By Frank Ahrens
Washington Post Staff Writer
Thursday, August 2, 2007
Now that Dow Jones & Co. has agreed to Rupert Murdoch's $5.6 billion takeover bid, what changes might be in store for the Wall Street Journal, and how will the influential chronicler of the American economy fit into the media and entertainment empire that is Murdoch's News Corp.?
One word: distribution.
Dow Jones believes it has tapped into a fast-moving, worldwide information network that has a footprint on every continent except Africa and Antarctica and businesses in every communications medium.
"News Corp. is much more of a global corporation than Dow Jones or the Wall Street Journal, though over the years we have tried to be as global as we can be," Journal publisher L. Gordon Crovitz said in an interview yesterday. "If we can have access to News Corp.'s much larger global operations, that could make us a more successful and more effective corporation globally."
Crovitz said recent research in Europe and Asia, where the Journal publishes thin, tabloid-sized editions, showed that the newspaper's brand and reputation are known far beyond its ability to reach potential customers. The Journal needs News Corp.'s deep pockets to expand.
Crovitz also mentioned MySpace, the world's most popular social-networking Web site, owned by News Corp., as well as the company's Fox Sports properties.
"We believe that social networking is a very important part of our online future; News Corp. obviously has the same point of view," Crovitz said. He added: "There should be opportunities between sports and business, as well, given that the demographics of the audiences are quite similar."
Whether such synergies lead to new revenue is debatable. The New York Times Co. paid Discovery Communications $100 million in 2002 to help launch the Discovery Times Channel, as a way of showcasing Times talent, such as columnist Thomas Friedman. After four years, the Times Co. did not see the sizzle it wanted and sold its half of the channel back to Discovery, taking a loss of $8 million.
In a letter May 14 letter to the Bancroft family, which controlled Dow Jones, Murdoch wrote that News Corp. would provide "the additional capital and scale that will preserve Dow Jones's leadership and growth for generations to come."
Specifically, Murdoch mentioned that he would spend money to expand the Journal's Washington bureau, improve the Journal's New York headquarters and amp up the Journal's clout in Europe and Asia.
"In Europe," Murdoch wrote, "News Corporation has such a large presence that anything less than a leading market share for The Journal would be a disappointment."
News Corp. would not comment publicly on its plans for the Journal beyond Murdoch's letter, but hints can be gleaned from interviews with company sources, who spoke on condition of anonymity because the deal has not closed.
Expect more color in the Journal, in photographs, graphics and advertising.
Expect more promotion of the Journal around the world.
In India, News Corp. owns Star TV, which dominates swaths of the viewing audience. Suppose during an Indian news broadcast, an announcer would say, "For more on this story, go to WSJ.com."
"That will raise [the Journal's] profile to an extent unimaginable if you use conventional digital or marketing means," a source said.
Dow Jones will be a small part of a very large News Corp. that may become the world's largest media company, eclipsing Time Warner in value.
In 2006, for instance, all of Dow Jones booked $1.8 billion in revenue. In fiscal 2006, Fox Television alone reported $5.3 billion in revenue. News Corp. as a whole had $25 billion in revenue.
Nonetheless, Dow Jones and the Journal represent something Murdoch does not have and has wanted for some time: sellable financial news.
An obvious use for Journal content and the skills of 750 of the industry's best financial reporters is to feed the Fox Business Network (FBN), the cable television business channel scheduled for an October launch, a direct competitor to CNBC.
Viewers likely will see Journal reporters and editors on FBN, and the Journal may use FBN to help break news stories, much the way that The Washington Post's partnership with NBC News allows some Post stories to break on television.
The deal between News Corp. and Dow Jones was sealed after midnight Tuesday, the companies said yesterday.
The deal is not expected to face regulatory hurdles, but Federal Communications Commissioner Michael J. Copps, a foe of media consolidation, said yesterday that his agency should look into the buyout, which should not be considered a "slam dunk." FCC rules prohibit one company from owning a television station and a local newspaper in the same city -- News Corp. has a New York TV station -- but the Journal is considered a national newspaper. Gannett, with headquarters in McLean, owns USA Today, a national paper, and Washington's WUSA (Channel 9).
The companies also announced yesterday that they have settled on the composition of a five-member editorial board designed to act as a buffer between Murdoch and the Journal newsroom, meant to prevent him from meddling in news coverage. It also would have oversight on the hiring and firing top Journal editors.
The initial members of the editorial board will be Louis Boccardi, a Gannett director and former head of the Associated Press; columnist Thomas Bray; former Republican House member Jennifer Dunn; former Tribune Co. president Jack Fuller; and Nicholas Negroponte, founder of MIT's Media Lab. The board will be self-perpetuating, appointing new members when existing ones drop off.
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