which the News Corporation can name or dismiss the top editors, but a panel of independent directors can block those moves. His critics say that despite that structure, he has shaped the newspaper’s staff and content as he saw fit, much as the owner of any other paper does.

source:www.nytimes.com