Dow Jones: Murdoch Ownership Has Been Very, Very Good to Us

By: E&P Staff By taking a $2.8 billion goodwill impairment charge on Dow Jones & Co., News Corp. on Thursday effectively admitted it paid nearly twice as much as the parent of The Wall Street Journal is worth. Friday, Dow Jones made the case that Rupert Murdoch's ownership has been a net-plus for the financial news giant.

Dow Jones said that since December 2007, when News Corp. bought the company from the controlling Bancroft family for $5.7 billion, the company has wrung out $100 million in operating costs -- and identified another $40 million in reductions for the fiscal year ended June 2010.

"Our success in finding savings allowed us to redeploy resources where it mattered most to readers and customers in this challenging business climate," Dow Jones CEO Les Hinton said in a statement. "These actions have strengthened the company's financial position so it can remain focused on improving the high quality news, insight and information that our audiences expect from Dow Jones."

The Dow Jones press release suggested that News Corp. actually had synergies with Dow Jones.

It noted that it has consolidated common services such internal audits, tax and treasury services, reducing staff and costs.

Office space around the world was consolidated, and News Corp. undertook extensive outsourcing of human resources, information technology and certain call centers and printing facilities. Dow Jones closed three of its 17 printing facilities during the year. Wall Street Journal editions in Chicago and Denver were contracted to local dailies. In other places, Dow Jones itself became the contractor, printing the Boston Herald, for instance.

Costs were further cut by "significant headcount reductions" and a year-long salary freeze for non-union employees.

"Management will similarly seek an equivalent freeze for union-represented staff as they conduct negotiations for successor collective-bargaining agreements going forward," Dow Jones said.

But Dow Jones also emphasized areas where it has expanded, using savings "to enhance our news, editorial, information and digital applications so they become even more valuable in a world where quality content matters more now than ever," Hinton said.

The Journal, the company said, was now "a more complete news source" with increased general and international news coverage. The Journal, which just announced the reduction of 14 newsroom positions through attrition and layoffs, expanded by four pages daily, Dow Jones noted.

"While other news organizations cut back, Newswires added to its world-wide network of journalists," the company said. "Expansion included key developing markets such as India and additional local language services in Spanish, Arabic and Dutch. The wealth of information in Factiva grew with the addition of thousands of new publications from around the world."