April 13, 2010

Why WSJ Failed.


As compared to the heavy-lifting Rupert Murdoch has been challenged with in the past, such as turning around Fox, Metromedia and his half dozen British newspapers among other things, fixing the Wall Street Journal will be "kid stuff".

As a content distributor, the Wall Street Journal daily news product is in fine shape. The reason the WSJ failed was due to its corporate culture. They considered themselves above reproach and refused to learn from their mistakes.


The Wall Street's Journal raison d'tre is to cover Wall Street. Wall Street is a place known for doing business. The Wall Street Journal is the paper of record for the business world.

You would think then that a company which covers both the best-run and worst-run companies on a 24/7 basis would have learned "what to do" and "what not to do" to keep it on the top of the business publishing pyramid. The reason it didn't is because of its culture.

Heard on the Street

It's common knowledge in the media business that the WSJ has been up for grabs for at least the last 5 years. The reason it's had no takers is that, as past and recent events have proven, no other media company had the stomach for it. The WSJ's culture made the choice easy to pass on taking on one of the biggest headaches in publishing.

Industry Trends

With all the media consolidation in the business today on 6th and Madison Avenues, history shows that there are no other national media companies who put up a fight to be acquired by another. It's been just the opposite. Judging from the anticipated multiples, most have rushed to the alter.

GE/NBC, Disney/ABC, Viacom/Paramount/CBS, AOL/Time/Warner - difficult marriage but no forced betrothal by any means of the imagination. Rather, it was as exciting as Charles/Diana wedding and divorce. That said, we admire AOL/Time/Warner and AOL for working through the toughest of times. If anything it is a sign of its culture.

Conde Nast/Any magazine/newspaper it wishes. NYT/Any partner it acquired. Also, B-sized PRIMEDIA, Meredith, ClearChannel, Gannett, and on and on and on. Hearst is another issue all together. We'll save that for another time.

WSJ has managed to find itself faced with a shotgun marriage.

Our eyes cross when we read that the reason for the Wall Street Journal's ambivalence of being scooped up by Murdoch has been due to its fear of losing its editorial independence. That is absurd.

The WSJ is anything but independent. It is actually a prisoner of its cultural ideology.

Editorial Record

On reporting, they have wrong and misreported the initial information on climate change, the telecom mess, the technology bust and of course its unindicted co-conspiratorial roll in Enron. On editorial, if you go back a ways, they mis-reported Vietnam, Watergate and most recently Iraq.

They can actually be forgiven for R. Foster Winans. That can happen to anyone. With all the rest, go into their archives and see how objective and/or well reported their coverage of these various events were.

One would think that the paper of record for business would have nailed these stories early enough to warn off the street from losing billions of $$. Rather, they only woke up to reality and jumped ferociously to cover its tracks after it was too late, once it became obvious that the industries and companies just suffering Titanic-level damage were reported everywhere.

We think the claim and fame of being the world's financial rudder comes with a burden and responsibility of getting it right before 20/20 mishaps occur. We'll give them this. The Wall Street Journal is excellent at 20/20. Actually we'll go even further. They do 20/20 better than anyone else out there.

Business Record/Competitive Analysis

Let's look at their business record, which is even worse. If it wasn't, they wouldn't be up for sale.

We won't go into issues such as the level of creativity and integration on Madison Avenue because we have seen the positive and negative up close. As with any media company servicing Madison Avenue, the quality of service really depends on the person assigned to the account. We have seen brilliance and un-brilliance. We were impressed to see that they began running small front page ads and began taking FSI's in 2005/06.

A side by side competitive analysis of the other 3 daily national newspapers, NYT, USAToday and FT along with WSJ would be the way to best measure its success.

We believe that a comparison between WSJ and NYT or USAToday is less than accurate for all three, since the later two's heritage has always been to be primarily published as national daily lifestyle papers, and secondarily as business newspapers.

For the record, NYT national distribution is less than 10 years old. USA Today began and remains a national newspaper.

The Wall Street Journal's heritage has been published as a national business newspaper for as long as most people in the business remember. Same goes for the Financial Times.

Therefore, the only real "apples to apples" comparison with the WSJ is with FT, since they are, for all intents and purposes the only two newspapers primarily published as national daily business papers, and secondarily as lifestyle daily papers.

Putting them side by side, FT is the most progressive advertising vehicle today as evidenced by their leadership, creativity and integration:
- Front page ads: Taking advertising for over 100 years
- Weekend Edition: Since 1976 (30+ years)
- Fashion Pull-out: Since 1993 (13+ years)
- Use of color: Since 1986 (20+ years)

Readership/Media Research

Reuters/IM Research reported that Financial Times tops the list of the world's newspapers last year, ahead of the WSJ (came in second) and (embarrassingly) knocked out NYT from #1 to #6.

The study was based on data from roughly 1,000 respondents, made up of business execs, politicians, university lecturers, other journalists and Madison Avenue types from 50 countries.

One other "minor" disappointment which we won't go into detail was its blazing intro into business technology: Telerate, where they cobbled together a dream team of "heavy creamers" - in other words - rich and thick clubbers, who partied their way to losing almost a $billion? until it was sold.

Madison Avenue "Trade" Campaign

We clearly state upfront this is a petty nick pick, though we think it is fair game since it is directed at Madison Avenue buyers and the business of media planning; which we know something about. As we were strolling down Madison Avenue last year, we gazed upon WSJ's new trade campaign for its new weekend edition, which was smartly placed on telephone kiosks. The ad essentially punched the point that the WSJ Weekend Edition is about lifestyle. We got it.

The Weekend Edition is an excellent product and goes equally well with our Saturday coffee as does NYT and FT. The ad we reference here was an ad that depicted attractive young men and women having fun at what looked like as a merry clam bake on a beach. It was great. It got the point across.

The most puzzling thing about the ad was that one of the men in the ad wore a dredlocks hair cut. Short dredlocks for sure but dredlocks just the same.

From a positive viewpoint, one could say it was an aspirational ad and is indicative of WSJ's admirable efforts to date of establishing a "big tent" readership. From a negative viewpoint... we will not go there, other than to point to similarities we wrote about with Microsoft's advertising campaign, which we also analyzed earlier this year. You decide.


We predict that Rupert Murdoch will triple the value of the Wall Street Journal franchise in less than 3 years. That's right 3 years, or less. On 07/17/10 conventional wisdom on the street will be that anything with the Wall Street Journal brand name on it will collectively be worth $15 billion or more, based on Murdoch's skill at running business.


Bottom-line, history and most recently Wall Street itself has voted in thought and $deed$ that the WSJ is the worst-run business media company in the world.

Getting back to our first claim of why we think fixing the Wall Street Journal will be "kid stuff" for the News Corporation? It's simple. It is by far the best-run media organization in the world. Or in other words, it's because of its company culture.

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