This might be any story about a company whose management could be clueless enough to blow a big, beautiful franchise. But this company puts out The Wall Street Journal, one of the most influential newspapers in the world. And this story will be covered by a small, often incestuous media group whose complex relations with sources and each other rival those of the Beltway crowd.
Dow Jones has stumbled for years, from its clumsy efforts to leverage the Journal name to its much-lambasted manage- ment of Telerate, a data serv- ice trounced by Reuters and Bloomberg. But while the stock languished, no one wasted much ink on it. The quiet ended in January, when Fortune magazine revealed that Lizzie Goth, a young heiress in Dow Jones’s controlling Bancroft family, was beginning to ask the inevitable question: is my inheritance safe? At her side was Ira Millstein, a lawyer known among the corporate elite for helping oust the CEO of General Motors, among others.
The Fortune story–with its suggestion of a new day dawning–sent the stock surging from the mid-30s to 40d. But it dropped almost as quickly, as investors seemed to recall that Goth and her allies had very little stock and that most of the family was siding with management. Then, a big blow: Dow Jones said it would spend $650 million beefing up Telerate, a move that would slam earnings for at least two years. The market wasn’t buying it. Dow Jones has already ceded the cutting edge, said analyst James Dougherty, and $650 million isn’t enough to fix it. The stock slid to 34i before moving back up to close at 36i Friday.
For bargain hunters, the fun may have just started. Cramer is one; he left Dow Jones’s SmartMoney magazine ““for a better offer,’’ he says, after a 1995 incident, when he was criticized for not adequately informing readers about his stake in stocks he wrote about. Now, he says, he’s a crusader, ready to push Dow Jones to spend its millions on the Journal and other ventures, not Telerate. And there are other investors in the stock who might ““make some noise,’’ says Dougherty. But if anyone can do more, he says, it’s the family dissidents. Indeed, they’ve shown the most progress. The lawyer, Millstein, isn’t talking to the press, but he’s engaged the high-powered PR firm Kekst & Co. to handle it. And he’s already scored a meeting with Kann.
As far as Dow Jones is concerned, the critics just don’t get it. ““They’re naive,’’ says spokesman Roger May, arguing that the data market will grow so fast–to $8 billion by 2000–there will be room for Telerate. It may be later before we know who’s right.
