The smart money wasn't on William O'Neil, a smooth-talking stock market guru, when he launched his own newspaper 10 years ago.
O'Neil wasn't just starting a newsletter. He was launching a national business daily. And he was publishing it in West Los Angeles, about as far from Manhattan's financial markets as one can get.
"Everybody thought we were nuts," he recalls. "Very few people thought we would make it."
Today, O'Neil's publication, Investor's Business Daily, ranks among the nation's fastest-growing newspapers. Although small compared to the 1.82-million circulation Wall Street Journal, the paper continues to gain subscribers. Its circulation, now 177,000, is 22,000 higher than at the start of 1992.
"We are growing 500 to 1,000 (subscribers) a week," O'Neil said. He predicts the paper can reach its break-even point--a circulation of 235,000--by the end of next year.
A break-even proposition might not seem so terrific to those who have banked on O'Neil's stock tips for years. He has spent more than three decades as a financial analyst and investor and has a huge following through his paper, seminars and best-selling book.
But publishing is a struggle today. Even for the giants. Of the 20 largest newspapers in the country, according to the Audit Bureau of Circulations, only four posted readership gains--in all cases modest--during the first six months of 1993 compared to the same period in 1992.
Said newspaper analyst John Morton: "Apparently, they have appealed to a market."
O'Neil began publishing his newspaper--then called Investors Daily--in March, 1984, finishing the first year with a circulation of 25,000. After working out advertising and distribution bugs, the paper settled in for the long haul, refining its product with new investment features.
Using a financial research company, the newspaper began running stories and charts that gave experienced investors and beginners more analysis than they might otherwise receive in other daily publications.
Among the most popular features has been the earnings-per-share ranking that tells readers how companies have compared in profitability over the past five years. The so-called EPS rankings run from 1 to 99--the number reflecting what percentage of companies the stock in question has outperformed. A company with a 70 ranking, for example, has outpaced 70% of all companies listed within the past five years.
There also are a number of standing features on national issues, the economy and investors, and a section dubbed Leaders and Success.
Gauging the newspaper's performance, however, remains difficult, even for those who are in the business of analyzing the industry.
Morton, an analyst with Washington-based Lynch, Jones and Ryan, says that despite the steady circulation gains posted by Investor's Business Daily, the fact that it has not reached a break-even point must be taken into account.
"Until they start making money, I am not sure you can say they have a carved out a niche, or at least a profitable one," he said.
But Morton added that Investor's Business Daily--like papers such as USA Today and large metropolitan dailies--seems to have eaten into the Wall Street Journal's huge readership by stressing more consumer-oriented coverage.
"It's been kind of a truism in the newspaper business that if a market is already well-served by a paper, it is difficult for a new one to come along and displace it or even make much of an inroad," Morton said. "Generally to do anything, you have to become more of a specialized publication. You can't come in otherwise and expect to do something against a Goliath," like the Wall Street Journal.
Based on its circulation gains, Morton says, Investor's Business Daily has learned that lesson.
The newspaper's executives acknowledge what many analysts have long observed: The Wall Street Journal may be the best written and edited newspaper in the country. But they are competing hard to lure Journal readers. This month, they say, Investor's Business Daily will increase its editorial staff of 40 writers and editors by 20% to 25%.
In the long term, the newspaper is betting it will benefit as Southern California--bolstered in part by links to fast-growing Pacific Rim countries--becomes an increasingly important economic center.
"We think the world is tilting this way (and) New York will become less and less important as a city," said Wes Mann, who joined the paper at its inception as a reporter and now is its editor. "It is the financial center, yes, and the publishing center of the country. But we don't think it is unnatural to have a financial publication outside of New York."
Investor's Business Daily has made major circulation gains in the past decade. It's betting that it can compete with the Wall Street Journal.
Source: Audit Bureau of Circulations and Investor's Business Daily