With a growing chorus of investors clamoring for

General Electric

(GE) - Get Report

to shed its media assets, news that the conglomerate is exploring the acquisition of a downtrodden newspaper publisher may be the last thing that Wall Street wants to hear.

In the end, however, shareholders don't pay GE's CEO, Jeff Immelt, to tell Wall Street what it wants to hear. They pay him to create long-term value.

While any investments GE makes in

Dow Jones

( DJ) would likely be pilloried in the short term by shareholders who are already frustrated with its stagnant stock, such a move could one day be vindicated.

A spokesman for GE declined to comment for this story, but a source familiar with the situation confirmed last week that GE is in talks with

Pearson

(PSO) - Get Report

, the British publisher of the

Financial Times

, about a bid for Dow Jones that could rival

News Corp.'s

(NWS) - Get Report

$5 billion buyout offer.

Previously, GE held talks with

Microsoft

(MSFT) - Get Report

about cobbling together an offer, but no agreement could be reached. Its latest negotiations with Pearson are in preliminary stages, and they may never result in an actual bid.

That said, the GE-Pearson talks appear to be the most credible alternative to News Corp. that has emerged since that company's rich offer put the publisher of

The Wall Street Journal

in play. Moreover, serious reservations about selling to News Corp. have been expressed by Dow Jones' employees; its former chairman and CEO, Peter Kann; and most important, its controlling shareholders -- the Bancroft family.

The Bancrofts, whose ancestors built Dow Jones into the most influential publisher of business and financial news in the world, control the company through a web of trusts that own a separate class of shares endowed with the majority of the company's voting power. Initially, after News Corp.'s bid for the publisher became public, the family expressed a majority of opposition to a sale, but they later agreed to explore the offer in acknowledgement of the company's precarious competitive position.

The Bancrofts currently are negotiating with News Corp. over safeguards designed to preserve the editorial independence and standards of its publishing assets. A number of parties to the deal have raised concerns about selling the company to Rupert Murdoch, News Corp.'s CEO, who has a record of flouting the editorial practices favored in the U.S. newspaper industry.

A GE-Pearson partnership could be a more palatable Dow Jones buyer for the Bancrofts, so it's possible the family would accept a lower bid from those companies.

The competitive rationale for both Pearson and GE is clear. Pearson could be hurt if News Corp.'s bid is successful, given the

Financial Times'

presence on its home turf in the U.K. and elsewhere around the globe. GE wants to keep the

Journal

away from Murdoch since its business cable network, CNBC, will soon be competing with a rival network owned by News Corp. that stands to gain instant credibility from a partnership with the venerable newspaper.

Meanwhile, GE is under fire from investors because its stock price has made no forward progress over the last seven years. Critics say the conglomerate needs to trim down in order to get its stock price moving again, and with the media industry in turmoil amid the rise of the Internet, they point to GE's media arm, NBC Universal, as the logical place to start cutting.

"Buying Dow Jones won't get Immelt any closer than he is now to unlocking value at GE," says Matthew McCormick, a portfolio manager with investment firm Bahl & Gaynor, which owns a stake in GE. "We're more in favor of GE spinning off assets now rather than adding to them. Clearly, NBC Universal is not one of their strengths."

NBC Universal recorded a 6% drop in profits last year as NBC slipped to last place among the four broadcast networks in ratings. The division expects flat revenue for all of 2007 with profit growth of zero to 5%.

Some observers say the business is showing signs of coming out of its slump, and Immelt has consistently shown a commitment to keeping GE in the media industry.

Content creators are suffering across the board now as audiences move online and Web aggregators such as

Google

(GOOG) - Get Report

suck up the lion's share of the online ad dollars. In this environment, GE's exposure to the media industry is weighing on its valuation, but as the digital transformation takes shape in the years ahead, Immelt is keeping faith that the old axiom "content is king" will once again be proven true. When content creation regains its value in the future, Dow Jones' assets could be a virtual goldmine, and GE's current stock price will be a bargain.

With that in mind, making a move for Dow Jones now would seal Immelt's commitment to GE's media business and deal one of its chief competitors, News Corp., an embarrassing setback. Also, GE might be able to work out a deal with Pearson that allows it to put up its CNBC brand as an asset in the deal without investing much cash or taking on much debt.

"Without a major financial commitment, a deal for Dow Jones could make sense for GE's long-term strategy if the company wants to stick it out in the media business," says Jack De Gan, a manager with Harbor Advisory and a GE shareholder. "It would not be viewed very positively in the markets right away, but Immelt is not the kind of CEO that's going to let that stop him."