Stockholders' Best Ally Is Breakingviews.com
NEW YORK (MarketWatch) -- A driven, controversial media chief covets a world-class newspaper and stuns Wall Street by making a tempting takeover offer for its parent. He appears to be closing in on the prize, when another serious bidder emerges at the 11th hour. In a nutshell, that's the Dow Jones takeover saga, the perfect story for breakingviews.com.
Some of the best analysis of the Dow Jones deal has come from breakingviews.com. Breaking what? Although little known among the public, the Web site serves the financial-industry elite -- the affluent, well-educated audience that's like gold to American media companies.
On May 1, the news broke that Rupert Murdoch's News Corp. made an unsolicited $5 billion offer to acquire Dow Jones & Co. , the publisher of the Wall Street Journal, among other properties. The Bancroft family, which controls Dow Jones, was initially opposed to Murdoch's bid but subsequently softened its stance. Then, Pearson Plc , publisher of the Financial Times, and General Electric Co., owner of CNBC, talked about making a joint bid.
Predictably, the U.S. media were drawn to the angle that the media conglomerate behind the sensationalist, gossipy New York Post might come to own the uber-admired Wall Street Journal. Journalists have concentrated on reporting about Murdoch's editorial style, the pedigree of the Wall Street Journal, the bickering Bancroft family and what the deal means -- a drum roll, please -- for the future of the global media.
But breakingviews, a shareholder's ally, has disdained the gossip and thumb-sucking speculation. Its mission is to present sophisticated analysis for an underserved audience. "We write for the shareholders," according to U.S. editor Rob Cox.
"What sets us apart is that we're not 'media critics,' Cox said in an interview Monday in breakingviews' sparsely furnished Midtown Manhattan office. "We are 'company critics.' We look at what deal will make the most sense in value creation, earnings potential and new products."
On June 15, breakingviews said: "A straight purchase of Dow Jones would be a nonstarter for Pearson shareholders. ... The execution risk would be huge. The fact that Pearson and GE seem to be seriously entertaining the idea is evidence of how much the prospect of a Murdoch-controlled Journal has worried both of them.
"It's not just the FT that would face tougher competition; it would give a boost to Murdoch's plan to turn his planned business-TV channel into a rival for CNBC."
This story poses a unique challenge for Cox and his team. Dow Jones is a minority investor in breakingviews, and the Wall Street Journal also publishes a daily breakingviews column. MarketWatch, the publisher of this column, is also a unit of Dow Jones.
"I don't think a loss of independence equals a defeat for Dow Jones," Cox, 39, told me. "New ownership that strengthens this fabulous brand is what the Bancrofts should be interested in. And Murdoch needs what the Journal offers: the best team of financial journalists in the world."
It wouldn't surprise me if breakingviews' approach catches on. Its stories run about 300 words, with no extra frills. With the U.S. newspaper industry struggling, editors are eager for ways to cut costs while continuing to serve readers. Too often newspapers rehash the kind of business news that their customers can already get via the Web or cable.
The breakingviews style of providing analysis of major issues can work for newspapers as well. They could leave the earnings stories and the like to the wire services and tell readers what's really going on.
Ambitious
About 500 financial institutions subscribe to breakingviews -- reaching about 20,000 professionals in banks, hedge funds, private-equity outfits and law firms. Subscribers pay anywhere from $5,000 to $200,000 per year. In addition, newspapers around the world publish breakingviews' work, with a potentiareach of millions more readers.
The breakingviews operation is the brainchild of Hugo Dixon, the editor and chairman who made his mark writing the "Lex" column in the Financial Times; and of Cox, a veteran of Bloomberg News.
I was struck by hearing Cox talking unabashedly about admiring Bloomberg and how the pecking order of the financial media has changed. When Cox and I worked for Bloomberg in the early 1990s, employees talked hungrily about topping Reuters Group .
"Bloomberg is rigorous in its standards," Cox commented. But he said that Bloomberg and breakingviews take different journalistic approaches. "They want to suck any editorializing out, and we're trying to do the opposite."
Conventional wisdom might signal that blogs, which also offer opinions free of charge, might cut into breakingviews' potential audience. Cox welcomes the boom in blogging.
"Blogs add to the clutter and make our lives so much better," he grinned. "Bloggers have personal opinions. They change out of their pajamas and write about tech stocks."
Naturally, breakingviews angers corporate execs now and then. When it assessed the merits of Viacom Inc.'s breakup on June 2, the media giant fired back in a letter to the editor.
A Viacom official later ripped breakingviews' "faulty analysis" and used such terms as "misleading" and "woefully incomplete."
What of it, I asked. "We don't suck up to CEOs," Cox said.
MEDIA WEB QUESTION OF THE DAY: Do you think Rupert Murdoch would help or hurt the Wall Street Journal, or business news in general?
WEDNESDAY PET PEEVE: Media outlets that focus on gossip instead of real news.
THE READERS RESPOND about Dan Rather's attack on CBS News and Katie Couric: "The CBS News is lame, lacks hard news, is tarted out. You are off base in trashing Rather and his legacy for simply speaking the truth." George Johnson
"Jon, well said. CBS made Dan Rather a very wealthy man, whereas a simple 'thank you' would speak volumes." Robert Lapp
"News flash Jon: What remained of Rather's 'legacy' was blown to smithereens by the Bush National Guard story. This was not Shakespearian tragedy -- it was the natural consequence of ego and ideology grown arrogant. He inherited a No. 1 rating and anchor chair from Walter Cronkite and then drove CBS to third place and kept it there. What legacy? He has nothing to lose." Mark Burgess
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By Jon Friedman