Family Business Magazine E-Newsletter
May 15, 2007



Contents
1.  Observers see signs that Murdoch may get Dow Jones.
2.  Helen Walton's wealth likely to go to family foundation.
3.  Dale Earnhardt Jr. to leave his family company.
4.  Why entrepreneurs have trouble mentoring successors.
5.  Running the business after the leader's death.





1.  Observers see signs that Murdoch may get Dow Jones.  The board of Dow Jones & Co. said on May 3 that it would "take no action" on News Corp. chairman Rupert Murdoch's $5 billion offer for the company because the controlling Bancroft family opposed the proposal. But analysts speculated that the Bancrofts -- who control 64.2% of Dow Jones through class B shares -- might ultimately agree to sell to Murdoch. "The family says 52 percent of the votes are opposed to the deal," the New York Times reported. "But that leaves 12 percent who have not agreed to reject the offer. And the family consists of some three dozen members who are scattered around the country and are of different generations, with varying interests and aims for their holdings.... [I]t would take just a handful of Bancroft family members changing their position, to swing the vote in favor of a deal." Analyst Alan D. Mutter told the Los Angeles Times, "The Bancrofts have hardly slammed the door in Rupert Murdoch's face. If the board adamantly didn't want to sell, they would say, 'Leave us alone' ... This appears to be not rejecting it, just tabling it for now." Alex S. Jones, director of Harvard's Shorenstein Center on the Press, Politics and Public Policy, "said the family was likely to face increased pressure from a newly energized and reconstituted group of common shareholders," the Los Angeles Times article said. Meanwhile, Columbia Law School professor John Coffee speculated to USA Today that Murdoch could raise his offer just for the Bancrofts. "Controlling shareholders can receive a control premium," Coffee told USA Today. The New York Times reported that Murdoch suggested a meeting between his family and the Bancrofts. According to a report on the Financial Times' website, some Bancroft family members want to meet with Murdoch, "but they face stiff opposition from relatives." The FT.com article said, "Insiders say some of the 35-odd family members vehemently oppose selling to Mr. Murdoch at any price. They believe he would harm the journalistic integrity of an institution their family has jealously guarded for more than a century. However, others have expressed a willingness to at least hear Mr. Murdoch's pitch." The Wall Street Journal's website reported that in a May 11 letter to the Bancrofts, Murdoch offered to add a Bancroft family member to News Corp.'s board and to establish an independent editorial board, though he did not raise his bid. A Journal article the next day said the Bancrofts held a conference call with their advisers to discuss the matter but didn't respond to Murdoch's request for a meeting. Murdoch's letter, the article said, "serves to heighten pressure on family members and keep them discussing the offer two weeks after its existence became public instead of just walking away." (Sources: New York Times, May 3, 2007; Los Angeles Times, May 3, 2007; USA Today, May 3, 2007; FT.com, May 13, 2007; Wall Street Journal online, May 14, 2007; Wall Street Journal, May 15, 2007.)

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2.  Helen Walton's wealth likely to go to family foundation.  Helen Robson Walton, who died last month, owned $37 million worth of Wal-Mart shares directly and one-fifth of Walton Enterprises LLC, which holds $82 billion worth of shares in the company, Fortune recently reported. Helen Walton, the widow of Wal-Mart founder Sam Walton, "died a billionaire many times over, and if her will were to say -- just to speculate -- that all her wealth should go directly into the already existing Walton Family Foundation, it would leap from an also-ran to one of the three largest foundations in the U.S.," the article said. "Eventually the enlarged foundation would need to be financed by sales of Wal-Mart stock." Helen and Sam Walton's son John, who died in a plane crash in 2005, also apparently owned one-fifth of Walton Enterprises, the report noted. "But no one knows what John's will said about philanthropy ... because it has been sealed, without explanation, by a judge in his hometown of Jackson, Wyo.," the article said.  (Source: Fortune, May 14, 2007.)

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3.  Dale Earnhardt Jr. to leave his family company.  NASCAR driver Dale Earnhardt Jr. will leave the company founded by his late father and join another team when his contract expires at the end of the year, the Associated Press reported. Earnhardt had asked for 51% ownership of Dale Earnhardt Inc., which is run by his stepmother, Teresa Earnhardt. "Negotiations on a contract extension began before the season and have been tense all along," the article said. "We never even got close," Earnhardt said at a news conference, according to the report. He noted that at 32, he is "the same age my father was when he made his final and most important career decision," the AP reported. "I believe I'd have my father's blessing." Teresa Earnhardt said in a statement, "While we are very disappointed that Dale Jr. has chosen to leave the family business, we remain excited about our company's future."  (Source: Associated Press, May 10, 2007.)

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4.  Why entrepreneurs have trouble mentoring successors.  "Entrepreneurs and high-powered executives tend to be intuitive decision-makers who grasp a situation and act quickly," writes family business consultant Mark N. Voeller in The Family Business Mentoring Handbook. "When asked to describe what they do, they're likely to underestimate the complexity of the tasks they tackle every day. They're not prone to spend time analyzing what information they need to make a decision and how they know what to do. In other words, mentoring doesn't come naturally to them."



For Voeller's list of the skills entrepreneurs must master to succeed at mentoring, see The Family Business Mentoring Handbook. Learn more about the book and view the table of contents here.

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5.  Running the business after the leader's death.  When a family business leader dies, "the whole family system is upended," writes family business adviser Ellen Frankenberg in the current issue of Family Business Magazine. "Not only is each individual affected by a range of complicated emotions, but all the relationships between individuals in the family are changed." Frankenberg offers some tips for those working through grief while trying to manage a family business:


For Frankenberg's thoughts on how different family members may react to the loss of the leader, see "When there's an empty chair at the head of the table" in the Spring 2007 issue of Family Business Magazine. Visit our website for subscription information.

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