Dieter von Holtzbrinck, a German publishing executive, submitted his resignation yesterday. In a letter addressed to his fellow board members and filed with the Securities and Exchange Commission, he said that although he understood the deal was good in financial terms, he was "very worried" about the issue of journalistic values.
Editorial standards is one of the major sticking points, preventing Murdoch from sealing the $5bn deal he hopes will bring Dow Jones into the News Corp fold.
Dow Jones owns the hugely respected Wall Street Journal, and there are fears that there will be an erosion of the integrity that makes it admired within the industry and by readers.
News Corp has sought to allay these fears by offering to set up a special committee made up of News Corp staff and members of the Bancroft family, to safeguard the independence of Wall Street Journal editors.
The Dow Jones board has voted in favour of accepting the deal, but there is still the matter of winning over the Bancroft family, which controls 64% of the voting rights for Dow Jones.
Family members are reported to also be concerned about the issue of editorial standards, and some are keen to wait for a different buyer to show up.
In von Holtzbrinck's letter, he refers to the appeal made by Jim Ottaway, whose family controls 7% of Dow Jones' voting power. In a piece published in today's Financial Times, Ottaway urges against the sale to News Corp, saying there are "good reasons not to accept" despite the financial gains it would bring.
Instead of appealing to the Bancroft family solely on the issue of editorial integrity, Ottaway says that News Corporation is not a good home for Dow Jones and that the fears about the future of an independent Dow Jones in the tough media industry are exaggerated.
The Bancroft family is meeting on Monday to vote on the Murdoch offer.
Dieter von Holtzbrinck's resignation letter in full:
Sorry, that I couldn't support the recommendation which got Board approval. Although I’m convinced that News Corp. offer is very generous in financial terms, I'm very worried that Dow Jones unique journalistic values will long-term strongly suffer after the proposed sale.
Listening to our lawyers, one has to vote for a deal which is in the best (financial) interest for the shareholders, except if one can prove that such deal bears risks for the company that overcompensate the financial profits.
I cannot prove that my worries are right. I can only refer to News Corp. business practices in the past, can only refer to Jim Ottaway's article in the Journal, etc. I do not believe that the "Special Committee" can finally prevent Murdoch from doing what he wants to do, from acting his way.
Herewith I resign from the Board of Dow Jones, hoping that you, my highly respected colleagues and friends, can understand my decision.
Dieter
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