Dow Jones surprised the industry last week with word that its No. 2 executive, Richard F. Zannino, will take over as CEO next month. Despite long-running criticism of his reign, few expected Peter R. Kann to leave the top post so soon; nobody expected his also-departing wife, Wall Street Journal Publisher Karen Elliott House, to leave at all.
Now Mr. Crovitz has become the favorite to assume Ms. House's old duties in an expanded role that will allow the company to more closely integrate its print and online operations. Mr. Zannino's decision to eliminate Ms. House's post was part of a strategy that could render Mr. Crovitz the chief revenue generator for a company that desperately wants to improve its bottom line.
"We do a pretty good job today of operating between print and online," Mr. Zannino said. "Going forward we'll be doing more and more of that in news, marketing and ad sales."
Dow Jones may have little choice as it bids to revive its stock price and morale amid a heartless ad market that pits the company's products against everything from USA Today to keyword searches to wall-mounted ads in airports.
Media buyers favor more integration. "Most of the industry today is in silos, but there is a big awakening happening," said Robin Steinberg, senior VP-director of print investment, MediaVest. "The evolution of integrating digital into the brand is moving at a more rapid pace within the publishing industry than ever before."
The driver isn't just competition; it is the realization that publishers' brands and content matter more than the distribution vehicles. "That's what's key here," Ms. Steinberg said, "because you're buying the brand where it can be viewed and consumed from a content perspective from multiple platforms."
Analysts such as Lauren Rich Fine of Merrill Lynch approved the strategy in notes to investors. "The decision not to replace the retiring Karen House ... signals more integration of DJ's print and online operations in the future and a more prominent role for Gordon Crovitz," she wrote.
Mr. Crovitz said last week that the growth of the Dow Jones audience, among other things, has made integrated selling increasingly desirable and likely to expand ad revenue. "For the first time, Dow Jones is able to deliver not just a uniquely attractive demographic audiences but also an audience with very large scale," he said. "As advertisers are making their plans and looking for the most efficient way to reach their audiences, they have brand goals, they have product goals, awareness goals, usage goals, direct-response goals. We are in a position to offer solutions."
He declined to comment on his future role. A Dow Jones spokeswoman said there have been no decisions on a new structure or new executive roles.
Inside headquarters, employees celebrated for more personal reasons. "People are mostly glad that Karen House is gone," said one Journal employee. Ms. House has endured perceptions of nepotism and occasionally alienated staff. In an unfortunate incident last June, she told The New York Times that staffers wouldn't have to work more once The Journal introduced its weekend edition, then added, "But any of the real stars of The Journal work a six-day week now." Journal employees still derisively repeat the "real stars" remark internally.
Dow Jones faces other challenges. Business-to-business advertising remains choppy, which has sparked the company's efforts to capture more personal-finance and consumer ads with vehicles like the weekend edition, introduced last September.
Tough all over
Even the general ad market today gives migraines to publishers across the competitive set. Ad revenue at Dow Jones totaled $687.6 million during the first three quarters of 2005, down 1% from the equivalent period the year before. At The New York Times Co., ad revenue totaled $1.6 billion during the first three quarters of 2005, up 2.9% over the equivalent period a year prior.Ad pages at Business Week dropped 9.6% during the first three quarters of 2005 from the period a year earlier, for example, and Forbes ad pages fell 7%.
Some saw the promotion of a nonjournalist as a precursor to a sale, but Mr. Zannino said he wants to prevent one. The Bancroft family controls the company and would have to agree to sell. "Management here is firmly committed to the independence of Dow Jones," he said. "Ultimately it's not our decision. What we can do is everything in our power to drive our earnings, cash flow and stock price to the level where financially it becomes a moot point."