By: Jennifer Saba
In the spring of 2007, when Rupert Mudoch’s News Corporation made an overture to the Bancroft family offering to take Dow Jones & Co. off their hands for $5 billion, it caused much agita within the newspaper industry. The media howled that the barbarians were at the gates of journalism, with their sights set on one of the country’s finest and august dailies — The Wall Street Journal.
News Corp. was eyed with great suspicion in these pages and elsewhere. Even the competition weighed in: A June 10, 2007 New York Times editorial warned without the stewardship of the Bancrofts and under the auspices of a “full corporate culture,” the Journal risked being reduced to a shell of a newspaper “filled with news agency reports and handouts.”
After three years of News Corp’s ownership, The Wall Street Journal is undoubtedly in one of the strongest positions of any newspaper. As many once-mighty metros turn to husks, the Journal has grown its circulation to more than 2 million subscribers, becoming the biggest daily in the U.S. Its advertising revenue is back in positive territory, up 23% in Q1 year-over-year, when everyone else is stuck reporting that the brutal declines are now “moderating.” It has, wittingly or not, an online paid-content strategy that is the envy of the industry. It is adding pages and sections and content, and a soon-to-be launched New York edition. It is for all these reasons that E&P has named Dow Jones CEO and Journal Publisher Les Hinton Publisher of the Year.
The Journal is one of the most exciting papers to watch these days for its renewed sense of energy and purpose, and a swaggering bravado too often lacking in newspapers. It’s both anachronistic ? taunting its competition in an old-school manner, recalling an era when newspapers ruled and flourished ? and at the same time forward-thinking.
“What we decided to do is we would become the unarguable, unchallengeable paper of record in this country,” says Hinton about News Corp.’s plans for the Journal once the acquisition was completed at the end of 2007.
Hinton is 66, tall and lanky, distinguished and yet approachable. News Corp. drafted him as CEO of Dow Jones shortly after the purchase while he was serving as chief chairman of the company’s News International, the United Kingdom’s largest publisher of newspapers including The Times of London. Hinton has worked for News Corp. for 50 years and first came to the United States in the 1976 when he covered the Carter/Ford election for the company’s British and Australian papers. He holds both American and British citizenships.
Hinton is also quick to emphasize the vision for the Journal reflects a team effort shared by Murdoch and Robert Thomson, Dow Jones’ editor-in-chief and Journal managing editor, who served as editor of the Times under Hinton.
Hinton says that when News Corp. approached him for the job, it was unexpected but that the opportunity to come over and run Dow Jones was one he was not about to pass up. He remembers when he first came to the U.S. in the 1970s, the Journal was always his first read. “It’s always been a fabulous paper,” he says. “The opportunity to be involved was pretty irresistible.”
The goal of becoming the paper of record means kicking aside the Journal’s past positioning as a “second read” ? a next-day take on yesterday’s business news ? and broadening its scope to appeal to more readers. It has extended its coverage to politics and general news while retaining its focus on business. Executives stress they added pages (four, to be exact) in order to cast a wider net for other topics spanning the globe.
Some have warned that by covering territory outside of the Journal’s traditional scope, it would turn off its readership base. Noted newspaper analyst John Morton believes otherwise. “When there is risk expanding what had been a very reliable franchise, you could conceivably alienate your core readers who think they may be shorted,” he says. “I don’t think that has happened. I don’t think the Journal does any less in business and finance.”
The changes coincided perfectly, for better or worse, with the beginning of the Great Recession, which caused readers to turn to the Journal to seek out financial and economic news that suddenly concerned everyone. “It was a very good point for us because people who read us for traditional reasons were buying us more than ever,” says Hinton. “And during the course of that we were changing and broadening the newspaper. Really, the wonderful piece of silver lining for us in that deep dark cloud is that we were able to showcase the paper.”
The Journal became even newsier in the process ? a welcome change, says Chris Roush, the director of the Carolina Business News Initiative at the School of Journalism and Mass Communication and the University of North Carolina at Chapel Hill. “The Journal has become much more aggressive in terms of covering news. I think it’s a good thing,” he says, adding that WSJ.com and its partnership with its sisters, like MarketWatch and Dow Jones Newswires, is equally impressive.
Eye on the ‘Times’
The Journal is often portrayed these days as obsessively focused on wanting to take down The New York Times. And while the paper is clearly going after the Times’ positioning and gleefully pokes at the competition across the way in Times Square, it is also happy to take readers away from weakened metros in other markets.
Sensing an opening, the Journal conducted focus groups in markets like Chicago and Los Angeles: “We were surprised by the extent to which the most discriminating of those readers were becoming terribly exasperated by the decline in quality of the local papers. It clearly represented an opportunity for us,” says Hinton.
In Detroit, when the News and Free Press cut back on home delivery, the Journal stepped up its efforts and grew sales. In San Francisco, the paper went further, adding local coverage on a weekly basis and heavily marketing itself.
New York was the next logical place to increase its audience, says Hinton, with an edition tailored to the city. If it’s successful, it could serve as a blueprint for other market expansions.
Says Hinton about the New York edition: “We are going to offer a section that will be different from anything else that discriminating newspaper readers read here. It will have a different take on the city. I think and hope we will be welcomed.”
The edition is scheduled to launch sometime in April ? at E&P’s press time, Hinton declined to reveal the exact date. News Corp. is staking a lot on the new section, investing “millions,” he says. The Journal is hiring more than three dozen journalists at a time when the industry has shed 27% of its newsroom positions in the last three years, according to the Project for Excellence in Journalism’s State of the News Media 2010 report. It will publish six days a week, along with a companion Web site.
“We do see an opportunity in some sense to be a first paper in New York,” says Journal M.E. Thomson: “New York is well served by the New York Post,” also owned by News Corp., “but it’s poorly served by its broadsheet. The New York Times does speak to a certain section in New York. We half-jokingly say it’s the Upper West Side and Park Slope. The character of the city is more complicated than that. It’s a very eclectic city, editorially.”
Thomson says that if the Journal decides to fan out coverage in more markets it will do so with its own staff, unlike the New York Times, which has partnered with several news start-ups like the Chicago News Cooperative. Any expansion “has to be on the basis of Wall Street Journal content,” he says. “I don’t mean to cast dispersions on the providers, but it’s not the New York Times. We would rather be in control of the brand and quality of the content.”
The New York edition is aiming to reach new readers and make more headway with a consumer-oriented advertising base that started with the Personal and Weekend Journal and its magazine, WSJ. Michael Rooney, the Journal’s senior vice president and chief revenue officer, argues that the paper is a leader in the business-to-business category with accounts like financial banks and tech companies: “We have great respectfor that position, and charge accordingly.”
While the Journal enjoys some high-end retail advertising ? Rooney pointed out three ads for very expensive watches on A2 that particular day ? it doesn’t dominate that segment. “In the B2C (business-to-consumer) category, I’m in a much more competitive environment,” he says. ” I’m a ‘must-buy’ in B2B and I’m ‘seriously considered’ in B2C.”
Hinton says that early advertising support for the New York edition has been “surprisingly enthusiastic” and that the sales force has signed luxury goods and retail store advertisers that are new to the Journal.
A profitable deal
News Corp.’s acquisition of Dow Jones ? at a stunning 65% premium ? was just as ill-timed as several other high-profile newspaper purchases that preceded it. And similar to those other mergers, News Corp. was forced to take a $2.8 billion write-down on Dow Jones last year, a little more than half the value of the deal.
Unlike its acquisitive hungry newspaper peers, however, News Corp. is not saddled with heavy debt loads and enjoys media diversification. It affords Dow Jones some shelter during a severe downturn because it doesn’t have to use its profit for leverage, unlike many newspapers now dealing with burdensome debt loads. The Journal is profitable, says Hinton.
That’s not to say the Journal was immune to economic cycles. Rooney describes the last year as tough, and that advertisers just went dark. “Everyone went and hid. I’ve repressed it all,” he says. “We had to make it through that. That is where Les earned my respect for life the way he treated me through that. He didn’t know me and he didn’t know my people, and he stuck it out with us.”
Rooney says they still had to make tough decisions last year, but he adds, “I never felt that we were cutting into the bone and hurting our ability to make sales or hurt the brand.”
Todd Larsen, the newly appointed president of Dow Jones and a 10-year veteran of the company, notes the difference between the two ownerships: “Under Les, we moved more boldly with a bigger sense of urgency. We haven’t done things that were risky per se, but they were bold, because it meant spending money at time when you weren’t exactly sure how quickly you would get your return. In a small public company, that is really a hard thing to do. From my standpoint, we have been able to do things because of our leadership and ownership structure.”
Larsen explains that despite being owned by the much bigger News Corp., which generated earnings of $254 million during its fiscal second quarter, Dow Jones doesn’t mean it has an unlimited money pool to tap. “We still have shareholders, and we are held to targets and we are expected to perform,” he says. “It’s not that we don’t have to make money ? it’s that we can afford to have a longer time horizon on an investment.”
In January, the company joined its two separate business divisions, the consumer and enterprise groups, so it could better serve and understand overlaps with its customers. It did the same with its newsroom, uniting its brands, including Dow Jones Newswires, MarketWatch and Barron’s, under Thomson’s editorial leadership. The structure allows Dow Jones to draw upon resources ? including almost 2,000 journalists across the globe ? that were once segregated. As a result, the Journal is expanding internationally, including new Web sites launched or relaunched in Asia and India.
Overhauling Ad Sales
Not everything was completely changed when News Corp. took over Dow Jones. The digs, yes: Once located in cramped sepia-toned offices on Wall Street, the company is now headquartered in News Corp.’s midtown Manhattan building and gleams in comparison ? white tile floors, floating staircases, an abundance of glass, open floors.
The advertising sales structure, however, was left intact because Rooney had already overhauled the department before Murdoch made its offer to the Bancroft family. Rooney was recruited from ESPN by the Journal’s former publisher, Gordon Crovitz, and within months 80% of the staff of about 400 had been turned over.
Salespeople are divided into teams, each with market leaders who oversee the big ideas and strategies for specific accounts. Within each team are media specialists who cater to print, online or mobile needs.
Online, the Journal is more focused on branding campaigns then ads that require click-throughs. “CEOs don’t click on banner ads to get information,” Rooney says. So WSJ.com brought back something that should be familiar to print sellers: surveys that tap recall and awareness. Additionally, WSJ.com does not rely on networks ? known to erode ad rates ? to backfill inventory.
The structure looks to be working. Rooney is still extremely cautious about the environment but says since October, monthly results have been very positive and that he’s now comparing results to 2008. “We are not that far off,” he says. “Some weeks we are there. That’s encouraging.”
Perhaps more than any other newspaper company, the Journal articulates that its content is platform-agnostic, letting consumers choose how to get information to their liking ? whether through a print, online, mobile or e-reader subscription. The Journal was to be available on the iPad for the device’s release April 3.
Whatever the platform, the Journal consistently charges readers for all points of access.
Hinton admits that News Corp. flirted with the idea of opening up WSJ.com but quickly decided against it. “We had figured at that point that if you produced the audience, you got the advertiser,” he says. “Although that is obviously still true, the fact is, in the end, to sustain quality journalism you can’t rely upon advertising. ? It didn’t take us long to realize that was probably not a good idea, and thank goodness we did.”
Sources say the Journal pulls in about $200 million in online subscription revenue, and its digital revenue represents 15% to 20% of total revenue. According to the Journal, WSJ.com traffic is up 28% year-over-year to about 22 million users.
Executives describe Hinton as a goal-oriented listener who is open to ideas. Thomson, who has worked with him since 2002, calls him a “legend in the U.K.” He has the backing of his boss, Rupert Murdoch, who told E&P, “Les is a lifetime colleague of mine, and one of our industry’s most respected executives. He has an enviable record of success, across the globe and across many of our businesses, that continues today at Dow Jones. Under his management, The Wall Street Journal is now the No. 1 newspaper in both total page circulation and online subscribers, and Dow Jones is the world’s leader in information services. I am confident Les will continue to shape Dow Jones to not just successfully adapt, but to thrive, in the coming years.”
Thomson says Hinton is a “very contemporary executive” who fosters an environment that promotes people to come forward with ideas: “Talking about concepts is generally intimidating. He creates an atmosphere where if anyone in a well-intentioned way is grappling with an idea in public, they are not going to feel foolish. That is really a rare quality in a manager and it gets the best out of people.
“It’s about the quality of ideas,” he adds. “You can’t be flippant about investing money because not only ideas, but people’s livelihoods depend on the investment being well-handled and well executed.”