Dow Jones' Web Prize

Rupert Murdoch gets the Net. No doubt he's got big plans for the online Wall Street Journal and other Web sites

by Catherine Holahan

Commentators were quick to note that The Wall Street Journal is the crown jewel that has long enticed News Corp. (NWS) Chairman Rupert Murdoch, who made an unsolicited $5 billion offer for its parent company Dow Jones (DJ), which acknowledged the offer on May 1. "It is a huge investment in the newspaper business," says Laura Martin, senior media analyst at Soleil Securities.

But Dow Jones boasts some Web site gems that add to the allure, and Murdoch is no slouch when it comes to online media. It was he who paid $580 million for MySpace in 2005 and sold Google (GOOG) rights to place ads on the site for an astounding $900 million a year later.

No doubt he's got similarly big plans for the online versions of The Wall Street Journal, Barron's, and the Dow Jones Newswires. Dow Jones owns business news and information sites MarketWatch.com, eFinancial News, and Factiva. And it's working with IAC/InterActiveCorp, owner of the Ask.com search site, to create a new personal finance site. "The aim of our transformation plan is to transform Dow Jones from a company heavily dependent on print revenue to a more diversified content-driven consumer and enterprise media company meeting the needs of its customers across all consumer and enterprise media channels," Dow Jones Chief Executive Rich Zannino said during an Apr. 17 conference call discussing first-quarter results.

Lots of Opportunities

The Journal has the distinction of being one of the very few successful U.S. pay-to-read online newspapers. (Another is The New York Times, which offers some premium content on a pay-per-read basis.) Other newspapers have tried in vain to force readers to pay for content. In the first quarter, wsj.com's base of paid subscribers grew 20%, to 931,000. Those subscribers see an average of 70 million pages a month. Barron's Online, which launched in January, 2006, has also seen subscriber growth, posting a 49% increase, to 88,000 last quarter.

The online version of the Journal rose to greater prominence recently as the size of the print publication was scaled back to reduce costs (see BusinessWeek.com, 1/3/07, "Journal Blazes Newspapers' New Trail"). Dow Jones Chief Financial Officer Bill Plummer credited the online Journal and MarketWatch with helping to increase overall revenue by 18% in the first three months of the year.

With the April addition of eFinancial News, a finance site, Dow Jones rounds out a group of business sites that News Corp. could harness for distribution of video and other content—not to mention commercials—from its own business properties that include TV and Web sites. News Corp. could also make use of Dow Jones' advertising relationships to encourage marketers to buy space on its own sites and the Fox TV network.

Limits to Cross-Marketing

News Corp. also has the potential to use tracking technology to glean more information about the Web surfing habits of Dow Jones readers and sell more targeted—and therefore expensive—ads across its online network. For example, it could put finance ads in front of MySpace users who have been reading up on the subprime mortgage mess on MarketWatch. Or it could show an ad targeted to a slightly younger audience on MarketWatch when it knows the visitor has recently come from MySpace. It could also use MySpace to promote its new venture with IAC (IACI), which is targeted at a younger audience.

It's possible that Murdoch could also tap social-networking technology at MySpace to enhance reader discussion features at MarketWatch and Dow Jones' other online properties.

Of course, the potential to mesh both companies' online businesses isn't without limits. Don't expect an overnight MyJournal that encourages Wall Street Journal readers to make pals with like-minded sophisticates, considering that The Wall Street Journal doesn't even let readers post comments on many online stories. And MySpace, with its focus on socializing, won't soon be buttoned-up.

And all this presupposes Murdoch can win over the Bancroft family, which controls more than 50% of Dow Jones' voting shares and who are likely to spurn News Corp.'s unwelcome advances. But if he fails, the prospects for Dow Jones' online media properties will certainly not be missed by other possible suitors.

Holahan is a writer for BusinessWeek.com in New York.