Warren H. Phillips, who led Dow Jones & Co. and its flagship newspaper the Wall Street Journal to soaring profitability but more recently has tried to stem its gradual decline, said yesterday he plans to retire next year.
Phillips's 15-year tenure as chief executive officer and chairman of the New York-based media company mirrored the great bull-and-bear cycles in the nation's financial markets.
The nationally published newspaper became the country's most widely read during the Phillips years, with daily circulation topping 2 million. But for the past five years, the Journal and its parent company have stumbled, hit by a downturn in financial advertising, new competition and the costly acquisition of an electronic financial-information service called Telerate Inc.
In a widely anticipated move, Dow Jones named Peter Kann, 47, the company's president and publisher of the Journal, to succeed Phillips. Kann, a Pulitzer Prize-winning journalist, will take Phillips's chief executive title on Jan. 1 and become chairman next July 1, when Phillips reaches his 65th birthday.
Sources at the Journal described Phillips's retirement now as something of a surprise, given that the company has no mandatory retirement policy for its executives. In a statement, Phillips said his phased departure "will provide an orderly transition of executive responsibility." He was not available for comment.
The executive change comes amid particularly trying times for the newspaper industry and Dow Jones in particular. Newspaper advertising is in one of its worst slumps since World War II, and profits are falling at all of the major newspaper companies.
The Journal and its weekly sister publication, Barron's, rely heavily on financial-services advertising, and thus have been hit with a double blow due to the decline among Wall Street firms since the 1987 stock market crash. The Journal reached its advertising peak in 1985, and since then has seen advertising fall in fits and starts. Circulation of the paper crested at 2.2 million in 1984 and is now at 2.0 million, still the highest in the nation.
Phillips tried to stop the slide at his company's flagship paper -- and largest source of its profit -- by adding a third section in 1988 devoted to stock and investment news. The company also introduced an Asian edition of the paper in 1979. More recently, the company has announced a series of cost-cutting steps, including salary freezes and the sale of its corporate jet.
Under Phillips, Dow Jones's revenue and profit exploded, but several of the company's ventures outside the newspaper business provided mixed results. The company was unsuccessful in starting a book publishing division, and produced several magazine prototypes before deciding not to enter that business. It also passed on acquiring Telerate at a lower price before deciding to buy it in stages. The acquisition, completed last January, has cost the company about $1.6 billion.
Analyst John Reidy of Smith, Barney Upham & Co. in New York said the Telerate service should provide pretax profits of about $60 million this year, which he described as a "less than wonderful" return.
Earlier this week, Dow Jones said its third-quarter earnings fell 17 percent to $23.75 million. Revenue was up slightly, to $408.5 million from $404.1 million in the third quarter of 1989. The company said its results were reduced by costs associated with the Telerate deal and a drop in advertising at the Journal, Barron's and Ottaway Newspapers Inc., a subsidiary based in Campbell Hall, N.Y.
Except for a brief stint as a copyreader with Stars & Stripes in the late 1940s, Phillips has spent virtually his entire working life at the Journal and Dow Jones, a period covering 43 years. After handling a variety of reporting and editing assignments, Phillips was named managing editor of the Journal in 1957 at the age of 31, making him the youngest person to hold the position in the newspaper's 101-year history. He became chief executive of the parent company in 1975 and chairman three years later.
In addition to his salary of $780,000, the Dow board gave Phillips a $1 million bonus last year for his long service to the company.
Kann, who joined the Journal in 1964, was awarded a Pulitzer for his coverage of the 1971 war between India and Pakistan. He was the first publisher and editor of the Asian Wall Street Journal, and became publisher of the flagship paper in January 1989. Kann has been president and chief operating officer of Dow Jones since July of last year.
Staff writer Steven Mufson contributed to this story.