By: Jennifer Saba Newly appointed Dow Jones CEO Richard Zannino's first move to reorganize the business is considered a good strategy, according to a report released by Goldman Sachs today. The research firm thinks "things are moving in the right direction at Dow Jones after several very challenging years."
On Wednesday, Dow Jones announced it was restructuring its business units around three markets, consumer, enterprise, and community media rather than by distribution.
Ad trends are starting to look up in February (though the environment is still choppy), the online properties at Dow Jones have a lot of potential, the weekend edition shows some revenue promise, and management succession issues have been "favorably" resolved, Goldman notes.
"The move makes sense to us," said Goldman analysts in the report. The one caveat: it might be more difficult to determine the progress of print and online since both will now be reported together.
Goldman also likes the fact that Gordon Crovitz's role has been substantially elevated.
Crovitz most recently ran the electronic publishing division. Under the new structure, he is now responsible for print and electronic consumer market division, including the print and online version of The Wall Street Journal, MarketWatch, and Barron's. These units represent 60% of the company's revenues, note Goldman analysts.
The research firm is, for the moment, leaving its full year estimates untouched despite the cost savings of $8 million because of the move. It maintains its "in-line" rating.
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