Rupert Murdoch’s $5 billion offer for The Wall Street Journal and the rest of Dow Jones & Company has aroused the passions of anyone interested in the newspaper business—and none more so, of course, than the Bancroft family, which has held a majority interest in Dow Jones since 1902. Several family members have indicated they’ve no intention of selling, positioning themselves as guardians of The Journal’s integrity, while others in the Bancroft clan see some wisdom and common sense in accepting Mr. Murdoch’s $60-a-share offer.
But the real story is how the Bancroft family, together with Dow Jones’ inept management, failed to turn The Journal’s impeccable brand name and sterling reputation into the hugely profitable business it could have become.
For the past century, the Bancrofts have been happy to sit around and collect dividends from Dow Jones. Each is currently taking home an average annual dividend of a half-million dollars, significantly less than the old days. Perhaps the family became victims of their own ease and contentment. In any case, they clearly missed the boat. Did any of the Bancrofts ever work a day in their life?
Indeed, through The Journal and other properties, Dow Jones had a virtual lock—a monopoly—on the financial-information business. Why didn’t the family ever install a management team that could understand the value of that market position and take advantage of the Internet and other high-tech advances? Instead, as the world changed at lightning speed over the past 15 years, Dow Jones management snoozed, and thereby let others—like a brash, ambitious upstart named Mike Bloomberg—take the lead. Mr. Bloomberg started with a single, powerful idea: a computer terminal which allows users to access real-time financial data—and built it into a multibillion-dollar business that is today the world’s largest financial news and data company, controlling 33 percent of market share. That business was Dow Jones’ to lose. The company should have been ahead of the curve rather than caught behind it. When Dow Jones went public in 1967, it sold for the equivalent of $385 per share in today’s dollars. Until Mr. Murdoch came along, it was trading at about $38.
Properly managed, Dow Jones should have been among the Googles of the business world. Instead, the company is profitable, but hardly thriving. Its showcase property—The Wall Street Journal—shows the second-highest weekday circulation of any paper in the country, yet performs worse financially than most major newspapers.
So far, Bancroft family members who represent 52 percent of the votes in Dow Jones have said they oppose Mr. Murdoch’s offer. If the family ends up rejecting the bid, they would be well advised to put someone in charge of Dow Jones who can shake things up, reverse the decline in share price, and re-establish the company as the world’s most eminent and trusted financial brand name. But it may already be too late.