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September 08, 2005
10 reasons why the Wall Street Journal could be up for sale to the highest bidder
This week's New York Magazine - in addition to having a lovely cover photo of Gwyneth Paltrow for its Fall Preview edition - features a preview of a far different sort inside: a look at all the reasons why the Wall Street Journal could be up for sale by the end of the year. The likely bidders in any kind of deal would involve some of the biggest names in the media world: the Washington Post, News Corp. and The New York Times. The article is not one of those pump-and-dump articles churned out by hedge fund manager James Cramer for the magazine -- it's an eight-page dissection of all the reasons why the Wall Street Journal is a "beleaguered" newspaper desperately trying to right a sinking ship. So, without more ado, a list of the 10 reason why the WSJ could find itself with new ownership sooner rather than later:
(1) The newspaper's new "Weekend Journal" (due out on September 17) is nothing more than a panicked, bet-the-house attempt to bring in more advertising dollars from companies that usually do not advertise in the Journal (i.e. Coach, Ralph Lauren, Best Buy and "importers of Ligurian olive oil").
(2) Even with the new advertisers, the new "Weekend Journal" will do little to add to the newspaper's bottom line -- the new venture is "so expensive and complex" that the costs outweigh the benefits
(3) Content at the Journal has been becoming more advertising-driven than at any time in the paper's history, thanks to an increasing diversion of resources to "Personal Journal" type of articles (e.g. "the rising number of home chefs using dishwashers to cook fish"). As a result, the newspaper's reputation for sterling, well-researched pieces has taken a hit.
(4) Demographics -- the readers of the Journal aren't getting any younger
(5) Bad management and horrendous corporate governance
(6) High staff turnover, as even the individuals responsible for shepherding through the "Weekend Journal" are jumping ship at the first opportunity
(7) The CEO of Dow Jones (Peter Kann) and the publisher of the WSJ (Karen Elliott House) are husband & wife -- what New York Magazine calls "an obvious managerial idiosyncrasy." Hint: employees of the WSJ sometimes refer to Karen Elliott House as "Karen Elliott Spouse."
(8) A failure to diversify the WSJ brand into other media-related ventures
(9) A failure to keep up with the Joneses (the Dow Joneses, maybe, but not the Joneses). According to New York Magazine, the managing editor of the WSJ (Paul Steiger) "wears a faded tie and a yellow shirt that looks as if it slid off a Brooks Brothers shelf twenty years ago..."
(10) Management succession questions - both Paul Steiger and Peter Kann are set to retire two years from now, which could lead to the mother-of-all-board-battles for control of the WSJ.
All that being said, though, I can't think of a better-written newspaper in New York, and it would be a shame to see the Wall Street Journal snatched up by someone like Rupert Murdoch (who also publishes the New York Post). A reporter for the WSJ sums up this sentiment perfectly at the end of the New York Magazine piece:
"As the companys advertising crisis continues, with few signs of abating, these reporters have found themselves with no choice other than to root hard for Kann to pull off an eleventh-hour victory with the Weekend Edition, to ensure that the company retains its independence. After one reporter angrily itemized his grievances against Kann, he took a deep breath and sighed. On the other hand, hes all that separates us from Page Six and Bill OReilly. May God bless him and keep him safe."
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