Wednesday, August 1, 2007

After the Deal: Facing Dow Jones' Realities and Opportunities

Mercifully the carnival that has been the negotiations for News Corporation's acquisition of Dow Jones appears to have pulled out of town, with factions of the Bancroft family finally wrestled into line with the financial and managerial realities of the deal. One shudders to think as to whether any right-thinking corporation would have considered an acquisition of Dow Jones any time soon after these machinations, so from at least that perspective the shareholders of Dow Jones should consider themselves very lucky indeed. But now that the glow of the spotlight is beginning to die down from this fracas, what's really going to happen with Murdoch's new acquisition?

As we said more than two months ago the benefits of having a global media company as a parent that has strengths in markets where Dow Jones needs to become stronger are the key to the real value in this deal. Murdoch's desire to have a major U.S. gem like Dow Jones in his crown will be overshadowed ultimately by his use of Dow Jones as an international brand that will allow him to become a more dominant player in influencing world markets. This will be especially important in U.K. Asian and Australian markets, where the online expertise and editorial strengths of Dow Jones can be used to build an English language global business media brand more able to dominate regional brands and Pearson's struggling Financial Times.
But it's also likely that the Dow Jones brand will be able to find footholds in other markets over times with Murdoch's leverage.

The missing piece from this empire is a strong presence in real-time trading markets. But given the cutthroat nature of those technology-driven markets that are not easily adapted to the managerial strengths of the Dow Jones organization this may be an omission worth skipping for the time being. As financial markets split into highly automated trading venues and opportunities driven by high-end market analysis tools the opportunity for Dow Jones to make better use of its strengths is not likely to solidify for some time in the wake of Thomson's pending deal for Reuters. A conjectural bid for Bloomberg is not really even worth considering at this point, though in two years' time it might be a reasonable play for NewsCorp if Murdoch's focus on succession takes his portfolio into more diversified channels.

While there is doubtless a fair amount of sadness in some hearts at Dow Jones as a proudly American brand passes to offshore ownership it's also an opportunity to reflect on the need for American business media in general to become more adept at managing international footprints. A weak dollar makes this a difficult time to buy in to those markets, so the wave of international acquisitions of U.S. targets this year at favorable exchange rates makes it that much harder for U.S. B2B media companies to make progress in overseas markets. But times will change - if B2B media companies take on a Murdoch-like view of the world that goes beyond the local golf courses and into more international circles of power. In the meantime congratulations to everyone involved in the Dow Jones deal - I hope that you get a few days off to forget about it all.
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