Rupert Murdoch's News Corp. (NWS) and Dow Jones & Co. Inc. (DJ) have "basically agreed" on a structure to protect the editorial independence of Dow Jones' news operations, a source familiar with the matter said Tuesday.

While some items remain to be resolved, the initial agreement sets the stage for the publisher of The Wall Street Journal to accept a $5 billion buyout from News Corp. 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 Murdoch.

A separate source close to the situation said an agreement, which would also cover Dow Jones Newswires, was near, but some open items remain unresolved. The source did not elaborate.

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

A pact to protect journalistic integrity is seen as one of the biggest hurdles to News Corp. chief executive Murdoch's high-priced quest for Dow Jones, which also publishes Barron's and business news Web site MarketWatch.com.

Murdoch is building his own financial news channel for cable television, aiming to usurp General Electric Co.'s (GE) 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 reporting would sully the newspaper's image as one of the world's most reliable sources of business news.

TALKS ACCELERATE

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 a wide network of Bancroft family members could 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 that, if Murdoch withdrew his offer, Dow Jones stock price could fall as low as the $30 range per share.

Dow Jones shares rose $1.49, or 2.59 percent, to $58.99, while News Corp.'s Class A shares fell 20 cents, or less than 1 percent, to $21.61, both on the New York Stock Exchange.

News Corp. and a representative for the Bancrofts declined comment. A Dow Jones spokeswoman was not immediately reachable for comment.

Reuters Group Plc competes with Dow Jones in the market for financial news.