Although Pearson PLC is being called a possible ‘white knight’ bidder for Dow Jones & Co, many in the newsroom of the Wall Street Journal are not enthusiastic about being bought by the publisher of the Financial Times. Reporters at the Wall Street Journal, many of whom regard the Financial Times as an inferior paper with low-quality “Brit journo” standards of fact-checking and sourcing, are worried that ownership by Pearson will deteriorate journalistic standards at the paper, a source at the Journal told DealBreaker.
“I took a straw poll around the office. A lot of people are worried about what this will do to the Journal’s reporting,” the source said.
Word began to circulate late on Friday afternoon that General Electric and Financial Times publisher Pearson were “in talks” about a potential joint offer for Dow Jones & Co. Over the weekend, the story ran in the Financial Times, the Wall Street Journal and the New York Times. A decision on whether or not to make a bid is expected to come within days.
A news of a possible bid from Pearson and General Electric may have the ironic effect of making the bid from News Corp more attractive. While News Corp chairman Rupert Murdoch has promised to spend more on the Wall Street Journal, expand its international presence and has announced plans to launch a new cable news network for financial news that may give Journal reporters more outlets for their reporting, a bid from Pearson and General Electric would likely involve mostly cost-cutting synergies.
[After the jump, the not-exactly-surprising news that Journal reporters aren't totally psyched about working for the publishers of the Financial Times.]
The Financial Times is already a major presence in Europe, and it seems unlikely that Pearson would pour additional funds into expanding the Wall Street Journal’s competing Europe edition. In Asia, the Wall Street Journal brand is arguably the bigger name there. But this might just mean that Pearson would concentrate on building that up further, moving resources away from the FT’s Asian edition. In the US, it seems likely that Pearson would seek to use the resources of Dow Jones to reduce the costs of running its US desk. The Economist, which is 50% owned by Pearson, is also a competitor with Dow Jones’ Barron’s, and combining the resources of the two could also result in lost jobs at one or both publications. In short, the economics of the deal from a Pearson perspective look like they depend on reducing reporting and editing costs (read: jobs) around the world. Pearson might well be a white knight that rides in bearing pink slips.
General Electric’s interest in keeping Dow Jones out of the hands of Rupert Murdoch is clearly aimed at staving off competition for its CNBC network by the unborn Fox Business Channel. CNBC has long enjoyed a close relationship with the Wall Street Journal, whose reporters often appear on the network. Although the Journal and CNBC have a long term contract cementing this relationship, we’re told the arrangement is not exclusive—meaning Journal reporters and stories may also be carried on the new Fox channel. But the fear of Fox goes deeper than that at CNBC, where executives worry that a Fox Business Channel would be a far great competitive challenger if it could leverage the credibility of the Journal.
The long time rivalry between the Financial Times and the Wall Street Journal means that it is unlikely that a bid from any partnership involving Pearson would be greeted with hosannas. The news room at the Journal considers its product far superior to the Financial Times, which is regards are too quick to print poorly substantiated and sparsely sourced rumors.
“The good news is that if we get bought by the FT, I’ll never have to make more than two phone calls on a story,” one reporter said.
Not everyone agrees that the Financial Times has markedly lower standards of journalism than that Journal. Others in the financial media dismissed these criticisms as a result of the years of bitter competition.
"Frankly, I think the Journal is a bit stodgy. The FT has more energy to it these days. The boys at the Journal could learn a few things from the fellas at FT," one former Wall Street Journal staffer told us.
Perhaps more importantly, it's not clear that shareholders in Pearson will tolerate any offer for Dow Jones that includes an even larger premium than what News Corp has already put on the table. For this reason, we're not moving the needle on the Murdoch Meter.
GE and Pearson Discuss Joint Bid For Dow Jones [Wall Street Journal]
GE considers joint Dow Jones bid [Financial Times]
Pearson Is Said to Seek a Partner for a Takeover of Dow Jones [New York Times]
Stop the presses! Are the Bancrofts going to put their money where their mouths are? [BloggingStocks.com]
Towel Talk: Can GE and Pearson beat Murdoch? [BlogginStocks.com]