Hold on, it’s going to be a bumpy ride.
That’s the message I
got out of Dow Jones’ recent fourth-quarter earnings announcement. Sure, Dow
Jones’ numbers were better than what we’ve seen coming out of the industry
yesterday. But I noticed the news placed politely in paragraph six (of seven)
in the Wall Street Journal’s own story: Dow Jones
will no longer provide
upfront quarterly guidance, opting for an annual outlook. “This change is
consistent with the company’s focus on long-term performance.”
Indeed. It’s a good idea, and you can bet Dow Jones CEO Rich
Zannino would even prefer a quadrennial reporting, rather than annual. Why? While
Dow Jones is among the leaders in rapidly re-thinking and restructuring the
print and digital products it produces, its leaders well know that the
restructuring is an open-ended one, one likely to take three to five years to
work well. But it’s largely uncharted territory; let’s call it Terra
Incogdigito, a place of potholed expressways and hazy destinations.
Sure, what it’s doing makes a lot of sense – giving room and resources to Consumer head Gordon Crovitz and Enterprise head Clare Hart -- to re-org and meet changing readers’ habits. It’s become a joke around the WSJ newsroom how each Page One must have at least one How or Why head – pushing the second-day, analysis angle of the print product. Sure, editors may be pushing hard, but you know the message is kicking him. Compare that push, which may be a bit too pushy at times, to most dailies, which still believe they are newspapers of record. They believe they announce the news – news that has already been announced by MSN, the Huffington Post and DayLife the day before.
But Dow Jones has little illusion. Rich Zannino told an SIIA audience today that he hopes to move his company from a 70%+ print revenue reliance to less than 50% -- without reducing print revenues. (For more SIIA conference coverage, check out David Scott, John Blossom and Barry Graubart.)
As the switch from mainly print/little digital (in revenue) to mainly digital/somewhat print happens, the big question is how much revenue there will be at the end of the rainbow. It won’t be purely “advertising”, but revenue derived from DJ’s well-moneyed readers through behaviorally tracked lead generation – and generations of more efficiently selling stuff beyond that.
Of course, how much merchants will pay for the privilege of getting to those DJ customers is the unanswerable question. When you study Dow Jones' relatively rosy 2006 numbers, you see that though print ad revenues are up, volume is challenged, flat-lining at best. That means Dow Jones has been able to price up -- for now -- to provide access to its readers. Will it continue to be able to price, in the headwind of new ad schemes competing for dollars?
And will that revenue be enough to get from here to there, as the outlines of Terra Incogdigito take more recognizable form?
ADDENDUM: Excellent Herb Greenberg column on ins and outs of company forecasts and advisories, here.