Journal Aims to Be a Weekend Warrior

When Martha Stewart’s criminal trial dominated the news this year, the Wall Street Journal swarmed the story in its typically aggressive fashion, often churning out several articles in a single edition.

But when Stewart was convicted on a rainy Friday in March, the world’s top business newspaper was mum the next day.

That’s because the Journal is published only on weekdays, relying solely on its website to stay on top of weekend news until it is back in print on Monday.

That may change as the Journal’s parent, Dow Jones & Co., seriously mulls over the idea of launching a weekend edition that would come out Saturday.

The plan, which the board is expected to take up at a meeting Wednesday, could allow the Journal to tap a rich advertising vein. Big papers derive as much as half their ad revenue from overstuffed Sunday editions.

But the decision on whether to move forward with a weekend paper is far from simple. The biggest risk is that a Saturday product could lure few new advertising dollars while cannibalizing old ones.

“It’s a gamble,” said John Morton, president of newspaper consulting firm Morton Research Inc., “and Dow Jones in the past has made investments that didn’t work out.”

It can ill afford another misstep.

Earnings at Dow Jones have fluctuated wildly in the last decade, and sagged in the last few years. After losing $119 million in 2000, the first year of the bear market, the company saw profit rebound to $201.5 million in 2002. It sank to $170.6 million last year.

Dow Jones shares, which closed Friday at $40.92 on the New York Stock Exchange, are off nearly 18% this year. They continue to trade near a 52-week low of $39.50, reached in mid- August.

Some large shareholders blame company management. Chairman and Chief Executive Peter R. Kann has led Dow Jones since January 1991.

“They’ve got an A-plus franchise with C-minus management,” said one longtime institutional investor. “They have not done a really good job of execution.”

To be sure, some of the company’s woes are beyond its direct control. It is trying to overcome a brutal advertising recession that has slapped all newspaper owners, but has trampled Dow Jones in particular.

“We don’t control the ad environment,” said Kann, whose wife, Karen Elliott House, is the Wall Street Journal’s publisher. “There are all sorts of things we can do and have done and will continue to do to ... chart our course as effectively as we can through what is still a fairly difficult environment.”

More than its general-circulation competitors, Dow Jones’ fortunes soared during the Internet boom in the late 1990s as its core financial and technology advertising took off. But those categories shriveled in the downturn, punishing the company far more than rivals with a healthier blend of advertising.

Although the ad market has picked up in the last year, the recovery has been choppy at best, especially in the so-called business-to-business market that makes up three-quarters of Journal advertising.

Dow Jones last week warned that September ads were weaker than expected because of softness in the technology, travel and business-to-business categories. Ads remain down 40% from 1997 and 1998, a period the company considers to be “normal.”

The Wall Street Journal “remains one of the strongest newspaper franchises in the world, but it remains largely dependent on financial and tech advertising,” Morton said. “That can be great in good times and a burden in bad times.”

Besides enduring ad market woes, Dow Jones over the years has suffered setbacks of its own making.

The most debilitating was its ill-fated purchase of Telerate Inc. in the late 1980s, a financial information service that performed poorly and was sold at a $1-billion-plus loss six years ago. Telerate badly hurt the company in the late 1990s until earnings were rescued by advertising tied to the heyday of high-tech.

Today, Dow Jones finds itself at a crossroads, wondering how it can grow in the years ahead.

This is especially worrisome for a company that is far smaller than many of its competitors -- including media behemoths such as Tribune Co., owner of a string of TV stations and newspapers, including the Los Angeles Times -- and whose long-term ability to stay independent is an open question.

In the past, members of the Bancroft family, Dow Jones’ controlling shareholders, reportedly have expressed displeasure at the company’s performance. Some outsiders have taken this as a sign that the family could sell for the right price.

Roy A. Hammer, a board member who has been the Bancroft family’s representative for decades, says that isn’t likely.

“I don’t think that they view being taken over by some big media company as necessarily consistent with their long-term best interests,” Hammer said.

To rev up growth, Dow Jones is proceeding on two tracks.

It wants to extend its brand by expanding its subscription-based electronic publishing line, which could provide a much-needed cushion from the vicissitudes of the economy. Dow Jones has bought three electronic newsletter publishers in the last year.

“That is where a lot of the growth opportunities in media are today,” said Richard F. Zannino, chief operating officer.

At the same time, the company is trying to lure more consumer-oriented advertisers, reaching beyond its traditional reliance on the financial and tech sectors. That’s where the Saturday paper, which could draw more female and younger readers, comes in.

The paper’s Weekend Journal, a lifestyles section published on Fridays, has proven popular. Personal Journal, a Tuesday-through-Thursday consumer news section started two years ago, boasts far less advertising, but it was launched at the depth of the recession and analysts are optimistic about its prospects.

“Even if things were going splendidly for them, the Saturday approach makes sense,” said Allen Ayvazian, chief equity strategist at Wells Capital Management in Los Angeles. “We are assuming they will have more of a consumer focus -- a combination Personal Journal and Weekend Journal -- on Saturday.

“Given the demographic of their readers, we think that would allow them to attract luxury travel and consumer goods advertising.”

Yet the Saturday concept is far from surefire.

Some suggest that advertisers may simply shift their buys from weekday pages to Saturday, shuffling revenue around without generating any additional sales dollars. “Will you just thin out the other days of the week?” asked Morton. “That’s the big danger.”

There are also several logistical hurdles to a Saturday paper.

Many Journal subscribers take delivery at work, and advertisers may not be keen on the paper languishing in office mailrooms until Monday morning.

Beyond that, analysts say, a Saturday edition could eat into readership of the Journal’s weekly sister publication, Barron’s, which hits newsstands on the weekends.

For his part, Kann declined to discuss the prospects for a Saturday paper, but he made it clear that the company was not about to go off half-cocked.

“If we were to proceed with this project,” he said, “we would have certainly worked through all the plans for everything from production to delivery to pricing.”

For all the uncertainty, at least some on the board seem open to the Saturday idea.

“I want to hear more about it at the board meeting,” said Hammer, the Bancroft family representative. “I think it has potential. I want to get a firmer grasp on the financials.”

Many agree that the decision could be a fateful one.

“It’s a question that’s going to make a huge difference for Dow Jones and for Peter Kann’s legacy,” one newsroom insider said. “If Peter Kann goes ahead with this and it becomes big, he’s done a lot toward saving Dow Jones and the Wall Street Journal.

But “if he goes ahead and doesn’t get that advertising and it’s a big albatross, it could really hurt the company.”

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Hamilton reported from New York and Kristof from Los Angeles. Times staff writer Thomas S. Mulligan contributed to this report.