Yahoo! Should Buy Dow Jones

The key to this is which type of online/offline media mergers this would be. The good ones
-- like News Corp.'s acquisition of MySpace, work out terrifically well. The other type? Need I remind you of the debacle known as AOL-Time Warner (TWX - commentary - Cramer's Take)?

The wild card is Semel. He could really shake things up at the company with this merger. I don't know if he could possibly pull this.

The GE Factor

The primary reason GE must be considered is that a News Corp./Dow Jones merger is potentially very bad news for CNBC, which is a a joint venture between NBC and Dow Jones. I would guess that senior people at CNBC are asking (pleading) with GE execs to make a run at Dow Jones, if for no other reason than to keep the WSJ out of Rupert Murdoch's hands.

Murdoch's interest is in using the Dow Jones infrastructure to power News Corp.'s Fox Business Channel, competing soon with CNBC on a cable box near you. A Murdoch-owned Dow Jones could make life very uncomfortable for the folks at CNBC.

It is conceivable that GE could acquire all of Dow Jones, roll all of its many media properties into a single entity, and then do a full spin-off of the stand-alone media venture.

A short list of GE's non-core, media property holdings that could be part of an NBC Universal spin-off

• NBC Network

• NBC Universal-Television-Group (Television production and syndication)

• Cable Networks: CNBC, MSNBC, Bravo, Sci-Fi Channel, USA Network, etc.

• NBC Local Affiliates

• Universal Pictures

• Universal Studio Theme Parks

Add to that list the full run down of Dow Jones properties: WSJ, Barron's, Marketwatch.com, Dow Jones News Wires, Factiva. That's a rather compelling stand-alone media conglomerate freed from the conflicts and obligations of an industrial parent company ...

One gets the sense that the media properties are not core GE holdings. They have shown little interest in the travails of CNBC as it is but a small component of their media division. They could roll NBC Universal - including NBC, CNBC, WSJ, Barron's, MarketWatch (see sidebar) into a single media-only entity. GE could then spin off their entire media group as a stand-alone.

I'm not sure if it would be at a higher valuation then they are getting at present: GE, CBS (CBS - commentary - Cramer's Take) and Dow Jones all sport comparable P/Es, and CBS stock is at the same price it was in 1999, when it was a very different company. The entire NBC/WSJ/DJ/CNBC package would be somewhere in the $10 billion to $20 billion range, depending upon the total revenue range of all the media properties included.

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As originally published, this column contained an error. Please see Corrections and Clarifications.

At the time of publication, Ritholtz and/or his firm was long GE, although holdings can change at any time.

Barry Ritholtz is the chief market strategist for Ritholtz Research, an independent institutional research firm, specializing in the analysis of macroeconomic trends and the capital markets. The firm's variant perspectives are applied to the fixed income, equity and commodity markets, both domestically and internationally. Other areas of research coverage also include consumer, real estate, geopolitics, technology and digital media. Ritholtz is also president of Ritholtz Capital Partners (RCP), a New York based hedge fund. RCP is driven by the analysis performed by Ritholtz Research. Ritholtz appreciates your feedback; click here to send him an email.