Last October, on Halloween to be exact, The Wall Street Journal announced its global "Top 50 Women to Watch." As a Dow Jones & Co. publication, it missed one of its ownóClare Hart, president and CEO of Factiva, a Dow Jones and Reuters joint venture. Only a few weeks later, in November, Hart was one of the winners of The Executive Council's New York Ten Awards, which recognize 10 leaders (not just women) in the greater New York business community "who have, through their innovation, significantly impacted their organizations and industries."
The Executive Council had it right; The Wall Street Journal missed the boat. In an extensive structural reorganization announced on Wednesday, Feb. 22, 2005, Dow Jones' new CEO, Richard Zannino, named Hart as head of the newly created Enterprise Media Group. Her title will be executive vice president, Dow Jones, and president of the Enterprise Media Group. Included in the new group will be Dow Jones Newswires, Dow Jones, Licensing Services, Dow Jones Indexes, Dow Jones Financial Information Services, Dow Jones Reprints and Permissions, and enterprise-facing joint ventures Factiva and Stoxx. This disparate product group is heavily weighted toward electronic financial information, but synchronicities among them are scarce.
Succeeding Hart as Interim CEO of Factiva will be Claude Green, who is based in London. Green has been deputy CEO of Factiva since 1999, having joined from the Reuters side of the joint venture. It is likely he will continue the present policies of the company, so customers should expect no significant changes. An international search will be conducted for a new Factiva CEO, who will be based in New York.
In her blog, From the Hart (http://fromthehart.typepad.com/weblog), Hart noted that her promotion won't take her completely away from Factiva: "While leaving day-to-day involvement with this great team was a difficult decision, it was made easier by the fact that as part of my new role at Dow Jones, I also become Chair of Factiva's board, so I am privileged to remain involved in Factiva's future success." The board is composed of three people from Dow Jones and three from Reuters. She also noted she wouldn't be posting as much in the future, which doesn't mean much, since she only started blogging at the beginning of January and has had relatively few posts.
The Other Two Groups
Dow Jones' reorganization created two other business units in addition to the Enterprise Media Group. The Consumer Media Group, headed by L. Gordon Crovitz (whose title will be executive vice president, Dow Jones; president of the Consumer Media Group; and publisher, Wall Street Journal) will oversee all formats of The Wall Street Journal (print, online, TV, and radio), Barron's, MarketWatch, and consumer-facing joint ventures including SmartMoney. This is the largest of the three groups, in terms of revenue. Had these three groups been in existence in 2005, consumer media would have had revenues of $1.04 billion, with an operating loss of $2.6 million while enterprise media would have had revenues of $380.3 million and operating income of $91.5 million.
The third group is the Community Media Group, composed of the Ottaway family of daily and weekly newspapers covering nine states. John Wilcox, previously president of Ottaway Newspapers, will head this group. His titles will be senior vice president, Dow Jones; president, Community Media Group; and CEO, Ottaway Newspapers.
The new structure will be in effect as of March 1, 2006.
This structural reorganization is the brainchild of Zannino, who had been CFO and COO prior to talking on the CEO role. In his position only since Feb. 1, Zannino's internal restructuring of the company reflects his views on the importance of franchise over distribution. By concentrating on customer segments, he makes the company format agnostic and blurs the distinction between traditional publishing and e-content. It's a recognition that, for most people, it's the information that matters rather than the container. While companies may put their products into platform silosówith print in one place, online in another, radio and television in a thirdóinformation consumers blend them. They check the Internet for some things, read the newspaper for others, and listen to the radio while driving.
Dow Jones will take a charge of about $14 million due to the restructuring, $11.2 million to be booked first quarter 2006, paid out as severance to Peter Kann, retiring CEO, and the other executives whose positions were eliminated. The remaining $2.8 million was booked fourth quarter and represented a severance payment to retiring Karen Elliott House, The Wall Street Journal's former publisher. The company expects to save $8 million a year, primarily due to fewer salary payments.
Newspaper Industry Challenges
There are a lot of challenges ahead for Dow Jones. Its brand recognition is spectacular, but its financial picture is cloudy. Traditional news businesses are in decline as revenue sources such as advertising shrink and the subscriber base drops. The Internet is supplanting print newspapers as the first place people go for news. Zannino, however, points out that, across all the Dow Jones' sites, he counts the number of visitors at 9 million, putting it third behind Yahoo! Finance and CNNMoney, which each have about 10 million visitors. It would seem, then, that the question is how to monetize the visitors and coordinate the information sources.
Many industry observers phrase the industry problems in terms of a schism between print and electronic products. Advertisers and readers, in this view, are deserting print for online access. Zannino has a more holistic view. The new business units reflect target market segments rather than technology. It's not whether people prefer print to online or online to television; it's that they want the information Dow Jones has to offer. There have already been a few changes that foreshadow developments in a Zannino-led Dow Jones. In Europe, The Wall Street Journal is now tabloid-sized, with many fewer pages than its U.S. counterpart, and encourages subscribers to move from print to the WSJ.com site for additional news on the printed stories. Barron's is no longer included in the subscription to WSJ.comóit requires a separate subscription.
Dow Jones' reorganization is a bold statement about the value of content, whether it is electronic or not, which shows a renewed emphasis on customers over distribution channels.