As rumors engulf Dow Jones, chairman Kann makes his case
Mar. 31, 1997
NEW YORK (AP) _ Peter Kann knows well the power of The Buzz. As a young Wall Street Journal correspondent in wartime Vietnam, Kann took it upon himself to start a bogus rumor _ just to see what would happen.
He no longer remembers exactly what story he spun, but Kann says he embarked upon the mischievous adventure by telling his tale to three people, either members of the Saigon press corps or hangers-on.
``Within two days, I had that coming back from people all over the place,'' Kann recounts. Perhaps it's a little poetic justice, then, that the chairman of Dow Jones & Co. is now under intense scrutiny himself, with every form of fact and fiction about the company and its management finding its way to the public eye with astonishing speed.
``It's more fun,'' Kann concedes with a chuckle, ``covering others than being covered.''
Oh, how Dow Jones has been covered. The story began, as many do, with a few lines here and there. Last October, Dow Jones reported overall third-quarter profits rose 20 percent but earnings from its financial information services unit, which includes the Dow Jones Telerate electronic information business, fell 32 percent.
Next, Kann told an auditorium full of analysts and journalists in December that Telerate, today called Dow Jones Markets, was the primary reason for ``mildly disappointing'' 1996 results.
The media attention intensified in mid-January, when Fortune magazine reported that an heiress of the Bancroft family that controls Dow Jones, with a cousin, had started a mini-revolt over the company's sagging stock price. Since then, it's been story after story, complete with a couple of buyout rumors and a would-be coup.
Dow Jones, which in addition to Telerate owns the Journal, Barron's, Smart Money, electronic news services and a group of community newspapers, appeared an unlikely candidate for the kind of scrutiny usually reserved for media companies owned by the likes of Ted Turner and Rupert Murdoch.
Kann, watching the story unfold from his spacious office on the 17th floor of Dow Jones' headquarters on Liberty Street in lower Manhattan, feels the clamorous coverage is underplaying some important facts.
``The two family members who are critical, together, have substantially less than 1 percent of the stock, which is not a fact that I see very often mentioned,'' he says. ``They're entitled to their views, but I guess context would probably say how much do those views matter?''
On the Telerate side, where a $650 million overhaul Kann initiated has drawn sharp criticism from the dissident family members and some on Wall Street, Kann also sees room for more context.
Some points tend to get lost, he says. Examples: ``That this has been a very good business for the company, that it's strategically central to this company, that it's been very profitable.'' He also notes that during the publishing recession of the early 1990s, when the Journal was struggling, Telerate was performing well.
Most recently though, Telerate, which provides financial data like bond quotes and prices for commodities like oil and natural gas, has encountered tough competition from Bloomberg and Reuters. Amid the banging of drums from critics for a spin-off of Telerate, Kann refuses to sell. Telerate, he says, is a central part of Dow Jones' effort to be a global provider of business news and information.
Vincent Loud and Hubbard Morris, two big Telerate customers, can attest to Kann's desire to turn the business around. Loud and Morris attended a two-day meeting on Feb. 27-28 in Orlando, Fla., where Telerate solicited their thoughts on the restructuring.
Both men were surprised.
``There's no precedent for it. I've never gone to an off-site event with Dow Jones of this nature before. We've dealt with them for over 10 years,'' says Morris, manager of administrative services for the bond-dealer group of Wachovia Corp., a big southern banking company.
Loud, manager of information systems for Phibro, the commodities trading business of Wall Street's Salomon Inc., said: ``It's the first time I've seen a vendor in a long time ask the customer what he needs, rather then tell him.''
If Telerate managers are re-energized as Loud and Morris suggest, it's because they need to be. Telerate's electronic boxes, which bring the service's data to the desktops of traders and analysts, are based on 1970s technology, making them cumbersome to use. Telerate has lost market share during one of the greatest bull markets in history.
Dow Jones' boss allows that he should have moved sooner and more forcefully, but apparently as time ticked away and Telerate fell behind nobody brought the problem into focus.
Kann's own Telerate workstation sits on a bookcase in his office, next to the TV and a good distance from his desk. In contrast, the Pulitzer Prize-winning reporter keeps an old manual typewriter well within reach, along with his word processing terminal.
Kann, now 54, has spent a chunk of his time during the past few months quelling rumors and clarifying his company's positions, perhaps more than he would have liked.
A Business Week story in late January had Reuters exploring a merger or other combination with Dow Jones. Dow Jones called it ``nonsense.'' A New Yorker story in March had General Electric interested in taking a big stake in Dow Jones. Dow Jones declined to comment ``on speculation.''
William Cox III, one of the dissident Bancroft shareholders, called for retired ABC chief Thomas Murphy to take over as Dow Jones' chief executive, despite the fact that Cox does not work at the company or sit on the Dow Jones' board, as do four other family members. Murphy replied through a spokesman that he was happily retired.
Dow Jones shares have vacillated wildly with each piece of news.
It would be hard to argue that the critics haven't unearthed some real problems, like the company's stock price, which stands at levels of 10 years ago. It has, however, made some headway since January, when Fortune first made the dissident shareholders's views public.
Amid that backdrop, Dow Jones' upcoming shareholder meeting on April 16 promises to be a lively affair.
Its chairman and CEO, however, says he's not particularly disturbed by the critics circling. He plans to push ahead with his blueprint for a new Telerate. ``I don't take this stuff personally, really,'' Kann says. ``I'm in this job by my own choice.''