Dow Jones Re-Org Takes Singular Aim at Business Readers
Originally published by Outsell on Jan 6, 2010
Advancing the business of information. Information on Outsell's reports
Important Details: On the first business day of the new year, Dow Jones announced it was combining the operations of its two largest divisions — the Consumer Media Group and the Enterprise Media Group – under the leadership of Todd Larsen, who was also named president of Dow Jones.
Larsen is an 11-year-veteran of Dow Jones, and he will now lead the business operations of the Wall Street Journal, Newswires, Factiva and other products, including advertising, sales, marketing and product development. He has previously served as chief operating officer of the Consumer Media Group where he was responsible for strategy, business development, financial management and day-to-day operations of the unit. The Local Media Group (called Ottaway Newspapers before the News Corp acquisition), with its eight daily community newspapers and 15 weeklies, will continue as a separate group, under the direction of Patrick Purcell and William Kennedy.
The major reorganization comes less than two months after it was reported by Forbes that the company had hired McKinsey & Co to help in boosting its business and follows a spate of Dow Jones restructuring actions in the two years since News Corp bought the company for $5.6 billion. Last February, it wrote down half of that investment, taking a charge of $2.8 billion.
Clare Hart, the president of the Enterprise Media Group, which includes Dow Jones Factiva and Newswires, departed the company after 25 years. The Enterprise Media Group has contributed a sizable chunk of the company’s net income over recent years, as the consumer business has suffered advertising decline. That said, in the enterprise-oriented licensed content aggregation market the established players like Factiva, Nexis, and Dialog have been under considerable pressure, from both general search engines directing users to free web content and from smaller more nimble aggregators using new technology platforms to deliver similar offerings at considerably less cost. As a result, Outsell forecasts the licensed content aggregation market to experience an anemic 0.1% compound annual growth rate from 2009 through 2011.
“This isn’t about personalities, and it’s not about costs,” said Les Hinton, Dow Jones CEO, in a release. “It’s about the best way to operate an information business at a time when technology provides new tools for delivering news and new opportunities for keeping businesses and individuals informed.”
Implications: The reorganization is a further sign of pervasive change at Dow Jones since News Corp bought it two years ago. Through the deep recession, Dow Jones has moved to maximize the value of its assets while wringing cost efficiencies out of technology introductions and staff reallocation. Further, it has moved to reposition the company in the marketplace. Among the key moves made by the company:
- Installing new leadership in both overall business and editorial direction. That leadership has made the paper — now #1 by paid circulation (print + online) in the U.S. — into a more general news daily, with strong business coverage, in contrast to its longtime position as the nation’s business daily.
- Introducing new staff-savings technologies, centralizing editing functions and more tightly aligning formerly separate reporting staffs for the Dow Jones Newswires and the Wall Street Journal (with the reorganization, the Newswires staff will report directly to managing editor Robert Thomson, who had shared oversight with Hart).
- Hiring Goldman Sachs to shop the Dow Jones Indexes.
- Launching a WSJ Pro product, an Enterprise Media Group product that, in part, blurred distinctions between enterprise and consumer customers (Insights, ”Dow Jones Goes Live with Wall Street Journal Professional,” Nov. 3, 2009).
In fact, the WSJ Pro introduction offers a glimpse into some of the rationale for the current reorganization.
Clearly, the marketplace is witnessing a blurring of the news-oriented enterprise and consumer news businesses overall.
Outsell believes that we can clearly see at least four areas — product, customer experience, sales channel and new device readiness — in which B2B and B2C markets are overlapping.
The workday, once somewhat circumscribed by weekday daytime hours, has become 24/7, as news junkies debate the limits and wisdom of bedtime tweeting. Work and personal lives have little separation. Consequently, ’round-the-clock content consumption may move from a general periodical — the Journal — to radio, to an online trade journal, all within a half hour.
Readers make little distinction among these content types, mixing and matching — and now expect simultaneous delivery via desktop, laptop and mobile, with e-reader/tablets to come. Products like WSJ Pro — and Gale’s recently announced AcquireContent — bring many of the formerly high-priced tools of business news customization to the business-interested at prices far below those traditionally charged by Dow Jones Factiva, LexisNexis or Dialog.
Ironically, former Enterprise Media Group head Clare Hart saw all this blurring early on, using the term “prosumers” to describe the emerging phenomenon. She also saw that the Googleization of content — the easy-to-use aggregation of lots of “good-enough” content — was a threat to Factiva’s enterprise business. Her counter-approach focused on a mantra of focusing aggressively on serving the unique needs of an enterprise and doing so at the level of individual functions and roles. It then built more role-specific offerings beyond Factiva’s core target of professional researchers.
Over the years, she has driven Factiva leadership to ever more deeply customize its capabilities, making it easier for customers to access and use tools, tailor searches and re-publish relevantly. The idea: go upmarket as Google ate its way through the low end of the market and into the mid-market.
Now the idea of knowledge workers — once the quite definable business target for news aggregators such Factiva, Nexis and Dialog — has become more elusive. In a sense, who’s not a knowledge worker? Moving into the new heavily digital news decade, there are fewer and fewer working people who don’t need to incorporate “knowledge” in their daily routines. The term was coined 50 years ago by Peter Drucker; now some estimates say as much as 70% of the U.S. workforce and 50% worldwide is made up of “knowledge workers”.
So the Dow Jones re-org has to figure out how to reach those business news — and general news — consumers. Among the key decisions will be direct sales force/self-service splits and product branding, nesting and pricing. As it seeks to rationalize its deck of consumer and business brands — Wall Street Journal, Barrons, Marketwatch, AllThingsDigital, Factiva, Newswires, Indexes and VentureSource — it must bring clarity to the marketplace.
That marketplace itself is shaping up as a titanic battle of a few global business news and data suppliers. Thomson Reuters and the ascendant Bloomberg (which recently nabbed Dow Jones consumer marketing chief Paul Bascobert to head its newly acquired Business Week), along with the Financial Times, are in a battle with Dow Jones to win business customers — in large enterprises and small — around the globe, as all of their businesses are going quickly digital.
For Dow Jones, the move comes at a time when its parent, News Corp, has asserted industry leadership (Outsell Insights, “News Corp Now Atop News Industry — and Making Moves Like a Leader”, Aug. 25, 2009), saying that the changes in publishing economics will be long-lasting. CEO Rupert Murdoch has said that advertising cannot be counted on to support publishing as it has, staking the company’s news future on wringing more revenue from readers. In fact, a competitor, the Financial Times, which has made the same point as Murdoch, declared yesterday that it had passed a milestone: Content revenues (print and digital) have surpassed print ad revenue.
Clearly, if one key goal is to maximize the revenue yield on content itself, then the reorganization is intended to focus one aligned workforce on it.
Such strategies, of course, are easier to announce than execute. There are many devils and many details here, and consolidations run the risk of alienating long-standing customers, especially those who may have been seeking lower-priced alternatives. While the prosumer blurring is clearly a reality, it’s a cake in progress that’s not completely baked.
Among the risks are that Dow Jones loses focus on the needs of an enterprise, as it looks to broaden the appeal of its prosumer opportunity. That risk could play out most outside the realm of the finance industry where the strength of its Dow Jones Newswires business allows it to compete against the power of a combined Thomson Reuters and against Bloomberg. While such a loss of focus might be acceptable in the grander scale for Dow Jones and News Corp, it will mean opportunities for other players in the licensed content aggregator space. That market has been challenged for years, but search fatigue and broader technology solutions means there is still an opportunity for companies looking to target specific corporate functions with vetted content and tools.
In addition, the Enterprise Media Group’s many publisher partners — those licensing content to Factiva — may be wary of the new development. While some of those publishers saw the Journal as competitive in some ways, the very separateness of Factiva in the non-consumer-based Enterprise Media Group (EMG) provided some arm’s length comfort for those publishers. Now, the new streamlined-to-be Dow Jones — clearly intending to maximize the value of its portfolio of owned content, may seem more competitive to other daily news publishers. If this comes to pass, it would slow EMG-related growth, and that could portend the selling or spinning off of the aggregation business itself.
Finally, in Clare Hart’s departure, Dow Jones loses one of its most recognized and respected figures in the marketplace. Hart has been a clear leader in the news aggregation business, and incidentally, one of the few women at the top of major information industry enterprises. She also leaves Dow Jones a significantly less diverse company at the top.