It started off as a low-key breakfast with Dow Jones (DJ) Chief Executive Richard Zannino on Mar. 29. Four months later, after facing down the resistant remnants of the founding Bancroft family and making certain concessions to ensure The Wall Street Journal's editorial independence, News Corp. (NWS) Chairman Rupert Murdoch now appears to have claimed the 124-year-old company with a $5 billion bid that proved too lofty for the likes of General Electric (GE), Pearson (PSO), and even Microsoft (MSFT).
In winning the battle, Murdoch confronted accusations—including a front page story in the Journal—that he has regularly meddled with the running of his newspapers, especially to gain business advantages elsewhere in his globe-spanning empire. And he now controls the newspaper that in 2000 famously dissected his wife's personal and professional ambitions in a front-page article that Murdoch says prompted the only time he has ever complained about the newspaper's coverage.
So what do you do if you're Rupert Murdoch, and you have just acquired one of the world's most prominent and respected newspapers? The billionaire says he has no plans to change the Journal's editorial direction and says he's been told that its current publisher, L. Gordon Crovitz, is a "brilliant man." Still, Murdoch is known for running his companies closely and aggressively. And with Dow Jones' earnings last year no higher than they were in 2003, you know that the Australian media mogul already has a preliminary game plan. Here are a few additional suggestions:
You've just won one of the best-known brands in journalism. Congratulations. But as you know, it's a company that needs work. I mean, what a mess, where does one start? Circulation at the flagship Wall Street Journal has been slipping for ages, and is off by 3% so far this year. Ads are also in the dumps, down 4.2% from a year ago. But the company's online properties are going gangbusters, with both WSJ.com and Barron's Online usage up in double digits.
This is a company that clearly needs the Rupert Murdoch touch. So for starters, cut the easy stuff. Sell off some of the company's 16 printing plants around the country, and lease them back as the company currently does outside San Francisco. Combine some operations with your New York Post, maybe even printing at the same brand-spanking-new printing plant you built in the Bronx four years back. As for those 7,400 employees? It's painful, I know, and you promised…
And as for the Journal, well, where do we start? Ad sales haven't budged much in the past five years and are down by nearly 2% this year, even as spending has increased by $40 million annually for the weekend edition. I know you promised, Rupert, but it's time for some layoffs. And last year's 4% whack ain't gonna do it.
Separate the Wheat from the Chaff
Then there are the things you don't really need. That half interest you share in SmartMoney with Hearst? Get rid of it. With 800,000 subscribers, it will never be much of a money maker. Same for Adico, an online data service for employers and career sites. It's not big enough to do battle with the Monster.coms (MNST) of the world. Russian newspaper group Vedomosti is a dog. And find a nice home for your local newspaper group, where advertising is off by 6%. Who needs the headache of a tiny chain of 23 small-town papers in places like Nantucket and southern Oregon?
Now for the interesting stuff. As you already know, Dow Jones' online operation is a gold mine waiting to be tapped. The Journal's 931,000 online subscribers and the 88,000 at Barrons are among the most lucrative in the country. High income, attentive readers. So why not sell more ads? Cut the subscription price—heck, kill it altogether—and offer tiers for some specialized services. Then watch those numbers climb.
But how do you boost subscriptions at the Journal, which sorely needs the boost? More spirited writing, maybe? What about some good-old fashioned promotion? The paper spends just about nothing on marketing. Goose that. Promote it on Fox News (yes, I know the Journal has a long-term deal to provide reporters to CNBC—details, details.) And all those guys who watch the NFL on Fox? Offer them cut-rate subscriptions to track their stock portfolios like they do Reggie Bush's rushing stats.
And ramp up the use of all those stock tables, tickers, and news briefs that are now digitally delivered online. Cell phones are ideal for getting news on the go, and your Fox studio is also knee-deep in cell phone filmmaking. Same for MySpace. It must reach about half the U.S. population by now. With the average age for MySpace users creeping toward 40, those people become prime candidates for stock info, news, maybe even Walt Mossberg's gadget reviews.
All Eyes on Video
Your big winner, however, will be ramping up video. O.K., so maybe your Fox Business Channel can't use Dow Jones content in the U.S. when it launches in October (see CNBC above) but there's a big world out there. How about a Wall Street Journal Channel in Asia, where your StarTV blankets more than 300 million folks in 53 countries? Maybe one in Eastern Europe, too, where you've recently been buying up TV stations, or one for your satellite operations in Italy and Great Britain. And, well, who says the lawyers can't find a way to wriggle out of that nasty CNBC deal? I mean, especially now with CNBC looking plenty defensive by chatting up the Financial Times about their own content deal.
And while I'm at it, have you ever seriously considered buying the FT? You should. Its parent company, Pearson, has been getting a lot of yapping from large shareholders who worry that you'll steamroll the FT with your new purchase. And the Times' core readers just coincidentally happen to be mostly in Europe—precisely where the Journal could use more eyeballs. So set up another breakfast, Rupert. What would it cost? $2 billion, give or take? I'm sure you have that lying around somewhere.