Billionaire Ron Burkle, who had shown an interest in buying the LA Times, has apparently hooked up with some of the unionized employees at Dow Jones (DJ) to snatch the company away from Rupert Murdoch.
Burkle would be joining the Independent Association of Publishers’ Employees, which represents over 2,000 Dow Jones employees, in working on a bid. Dow Jones has a little over 7,000 staff.
According to The Wall Street Journal, the chairman of Dow Jones, M. Peter McPherson, has been pushing the company’s founding family and board to go slow in talks with Murdoch. That may give Burkle additional time.
Burkle and the union have a significant problem, unless the billionaire wants to buy the company with his own cash. Dow Jones has operating income of about $120 million a year. If Burkle wants to use the same mechanism that Sam Zell used with The Tribune Company, it would involve taking on almost the entire purchase price in debt.
Covering over $5 billion in borrowings along with debt service when operating income is so low may be very tough. Murdoch does not have the problem. News Corp (NWS) is large enough to digest Dow Jones without creating any debt issues.
If the employees of Dow Jones do not want to live under the tyranny of Murdoch, the should consider what it would be like to operate under a mountain of debt.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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