Rupert Murdoch's News Corp. and Dow Jones & Co. Inc. have basically agreed on safeguards to the editorial independence of Dow Jones' news operations, a source familiar with the matter said on Tuesday, setting the stage for Dow Jones to accept a $5 billion buyout offer.
The source said Dow Jones' controlling family, the Bancrofts, would be consulted on the agreement, which was reached late Monday evening. The Bancroft family must approve any deal with News Corp., which is controlled by Murdoch.
A separate source close to the situation said an agreement, which would cover The Wall Street Journal and the Dow Jones Newswires, was near, but some items remained unresolved. The source did not elaborate.
Details of the revised agreement were not immediately available. It was also not known whether discussions over raising Murdoch's $60 per share bid had commenced.
News Corp., Dow Jones and a representative for the Bancrofts declined comment.
A pact to protect journalistic integrity is seen as one of the biggest hurdles to Murdoch's high-priced quest for Dow Jones, which also publishes Barron's and business news Web site MarketWatch.com.
Murdoch, News Corp.'s chief executive, is building his own financial news channel for cable television, aiming to usurp General Electric Co.'s CNBC, which has a news partnership with Dow Jones.
But journalism watchdogs and some reporters and editors at the Wall Street Journal fear Murdoch's brand of tabloid journalism would sully the newspaper's image as one of the world's most reliable sources of business news.
Discussions accelerated last week after Dow Jones said its board would take over negotiations with News Corp.
The Bancroft family met Murdoch in early June and discussed a proposal to protect editorial independence. But the Dow Jones board grew concerned that lengthy deliberations among the wide network of family members would push Murdoch to withdraw his bid.
Some three dozen Bancroft family members control Dow Jones through a combined ownership of 64 percent of voting shares.
Murdoch is offering to buy the company for $60 per share, a 65 percent premium to Dow Jones' share price prior to the company's disclosure of the offer.
Some financial analysts and journalism experts have said if Murdoch withdrew his offer, Dow Jones stock price could fall as low as the $30 range per share.
Dow Jones shares closed up $1.27, or 2.2 percent, to $58.77, while News Corp.'s Class A shares fell 30 cents, or 1.4 percent, to $21.51, both on the New York Stock Exchange.
Reuters Group Plc competes with Dow Jones in the market for financial news.