Family Business Magazine E-Newsletter
August 7, 2007



Contents
1.  Dow Jones saga ends with agreement to sell to News Corp.
2.  Sumner Redstone feuding with daughter.
3.  Enterprise to acquire National and Alamo.
4.  New York Times donates records to New York Public Library.
5.  'Family business basics' for mentors.
6.  Advice on 'going green.'





1.  Dow Jones saga ends with agreement to sell to News Corp.  Wall Street Journal publisher Dow Jones & Co., which had been controlled by the Bancroft family since 1902, agreed to be acquired by Rupert Murdoch's News Corp. on July 31. "Dow Jones's board had rejected the request for a higher price for Class B shareholders," the Journal reported. "Instead, what emerged from the talks was a deal under which Dow Jones agreed to pay the family's legal and banking bills." The fees could add up to $30 million to $40 million, according to various reports. A New York Times article, noting this arrangement, questioned whether the Bancrofts were "pushed to do the deal by high-priced Wall Street advisers who stood to make far more if a deal was consummated." Dow Jones shareholder James H. Ottaway Jr., retired chairman of Ottaway newspapers, told the Times, "I think there was a definite spin toward scaring the family by their advisers." He and others also "questioned whether the advisers' past and current relationships with the News Corporation swayed their advice," the Times reported. (A Bancroft family spokesman denies this, the Times article said.) Fortune senior editor-at-large Allan Sloan noted in an online posting that because of Dow Jones' share structure, the Bancrofts had less control than do family owners of the New York Times and Washington Post. "[A] majority of Dow Jones's board is elected not by the B shares alone or by the Bancrofts alone, but by regular shares and B shares voting together. Get essentially all the regular shares and a third of the Bancrofts' B shares, and you achieve control.... The real irony is that Murdoch's clan could go the way of the Bancrofts." According to the Journal, Dow Jones expects the deal to close in the fourth quarter.  (Sources: Wall Street Journal, Aug. 1, 2007; New York Times, Aug. 2, 2007; CNNMoney.com, Aug. 1, 2007.)

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2.  Sumner Redstone feuding with daughter. Viacom Inc. chairman Sumner Redstone -- who recently settled litigation with his son Brent by buying out Brent's stake in the family business -- is now feuding with his daughter and heir apparent, Shari. The feud stems from "a dispute over corporate governance issues" at Viacom and CBS, which Sumner Redstone also controls, according to an online report by Fortune writer Tim Arango. Arango reported that Sumner and Shari and their lawyers "have been in discussions ... about reducing her influence in the affairs of CBS and Viacom, where she sits on both boards as non-executive vice chairman. This could include a deal in which Sumner acquires Shari's voting stock in Viacom and CBS ... although it is far from clear that Shari will assent to such an agreement." According to a Wall Street Journal report, a few years ago Sumner "agreed to changes in trust documents related to his estate planning to say that [Shari] would succeed her father if he died while she was on the board.... Father and daughter are now in dispute over the meaning of this provision.... Ms. Redstone believes her succession is automatic; Mr. Redstone believes it is conditional." In a later report, Fortune's Arango wrote that Sumner's effort to remove Shari from the boards "is the only way he can prevent Shari from taking over upon his death. Such an effort would mimic his 2003 ouster of his son Brent from the board of directors of Viacom." The Journal article noted that Shari, who runs Viacom's National Amusements movie theater chain, "appeared to want to prove she had something to add to those companies beyond her relationship with her father.... That sometimes meant she would take on her father publicly." That "infuriated" Sumner, who "appeared to feel the two should present a common front as a family, and also that he was more of an expert in matters concerning Viacom and CBS," the report said. A buyout of Shari would leave Sumner as the sole owner of his family's shares in the companies and "could make sale of the investments more likely on his death," the Journal said. Arango wrote that if the feud results in lawsuits, "allegations involving self-dealing in a long-ago transaction in which Sumner gained control of National Amusements, which are the basis for a still-unsettled lawsuit brought by Sumner's nephew, Michael Redstone, are likely to be front-and-center."  (Sources: CNNMoney.com, July 19, 2007; July 22, 2007; Wall Street Journal, July 20, 2007.)

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3.  Enterprise to acquire National and Alamo.  The Taylor family's Enterprise Rent-A-Car plans to buy two rental-car brands, National and Alamo, pending regulatory approval. "The deal will strikingly revamp market share, as Enterprise will make an instant jump from about 8% of the airport market to more than 27%," just behind Hertz's 28.5%, Fortune reported. The estimated $1.2 billion deal caused Standard & Poor's and Moody's to lower Enterprise's credit ratings, which will raise its interest rates -- but "they will still be lower than Hertz's," the article said. While Hertz is "a highly leveraged company that is controlled by a group of private-equity firms," the article said, "Taylor wouldn't dream of taking Enterprise public and has no financial reason to do so. He actually sewed up the pending purchase by offering a no-contingencies, all-cash deal."  (Source: Fortune, July 23, 2007.)

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4.  New York Times donates records to New York Public Library.  The Sulzberger family's New York Times Co. has donated more than 700,000 pages of personal letters, financial documents, photos and other materials to the New York Public Library, the New York Times reported. "Many of the documents reveal the newsroom's sometimes prickly relationship with its owners," the article said. For example, according to the report, a 1949 note from managing editor Edwin L. James to Arthur Hays Sulzberger in response to Iphigene Sulzberger's complaint about the placement of a story on Cardinal Francis Spellman reads, "It is difficult for me personally to take a position not in accord with the wife of the Publisher" and then goes on to offer "a spirited defense of the news desk's judgment."  (Source: New York Times, July 25, 2007.)

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5.  'Family business basics' for mentors.  A non-family mentor can be a wonderful resource for a next-generation family business owner, but the mentor must understand and respect the family's vision and the values that drive it, writes family business adviser Glenn R. Ayers in The Family Business Mentoring Handbook. Mentors, he writes, must understand "the family business basics," which distinguish family-controlled from non-family public companies:
  1. Families drive the vision of family businesses, not the CEO.
  2. A family member may be an owner by virtue of birth, but in well-run family businesses, employment advancement is a merit-driven concept.
  3. Successful businesses bring prestige, recognition and valuable economic resources to families; and families bring their name, their values and their commitment to businesses.
  4. Family business is not about stock values; it is about long-term success, stakeholder value and public reputation.


For more advice for mentors -- non-family as well as family members -- see The Family Business Mentoring Handbook. Learn more about the book and see the table of contents here.

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6.  Advice on 'going green.'  Guardian Service Industries, a New York City janitorial and building-maintenance company in its fourth generation, has adopted what it calls "environmentally preferable practices," including the use of new cleaning products and equipment, reporter Thomas W. Durso writes in the current issue of Family Business Magazine. Guardian executives offer these tips for other companies seeking to become more environmentally friendly:



For more information, see "Clean and green" by Thomas W. Durso in the Summer 2007 issue of Family Business Magazine. Visit our website for subscription information.

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Co-preneurs wanted.  Graduate student in communication at UC-Santa Barbara studying how co-preneurs balance work and family is looking for married couples who run family businesses to participate in dissertation research. Contact Jill Helmle, jrhelmle@yahoo.com or (805) 729-0536.

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