Richard Zannino takes the helm of Dow Jones & Co. at a critical juncture for the company as marketers increasingly shift their ad dollars online.
Zannino, currently COO of Dow Jones, will succeed Peter Kann as CEO on Feb. 1. He said his top priority is to move aggressively to integrate the publisher's print and online sales staffs. By wedding the two sides more effectively, he aims to stem the ad losses that have led to a prolonged slump and caused five straight quarters of profit declines.
"We have lots of properties in print, online and radio, and need a strategy to do more selling on a combined basis," Zannino, 47, said. "It's a top-down emphasis. We have print reps who love to sprinkle some ad sales online and online reps who are willing to sell print. It all comes down to how we satisfy the customer, and we'll do that through joint marketing, joint rate cards and joint training, so as to give customers the right incentives for either print or online sales."
Zannino, who will be the first nonjournalist since 1933 to run Dow Jones, joined the company in 2001 as CFO. Prior to that, he held senior finance, strategy and operating positions at Liz Claiborne, General Signal Corp., Saks Holdings and Peter Kiewit Sons.
Kann will remain chairman until 2007, when he reaches the company's mandatory retirement age of 65. A new chairman has not been named, nor has a new COO.
The search for a successor to Kann came down to three people: Zannino, Karen Elliott House, senior VP-publisher of The Wall Street Journal; and L. Gordon Crovitz, president of Dow Jones Electronic Publishing. In announcing Zannino's appointment, Dow Jones said House, who is married to Kann, is retiring from the company.
Wall Street welcomed the news of the management changes. On Jan. 3, the day it was reported, Dow Jones' stock closed at $39.14 a share, up $3.65.
Kann, CEO since 1991, has taken pains in the last few years to expand the Journal's ad base beyond the financial and technology sectors to more lifestyle marketers. These efforts have included the addition of the "Personal Journal" section in 2002 and the launch of the Weekend Edition last September. He also engineered the plan to save the newspaper $18 million annually by shrinking the paper's width to 12 inches in 2007.
The results of the changes so far have been underwhelming. Through November, ad linage at the Journal was down 2.1%. In November, the Newspaper Association of America's semiannual circulation report said the Journal's circulation fell 1.1% to nearly 2.1 million.
Although the print side continues to struggle, WSJ.com has been a runaway success. With about 764,000 subscribers, it is the largest paid-subscription online news site.
Crovitz, who was instrumental in Dow Jones' $519 million purchase of MarketWatch last year, is considered the front-runner to succeed House, according to Reed Phillips, a partner in media investment banking firm DeSilva & Phillips.
"There was complacency there under Kann and House that will be greatly diminished" with their departures, Phillips said. He predicted that within a short time the new regime will start to retool Dow Jones' brands and make significant changes in strategy.
Others would not rule out that Zannino may have been brought in to streamline operations for a potential sale.
"There are some Bancroft family members who want that company sold, so I wouldn't be surprised if Dow Jones is put into play this year," said Larry Grimes, president of media investment bank W.B. Grimes & Co. The Bancroft family owns a controlling interest in Dow Jones.
"The company hasn't performed very well for the last several years," Grimes said. "That said, newspaper publishing companies continue to run at very healthy margins, particularly compared with a lot of other industries."