Brad's Numbers: All Over the Board

Well, we don't have to wonder what Brad Greenspan is proposing to the Bancroft family and Dow Jones; we just have to wonder who really is behind him.

His latest foray seems a bit desperate -- an open letter issued a couple of hours ago. But the value of an open letter is you see the thinking in detail.

In brief, he proposes to loan family members (presumably the Christopher Bancroft Wing) $400-600 million so that they can buy out Bancrofts who want out, but want their $60 a share, a number that looks like it has become a new birthright. The Bancrofts could then say no to Rupert and lead a recapitalization of the company -- borrowing more money -- and buying back 50% of outstanding shares at that golden $60 a share number. Then they'd take on another $500 million in debt to greatly expand Dow Jones digital businesses. Greenspan talks about leaving the print crown jewels alone, and creating two big new ventures, one a free (non-subscription) WSJ website, heavy on ads and ad-supported video and secondly, pulling a page from Murdoch's book, a third (after CNBC and the to-be-launched-in-October Fox Business News Channel) cable/satellite/Internet-delivered business news channel.

Okay, some good ideas, some poor assumptions, lots of ways to go with this. A few thoughts:

* In a number of ways Greenspan's plan is a reaffirmation of the current Dow Jones plan, energized by investment, but burdened by additional debt. The Crovitz news plan has been moving toward this kind of print/digital future.
* The kind of free-to-public, video-forward site he's pitching is one that's already out there -- it's called Marketwatch and it's owned by Dow Jones. The branding question is an interesting one and has been wrestled with within DJ, about what the MarketWatch brand means and what the WSJ brand means and how a smart company can nest the two. That does need better resolution, but importantly the product is in place. How Marketwatch gets fed with WSJ and Dow Jones content in ways that leverages that authority better is a valid question.
* Greenspan says his plan will move the share price to $100. I don't think so. The second page of Brad's open letter, "Assuming stable performance from the existing businesses...." Unfortunately, that can't be done. Print's not stable; it's in decline. So while there's much upside to online, inevitably the online line goes up as the print goes down. Dow Jones with 40% digital revenue is in better shape to make a fuller transition, but remember that much of that digital income is on the B2B side, not the B2C WSJ.
* How many video views can an open site generate? Yes, WSJ video rates have climbed to $90 and a new Marketwatch on steroids could fetch closer to $50 than the $30 cpms Greenspan has in the plan. But inventory is the problem. The public likes web video, but how much will it watch -- how much does the subject matter itself lend itself to video, when you consider the value of written analysis and data? So is his projection of 10 billion annual video page views by 2009 a tad high?
* His re-capitalization offers relief to 50% of the shareholders. How about the rest, and what legal actions would the board/Bancrofts have to deal with, if they go that route?