Former Wall Street Journal managing editor Norman Pearlstine, speaking at the PriceWaterhouseCoopers media conference in New York on Tuesday, said he doesn’t beliebe that the newspaper’s brand name will transfer well to television if News Corp. CEO Rupert Murdoch decides to use the paper to help launch Fox Business Channel.
Paul LaMonica, who covers the business of the media for CNNMoney.com, wrote, “Pearlstine said he thinks the WSJ won’t help Murdoch’s plan to start a new business channel since he believes the WSJ brand name won’t necessarily translate to television. He added that if Dow Jones was really such an important asset, then GE, Pearson (PSO), which owns the Financial Times and also thought about a Dow Jones bid before backing out, or even McGraw-Hill (MHP), which owns BusinessWeek and Standard & Poor’s, should have been willing to match, or even top, Murdoch’s bid.
“‘There are some obvious people out there that could have done a deal. You would think Dow Jones would be more valuable to GE in order to protect CNBC,’ Pearlstine said, also noting that private equity shops have been notably absent in the recent round of newspaper consolidation, suggesting that the newspaper publishing business is not that attractive.
“Laura Martin, founder and CEO of Media Metrics, a sell-side research firm that covers media companies, agreed with Pearlstine. She has a ‘sell’ rating on News Corp. and said that a deal for Dow Jones would ‘destroy value’ for News Corp. shareholders. Her argument is that by adding Dow Jones, News Corp. will increase its exposure to the slow-growth newspaper business.
“And even though Martin conceded that Murdoch is a visionary who may have a bold multi-year plan for Dow Jones, she thinks that hedge funds and other investors won’t have the patience to tolerate the drag on profits in the short-term that a Dow Jones deal is likely to create.”
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