Cramer: Dow Jones Wakes Up-Will Others (NYT)? (Dinosaur Media DeathWatch™)

TheStreet ^ | June 1, 2007 | Jim Cramer

[abb]

Remaining newspaper companies take note, especially The New York Times (NYT) .

Going digital isn't enough. It won't work.

That's the real reason behind the Bancroft capitulation that I have been saying since Day 1 had to happen.

It's the economics of the Web. But first, let's accept that Dow Jones' (DJ) two-tiered structure created a tremendous disincentive by management to develop businesses away from the Journal. As someone who worked for Dow Jones from 1991 to 1995 I can tell you that the reservations to do anything remotely smart or clever away from the paper were so great that I knew right at the start to shut up.

(Never forget that the publication you are reading was initially SmartMoney.com, my blueprint that I showed Dow Jones in 1995 so they could own the Web space. They wanted it for free and would not even give me a percent equity in it.)

Dow Jones hated new ideas, hated them. And hated anything that would make their product more trader-friendly -- read Bloomberg-like. They also hated to hear any criticism about their TV show offerings -- remember that. Oh yeah, and they hated me for speaking up about it.

Why not? Who cared? As long as the family's trustee gave the execs cover, they were free to go to win as many Pulitzers as they wanted and free to run the place like a real good college.

But somewhere along the line, perhaps in the last five years, Dow Jones got dot-com religion. It developed a fabulous product that is the paid gold standard online. It's terrific.

And therein lay the real undoing of the company. You see every day that customers are switching from the staid off-line product to the cool online product. But customers simply can't be monetized. Every day DowJones loses income from the switch. The ads aren't there, the infrastructure's too unwieldy, the headcount way too big.

But that was OK, it had the Dow Jones Wires to make them money. But with the additional competition of Reuters and Thompson on the low end and Bloomberg on the high end, there was no room for the Wires either.

The one-two punch of the immediate and incredibly stupid kneejerk rejection of the savior bid plusthe potential annihilation of the wires resulted in a situation where the stock would fall to the 20s, the dividend would soon be in question, and the layoffs (the real compromise of journalistic integrity, not the aggressive muckrake of China that might go away), was actually at stake.

What we know about the Web and newspapers is that their integrity is diminished every day because every paper in this country is overstaffed vs. what can be made up in ads.

I believe the younger Bancrofts knew this and as I have been saying (lonely but right) the lawsuit against the trustees was just too juicy.

The trustees knew they could never get the stock to $60 with these trends, and the big opponents of the bid -- like the two-faced James Ottaway, whose family created one of the journalistically worst chains of papers in the country -- had to accept that the Journal would soon be as bad as the Ottaway papers if the bid wasn't taken.

The bottom line here is that it was always in the bag for Murdoch: Cheaper than it was when he wanted to buy it in 1996 because of the rank incompetence of the management, which didn't know cash flow from Scapa Flow, and more needed because of the business channel. It's just that the trustee, who barely even bothered to show it to the Bancrofts, as usual, didn't know it. (Lawyers, more guys who can't read an income statement.)

The good news? I bet the paper, now well-funded, will be better than ever. The bad news? What a great saga, fun to watch and report on.

[abb]

The Old Grey Hag is next...

[abb]

Ping

[sportutegrl]

Dow Jones hated new ideas, hated them. And hated anything that would make their product more trader-friendly -- read Bloomberg-like. They also hated to hear any criticism about their TV show offerings -- remember that. Oh yeah, and they hated me for speaking up about it.

But I'm not bitter.

[Tribune7]

That's the real reason behind the Bancroft capitulation that I have been saying since Day 1 had to happen.

LOL. No, the real reason is that it is real hard to say no to $5 billion.

[Grampa Dave]

Cramer has come close to nailing what was wrong with the WSJ and the left wing owners.

What he and other lefties continue to forget is how these left wing controlled mediots have POed so many Republicans. We cancelled our subscriptions as they allowed Al Hunt and his clones to attack our party and then our President like the the vicious misfits at the NY Slimes, LA Slimes and Washington Compost.

“Dow Jones hated new ideas, hated them. And hated anything that would make their product more trader-friendly — read Bloomberg-like. They also hated to hear any criticism about their TV show offerings — remember that. Oh yeah, and they hated me for speaking up about it.

Why not? Who cared? As long as the family’s trustee gave the execs cover, they were free to go to win as many Pulitzers as they wanted and free to run the place like a real good college.”

Imagine working for a company with this facist control:

[george76]

Liberals ( Jim Cramer ) critizing liberals ( Slimes, etc ).

8-)

[Grampa Dave]

Crame is one of the interesting liberals.

At times he appears to be a logical business guy, then his left wing insanity will take over.

He actually scares our grandkids. I watched a little of one of his screaming tirades earlier this year. They asked me to change the channel as his screaming and antics scared them.

[abb]

Dave, he frightens me, too...

[george76]

He is also corrupt. IMO.

He got caught when he was a hedge fund trader...No telling what he also got away with.

One of his tricks was ‘front running.’

[Grampa Dave]

My six year old grandson said, “I feel sorry for his kids if he screams and acts like that at home!”

[Grampa Dave]

I wonder how many of these left wing so called financial expert mediots do things that would put you and I in jail.

The BS that MSNBC’s so called financial morning show during the Clintoon’s ravaging of our economy and when GW proposed the tax cuts often appeared to be helping insider trading.

[Milhous]

One of my caveats that business media celebrities tout “buy” to pump-and-dump and vice-versa.

[Milhous]

Dow Jones: The Beginning of the Endgame

Old joke:
A guy asks a woman if she will sleep with him for $50. She says no.
Then he says, "What if I gave you $1 million?"
She says, "Sure."
And the guy says, "Now that we have established what you are, the only remaining issue is price."

Which brings us to today's news about Dow Jones. After four weeks of playing possum, hoping that Rupert Murdoch and his $5 billion, $60-a-share offer somehow will just go away, the controlling Bancroft family finally has come to grips with its fate. They've agreed to meet with Murdoch to talk about a possible deal.

Or, as they put it:
"After a detailed review of the business of Dow Jones and the evolving competitive environment in which it operates, the family has reached consensus that the mission of Dow Jones may be better accomplished in combination or collaboration with another organization, which may include News Corp."

Translation: "Show us the money."

Yeah, the Bancrofts also let it be known that they'd listen to--hell, they'd prefer, to the point of begging--an offer from somebody, anybody, who's not Murdoch. But it doesn't look like that's going to happen. More than likely, it's Murdoch or nothing. And apparently enough family members have figured out that "nothing" is a lousy outcome.

Now, as the joke goes (props to Alan Mutter for reminding me, btw), the major remaining issue is price. Murdoch has offered the Bancrofts $60 a share to sleep with him; they've said no. For a few dollars more, however, their resistance probably will crumble. And Rupert Murdoch will control Dow Jones and The Wall Street Journal.

I hope he at least buys them dinner first.