Acquisition of Dow Jones by News Corp The acquisition of Dow Jones by News Corp owned by Mr. Rupert Murdoch is complete with the previous owners, the Bancroft family giving their formal assent to the deal. Dow Jones is a highly regarded US media institution with the Wall Street Journal being the jewel in the crown. The media is increasingly being dominated by business news, analysis and it strengthens the hold of News Corp's bid to become a stronger and major player in USA.
News Corp is present in USA by virtue of its acquisition of Fox channel which reaches approximately 30 million US households. Fox is planning to start a business news channel in October 2007. Its bigger competitors will be CNBC and Bloomberg in the electronic media.
News Corp owns the BskyB and it can provide video content from London and cover Europe. It is very strong in Australia from where it can reach Asia-Pacific.
In the print media, WSJ has to contend with the giant New York Times and the smaller Financial Times. NYT has a circulation of 5.1 million. FT has a circulation of around 500,000. As against this WSJ has a circulation of 2.1 million. The present image of WSJ is that of a financial newspaper rather than a business newspaper. However, its bigger competitor NYT is not seen as a business newspaper at all. It covers all aspects including business. The biggest advantage NYT has is its credibility and editorial independence. What NYT publishes is taken as the gospel truth by most of its readers. From this angle WSJ will have a tough fight on its hands to prove that it has no axe to grind after the takeover. WSJ has a contract to provide content to CNBC till 2012.
Obviously, the Fox business news channel will have to wait till then for exclusivity. The New York Post is owned by Mr. Rupert Murdoch and is known for undercutting for increasing circulation. It is supposed to have an aggressive and persistent marketing team. The ads can be bundled in this newspaper along with WSJ and Fox business news channel.
The biggest attraction is the ownership of properties of Dow Jones. The properties are the investments weekly Barron's with a circulation of around 300,000 and newswire Marketwatch.com. They have more than 900,000 subscribers. The biggest competitors in the section are Thomson/Reuters combine and Bloomberg.
In the media business, it is no longer viable to be a standalone player. One must be present in a large way in all types of media namely, print, electronic and web. It is easy for ad agencies to book ads in all the media when a bundle can be offered. The advertisers can breathe easy because they get a single window rather than tackling different media at various doorsteps. The NYT is moving well in web focusing on small business section and has now entered into an arrangement with Monster.com for jobs. The New York Times must get into electronic media sooner than later. It must become more aggressive.
The media business is meant for people with very deep pockets. One must keep pumping more and more money, try innovative techniques and improve credibility. Sometimes it takes one to two decades before it can make profits. News Corp has the past record in its ability to withstand the long haul. There is no reason as to why this acquisition will not succeed, as long as the editorial independence and hence the credibility is not compromised. There is also no reason as to why it should be done when one is competing with the likes of Thomson/Reuters, Bloomberg, NYT and FT. WSJ is not a tabloid and cannot be run like a tabloid. The media people who blame him should give the new owner the benefit of doubt. He owns a USD 70 billion global media empire. He is the owner of Dow Jones now and can run it the way he likes. It is the market that is going to evaluate his performance and not the fellow media people. I was quite surprised with the rabid outburst in the UK based Guardian Newspapers dispatch which talked of potential right wing financial news terrorism. It also talked about the bad experience of just one journalist Mr.
Andrew Nell. The sneering attitude taken by the author in the Guardian dispatch against the Bancroft's for having sold out was uncalled for and calling New York Post a tabloid shows immaturity and perhaps personal prejudice. Surely, the editorial team of Guardian has slipped or was it deliberate?
Having said that people in the media must look at the other side of the coin. The WSJ was run by professionals and the earlier owners Bancroft's did not interfere with the day to day management.
Very few outside USA knew the former owners of WSJ till the takeover talks began three to four months ago. How come people in WSJ started flying with Leslie Bancroft suddenly? It has a world class reputation and had all the editorial independence in the world. But it was slowly but steadily bleeding to death. That is a fact people in WSJ must accept. No owner will accept that situation. Bancroft's sold out for that reason and after having waited so long. It is a right decision.
USD 5.6 billion plus legal expenses is a lot of good money to exit for WSJ and is 65% above its market value. No one is in any business for charity or maintaining health.
News Corp and its owner Mr. Rupert Murdoch have often been accused of aggressive tactics in dealing with competition, reporting and editorial staff. All the talented and beautiful people in the media must realize that it is no use having them on board if they cannot make money for the owners within a reasonable time frame. For too long the people in the media have been egoistic, concentrating on personal batting averages and glory rather than the financial health of the institution they work for. They behave like stars and celebrities. That is acceptable as long as they can also make money for the owners. They should know that they get a big platform to showcase their talent and get well paid for it. Without a platform what will they do? Where will they go?
The media business is just like any other business. It must make profits after a reasonable gestation period, as otherwise there is no reason for it to exist - with apologies to (Late) Dr. Peter F Drucker.
© August 2007. www.madgopes.com. All rights reserved.
Acquisition of Dow Jones by News Corp - To learn more about this author, visit Madhavan T Gopalachary's Website.
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Madhavan T Gopalachary
(Visit Madhavan's Website)
Madhavan Gopalachary, nick name "madgopes"
(g pronounced as in go) given by IIT
classmates, is a Mechanical Engineer and
an alumnus of Indian Institute of
Technology, Madras having passed out
specializing in IC Engines &
Thermodynamics.
He has nearly 35 years of experience in
the Corporate World. He started off as a
trainee and handled sales, marketing,
manufacturing, product management, profit
center management, strategic planning and
corporate development including R & D in
various organizations and at various
levels before becoming a CEO. His last two
professional assignments were at CEO level
before embarking to start management
consultancy business on January 01, 1998.
He has worked for British, Swedish MNCs as
well as very large Indian business houses.
He has spent a large portion of his time
from June 1998 till date in East African
Countries practicing as an independent
Management Consultant.
More details can be obtained at the
following web sites:
mmg.name/
mtg.html
mmgconsu
lting.biz/
Madhavan's articles can be accessed at www.madgopes.com
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