Rupert Murdoch edged closer to his goal of owning Wall Street Journal publisher Dow Jones & Co. late Tuesday as the board of his News Corp. media conglomerate signed off on the $5-billion deal, a person with knowledge of the matter said.
If he succeeds, as seems likely, Murdoch would get one of the trophies of U.S. journalism and a newspaper that is considered required daily reading among the business and power elite.
The deal would also expand Murdoch's massive global media and entertainment empire News Corp., which owns the Fox broadcast network; Fox News Channel; the Twentieth Century Fox movie and TV studio; MySpace; newspapers in Australia and Britain, and several satellite TV broadcasters.
A person familiar with the deal said News Corp.'s board approved it but asked for anonymity because the vote had not yet been made public. News Corp. had said it would only agree to move ahead if the deal had sufficient support from Dow Jones' controlling shareholders, the Bancroft family.
The Journal reported on its Web site late Tuesday that Dow Jones' board had approved the deal, clearing the last significant hurdle, but a company spokeswoman declined to comment.
The next step will be a general shareholders meeting to ratify the pact, with Murdoch expected to win if nonfamily shareholders vote overwhelmingly for the deal, as expected.
The Bancroft family owns a special class of shares that gives it control over 64 percent of voting power. The Ottaway family, which sold its papers to Dow Jones in 1970 and reportedly opposes the deal, controls about 7 percent, and the remaining 29 percent rests with a mix of regular shareholders, including arbitrageurs who bought it recently hoping for a profit.
On Monday, Murdoch threatened to walk away from the deal unless he received more than the 28 percent of the Bancroft family vote that was reported by the Wall Street Journal to have been cast for him at that time. He wasn't specific about the level of votes he needed.
The Journal reported that a key Bancroft family trust had reversed itself and decided to support the deal, meaning that votes representing about 37 percent of Dow Jones' shareholder vote were now in favor of selling to Murdoch.
A Denver-based family trust with about 9 percent of the company vote had been holding out for a higher price but agreed to the deal after Dow Jones' board said it would set aside funds to pay the Bancroft family's advisory fees, which could total at least $30-million, the paper reported.
Combined with the 29 percent of Dow Jones shares that are publicly held and very likely to support Murdoch, the deal appeared to have critical mass.
The deal comes as newspapers across the country face a crisis of slumping revenues as readers flock to the Internet for information and entertainment, and advertising dollars chase them there.
The deal for Dow Jones represents the third time in just over a year that a major newspaper publisher has been pushed into a sale. Last year, Knight Ridder Inc. was forced to sell itself following a shareholder revolt over poor financial performance, and this year Tribune Co. agreed to a going-private transaction orchestrated by real estate magnate Sam Zell.
The Bancroft family was deeply divided over selling to Murdoch, and some members actively sought alternatives to his bid. One of them, Leslie Hill, resigned Tuesday as a director of Dow Jones as the final deal was taking shape, the Journal reported.
Several family members, a union representing Journal reporters and former board member Jim Ottaway Jr. expressed concerns about potential meddling in the Journal's news coverage.
German publishing executive Dieter von Holtzbrinck resigned as a director of Dow Jones two weeks ago after the board tentatively signed off on the deal, saying he was worried about how the Journal would fare under Murdoch.
Murdoch says any concerns about corporate meddling in the Journal's news pages are unwarranted. News Corp. has agreed to create a committee that would have to sign off on any decision to hire or fire top editors at the paper.
Dow Jones shares rose sharply Tuesday on hopes that a deal was close, and were getting closer to Murdoch's offering price of $60 a share, indicating growing confidence that the deal will go through. Dow Jones shares rose $5.82, or 11.3 percent, to close at $57.38. They gained another 47 cents in after-hours trading.
In a lengthy letter to fellow family members last week, Bancroft descendant Crawford Hill urged them to vote for a sale, saying the family hadn't taken an active enough role in overseeing Dow Jones and was now "paying the price for our passivity over the past 25 years."
On Tuesday, Thomas Walker, who worked on the global copy desk at the Wall Street Journal, said outside of the Dow Jones building in lower Manhattan that he was quitting rather than see the paper sold to Murdoch. "I don't want to work for the man," he said.
Information from Newsday was used in this report.