A Jan. 4 Business article and a Jan. 5 correction on the appointment of Richard F. Zannino as chief executive of Dow Jones & Co. incorrectly characterized the time frame when national ad pages in Barron's declined by 30 percent. That figure applies only to November 2005 compared with November 2004. National ad pages from January 2005 to November 2005 dropped 13 percent.
Two Dow Jones Executives Out
Wednesday, January 4, 2006
The journalism power couple of Peter R. Kann and Karen Elliot House, who have run the Dow Jones & Co. publishing empire for more than 15 years, stepped aside yesterday after years of disappointing advertising revenue at the company's flagship Wall Street Journal.
Kann, chairman and chief executive, will be replaced by Richard F. Zannino, the company's chief operating officer since 2002, as the board of directors broke with a decades-long tradition of installing company veterans and former journalists in the top job.
Kann and House are Pulitzer Prize winners. Zannino is the company's first non-journalist chief executive since 1933.
The ascension of an outsider may placate critics who have clamored for new management as the company has struggled to improve profitability in a weak advertising market. Among the critics are dissident members of the Bancroft family, which controls a majority of the company's voting shares.
Zannino, 47, is not expected to make radical changes but rather continue initiatives started under Kann to expand the company's sources of ad revenue. Kann will step down as chief executive Feb. 1 but remain chairman until the company's 2007 annual meeting. By "mutual agreement," Zannino said, House, 58, will resign as a Dow Jones senior vice president and Wall Street Journal publisher after helping in the transition.
Dow Jones has been especially hard-hit by a decline in financial and technology advertising. From January to November 2005, the Journal's financial advertising fell 17 percent and technology-ad volume decreased 8.2 percent.
To reverse the slide in ad revenue at the newspaper, the company increased the number of color pages, launched new sections and, in September, introduced a Saturday edition -- all in an effort to attract more consumer advertising, Kann said in an interview.
The turnaround has come slowly, though. The company's stock has continued to perform poorly even as Dow Jones looked for ways to cut costs. In 2004, management froze wages and asked employees to pay more for health insurance, setting off a bruising round of negotiations with the Independent Association of Publishers Employees, the largest union that represents Dow Jones employees, including editors and reporters.
"We tried to reduce the cost of our benefit plan without putting an undue burden on our employees," Zannino said. Benefits "were putting us at a competitive disadvantage. They were hurting our ability to grow."
Some newsroom employees worry that Zannino, previously an executive at Liz Claiborne Inc., General Signal Corp. and Saks Holdings, with no background in journalism, might put saving money above quality.
"There's a risk you lose a certain understanding with and a rapport with what we do every day," said Theo Francis, a Journal reporter. "The Journal first and foremost is about top quality reporting. . . . Cutting your way to profitability is not a long-term solution."
Though he has never been a journalist, Zannino said, he has "enormous respect" for journalism.