Turmoil at Dow Jones as share price flags

The US financial information group is facing a revolt over spending on Telerate, writes David Usborne in New York
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The Independent Online
More used to being a purveyor of the news rather than a subject of it, the Dow Jones company, publisher of the Wall Street Journal, is attracting shrill headlines about its flagging stock price and unrest among its shareholders.

Uncertainty about the future of the company, which also owns the Telerate global financial information service, has even led to media reports that it could be about to fall prey to one of its biggest rivals, Reuters of the UK.

The woes at Dow Jones centre on its share price which has long been stuck at around the $39 (pounds 24m) mark, well below its peak achieved 10 years ago.

The disappointing share performance has led to widely publicised sniping from two members of the Bancroft family that founded and still controls the company, William Cox III and his cousin, Elisabeth Goth.

Last week saw the sudden resignation from the company payroll of Mr Cox, who had been in charge of Dow Jones' global stock indices. While Mr Cox gave no official reason for his decision, he indicated that it would liberate him to fight for a change of direction in management.

Most urgently at issue is the fate of Telerate, which has been falling behind the rival global services of Reuters and Bloomberg. Stock of Dow Jones took a beating in late January after the company announced that it would spend $650m trying to revive the sagging service. Many investors had been hoping instead for a decision to dump Telerate.

Fortune magazine, meanwhile, recently revealed that the prominent New York money manager Michael Price has amassed 5.4 per cent of Dow Jones stock. The magazine last week tried to capitalise on its scoop by placing an advertisement in the Wall Street Journal. Dow Jones refused to print it, however.

Mr Price has since spoken out about his disappointment with the decision to spend more money on Telerate and is expected to push for new additions to the Dow Jones board at its annual shareholders' meeting in April. "Hopefully, there will be some smart people in there," he said.

There has been no confirmation, however, of Reuters or any other competitor exploring a hostile buyout. Members of the Bancroft family, Mr Cox included, have declared themselves unified in wishing to keep the company independent. "I would like to see Dow Jones independent, but the best way to do that is to good corporate governance," Mr Cox remarked.

Of his own decision to quit his post, Mr Cox commented: "I think that it's the right route. It's difficult to work at the company and try to get better shareholder value." He added: "Obviously Michael Price is there and others are there because it's an underpriced stock."

Taking the heat in the dispute is the current chairman of Dow Jones, Peter Kann. A former Pulitzer Prize recipient and famed Vietnam war reporter, Mr Kann may be under pressure in April to spin off Telerate and cut the company's losses in it. There is no expectation, however, that his own position is at risk.