News Corp and DJ board in editorial pact

By Kenneth Li and Robert MacMillan

NEW YORK (Reuters) - Rupert Murdoch's News Corp. (NWSa.N: Quote, Profile, Research) and Dow Jones & Co. Inc. DJ.N 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 (2.5 billion pounds) 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.

The Bancrofts will receive an overall proposal for the deal, which includes a price as well as the editorial safeguards, the source added.

Details of the revised agreement were not immediately available. It was also not known whether discussions had also involved raising Murdoch's $60 per share bid.

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 (GE.N: Quote, Profile, Research) CNBC, which has a news partnership with Dow Jones.