For the WSJ, it's not about making profits

Allan Sloan writes in his Newsweek column that any owner of The Wall Street Journal has to realize that the paper doesn’t make great profits. What’s more important is its journalism.

Sloan wrote, “No, the Journal’s not perfect. What is? But I love the Journal newsroom’s prickly independence. I saw the paper bend over backward in the 1980s to avoid favoring a member of Dow Jones’s board; I saw a top Journal editor, my friend Barney Calame, recuse himself from the Enron story after being contacted by a longtime acquaintance, Enron chief executive Ken Lay, who didn’t care for the paper’s groundbreaking coverage, and last year, of course, the Journal broke the news about hundreds of companies’ having improperly backdated stock options.

“But although journalistic coups and strict attention to journalistic ethics are what have attracted the Journal’s audience and built its brand value, the paper itself isn’t all that good a business anymore. The Journal was fat, happy and nicely profitable in the latter days of the 1990s stock-market bubble, as evanescent companies flush with money raised in the stock market bought ads right and left. As did the Wall Street houses that floated those bubblicious issues. When the bubble vaporized, so did the ads. Even though the broad stock market has recovered from the bust, the Journal’s ads still languish well below their highs. They’re unlikely to ever be what they were, given the fragmenting world of national advertising that has affected many mainstream national print publications, including my employer NEWSWEEK.

“One reason Dow Jones is so vulnerable to being taken over is that its cash cow—the electronic data distribution business—is threatened by the pending merger of Reuters and Thomson. Combine that prospect with the Journal’s profitability problems, and you see why Dow Jones is toast—at least financially.”

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