Histoire de Dow Jones page 1

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History of Dow Jones

In Mr. Barron's era, business news was considered parochial and dull. Mr. Barron and a
succession of Dow Jones editors and publishers would change those perceptions.
Using Linotype, ticker tape,printing presses, radio, television and bits and bytes, they would
prove that timely, reliable financial information was the fundamental currency of almost every
part of life, from building railroadsto buying kitchen sinks. At the same time, they would create
a profitable and principled corporation stretching around the world.

But Dow Jones would also have its share of failures, including The National Observer and
Telerate, and an insider-trading scandal. The family that largely controlled the company --
descendants of Jessie Barron and her daughter from a prior marriage, Jane (Mrs. Hugh)
Bancroft -- let the top executives run the business. But the family didn't always agree with
their decisions -- or with one another. Cautious and conservative, the company was often
behind the curve on developing new channels to deliver information. Recently, it sometimes
seemed as though Wall Street itselfhad turned against the company and its inert stock price.

Like most of their successors, for better and worse, Charles Dow and Edward Jones were
journalists first, businessmen second. They had been working for a Wall Street information
broker for two years when they and a third partner, Charles Bergstresser, decided to go into
the financial-news businessfor themselves. In 1882, they opened shop in the basement of a
lower Manhattan candy store,which is now home to the New York Stock Exchange.
Seven years later, The Wall Street Journal was born.

Mr. Dow, a reserved and tenacious reporter who took notes on his shirt cuffs, had already
earned the reputation as a man who got his quotes right. Mr. Jones was a high-spirited bon
vivant with a knack for analyzing financial reports.

In those days, a financial journalist was a combination private detective, stenographer and
gossip columnist. "Gathering news was a bare-knuckle business," wrote Oliver Gingold, who
joined Dow Jones in 1900 and stayed for six decades. "Many companies refused to issue
annual reports even to their own stockholders." Reporters spent long hours "waiting outside
directors' rooms or corporate offices for a chance at buttonholing an 'insider.'" Messengers
shadowing the reporters ran the news back to the office where scribes made carbon copies --
as many as 24 at a time -- that were hand delivered to subscribers.

What soon distinguished Dow Jones from its competitors was its revolutionary approach to
financial journalism: Instead of collaborating with companies and investors to manipulate the
financial markets -- and taking a piece of the action -- they would try to impartially distinguish
fact from rumor. From the beginning, they forbade their employees from investing in companies
they were covering (a rule sometimes observed in the breach). An early Wall Street Journal
motto was succinct but audacious:
"The truth in its proper use."

The early Journal was aimed explicitly at "operators, bankers and capitalists" who would find
in it "essential statistics compiled so that their pith and bearing can be readily remembered."
Much of its early coverage focused on the booming railroads; one news story was headlined,
"It Is Not True That the Railroad Trunk Lines Have Agreed to Pro-rate With the Western Roads."
For many years the Journal had no real competition, but its narrow focus and drab prose slowed
its circulation growth at a time when many American newspapers were growing rapidly.
The paper had 7,000 subscribers when Mr. Barron bought the company in 1902 for $130,000.
But Mr. Barron and many future editors and publishers liked the idea that their readers were
an elite class, wealthier, better educated and more influential than average. It meant the
company could charge both subscribers and advertisers a premium for joining the club.

Although opinion was banished from its news columns, the Journal published clearly marked
editorials commenting on political and economic disputes. William Hamilton, who became the
editorial-page editor in 1908, set the agenda: unfettered free-market capitalism. For the most
part, that meant supporting Republican political candidates and opposing taxes, trade barriers
and other "half-baked Socialist schemes," as Mr. Hamilton wrote.

"Wall Street has no prejudices," he said disingenuously. "It likes the man it can trust, as,
for instance, [Calvin] Coolidge. It merely wonders why the Democratic Party does not develop
the courage of its own convictions." Years later, President Harry S. Truman said,
"That Wall Street Journal is the Republican Bible."

Charles Dow's other lasting legacy was creating and branding a market statistic at a time
when many people thought the financial markets were so irrational or corrupt as to be
essentially chaotic. Mr. Dow thought the markets might be more like the ocean. Someone
"who wishes to know the exact spot which marks the high tide sets a stick in the sand at the
points reached by the incoming waves until the stick reaches a position where the waves do
not come up to it," he explained. He began publishing the combined average price of 11 stocks
-- mostly railroad companies -- in 1884. The Dow Jones average of 12 industrial stocks
appeared in 1896.

The company also expanded into the telegraph ticker business in 1897, promising fast and
simultaneous distribution of news to brokerage houses across the country. The ticker news
service, though traditionally a less-glamorous branch of the company than the newspaper,
has been its financial savior during some lean times.

Mr. Jones left Dow Jones in 1899 to join a brokerage house, where he could make more money
to fund the high life he so enjoyed. Mr. Dow, in failing health, sold the company to Mr. Barron
and his wife three years later.

Mr. Barron was the ideal steward for a company selling financial news when American
businesses, generating huge profits, were flexing their muscles. Ebullient and self-confident,
Mr. Barron expanded the paper's coverage while preserving its independence. As the paper
became more influential, market manipulators applied more pressure on Mr. Barron and his
staff, usually (but not always) with little effect. "I don't make or unmake enterprises,"
Mr. Barron wrote. "I only decide what enterprises we will give a chance to unmake
Dow Jones & Co. and The Wall Street Journal."

Mr. Barron also continued other Dow Jones traditions: using simple, spare prose that would
"economize the reader's time"; training the company's own staff; discouraging reporters
from being prima donnas; and warning employees that despite their long hours, they would never
get rich working for Dow Jones. During poor times, reporters would be told to take
"Scotch vacations" -- time off with no pay. But during the 1920s, as the Dow Jones
Industrial Average more than tripled to 381, the newspaper and its ticker service also flourished.

During the last years of his reign, Mr. Barron saw one of his longtime ideals coming true:
More ordinary Americans were investing in the stock market, buying a stake in the country's
growing wealth. When Mr. Barron died in October 1928, at the age of 73, the mood of the
U.S. was buoyant. "The outlook for the fall months seems brighter than at any time in recent
years," the Journal proclaimed in August 1929.

Even after Black Tuesday, Oct. 29, 1929, the worst selloff in stock-market history,
the Journal's page-one headline read, "Stocks Steady After Decline." But the company's
unshaken faith in the U.S. financial markets couldn't protect it from the Depression.
The company watched helplessly as customers and advertisers walked away. Circulation
of the Journal dropped by almost 50%, as did the number of pages per issue.

As Wall Street and the U.S. economy began rebounding in the late '30s and '40s, so did
Dow Jones. But the days when the stock market was a free-for-all for insiders and their dupes
were ending. The government was reining in the manipulators and leveling the playing field.
With better communication and transportation, companies were scaling local boundaries and
becoming regional or national. By the 1940s, a businessman in Portland, Maine, might want
the same financial news as a businessman in Portland, Ore., as Bernard ("Barney") Kilgore
liked to say.

Journal readers also wanted some relief from the gobbledygook of most financial reports.
They had found an ideal translator in Mr. Kilgore, a young Journal reporter who wrote a series
of columns called "Dear George," in which he tried to deconstruct financial news for a
hypothetical ordinary person. The popularity of these stories persuaded the Journal's
management that if they wanted to continue expanding their readership, they had to tell a
story. As Mr. Kilgore later said, "The easiest thing in the world for any reader to do is to
stop reading."

Mr. Kilgore became the Journal's managing editor in 1941 at the age of 32. For the next
25 years, he methodically rebuilt the paper from the ground up, increasing circulation from
33,000 to 1.1 million. Probably more than any editor before or since, Mr. Kilgore defined
the mission, culture and style of The Wall Street Journal, all in perfect tune with sweeping
changes in American business and society. "His perception was in seeing that the nation at
work is the same everywhere; labor, capital, enterprise -- and the problems that grow out
of all three -- are the tie that binds," said a Journal eulogy when Mr. Kilgore died in 1967.

Unassuming but intensely ambitious, Mr. Kilgore recognized that the Journal
could -- and should -- be more than a trade paper. It should appeal to "everyone who is
engaged in making a living or is interested in how other people make a living," he said.
In other words, don't write banking stories for bankers, write for the banks' customers.
Brokers are nice people, he said, there just aren't enough of them to keep a first-class
newspaper afloat. He also joked that he had written a headline that could top almost any
story the paper published: "Giant Firm on the Rocks."

Most newspapers in Mr. Kilgore's era were worshipping at the altar of the five W's -- the
first sentence of a story would answer the questions who, what, where, when and why.
The style made for fast, objective stories, but sometimes left the reader puzzling over
what it all meant. Mr. Kilgore liked "situation" stories, which described an event or debate
and then appraised it from different angles. A situation "doesn't have to have happened
today to be news," he said.

He was also the architect of the paper's distinctive front page -- six almost unbroken columns
of type with no advertising -- which survived until 2006. Mr. Kilgore wanted the New York
and Pacific Coast editions of his "national newspaper" to look as much alike as possible,
which meant no photos because they couldn't be easily and clearly transmitted.
But better technology gradually enabled the company to set up printing plants and
reporting bureaus across the country.

Dow Jones earned more than $13 million in 1966, the last full year of Mr. Kilgore's
formal leadership, compared with some $211,000 in 1945, when he became
the company's president. But Mr. Kilgore was responsible for one high-profile business
failure. Hoping to attract younger readers -- the television generation -- in 1962 he started
a weekly general-interest newspaper, The National Observer, to cover "the business of living.
" Scrappy, unpredictable and highly polished, the Observer attracted a respectable
number of readers -- 560,000 at its peak in 1973 -- but could never make national advertisers
understand the value of a newspaper that seemed more like a magazine. Impatient with its
drag on earnings, Warren Phillips, chairman of Dow Jones, in 1977 announced that the
"long effort to make the Observer self-sufficient" hadn't succeeded. In its 15 years
of publication, the paper cost the company about $34 million.

Some people believed that if Mr. Kilgore hadn't died in 1967, at the age of 59, he would
have been able to save what he called his "baby." So iconic a figure was Mr. Kilgore in
the Dow Jones culture that succeeding generations of managers, encountering a new idea
or problem, asked themselves, "What would Barney do?"

But the Observer's demise was a small setback compared with the vitality of
The Wall Street Journal, which had become the largest paid-circulation newspaper in America.
Between 1966 and 1983, circulation more than doubled to 2.1 million. Advertising rates rose
more than 10% a year between 1977 and 1983, but advertisers didn't seem to mind.
Occasionally they had to be turned away because the Journal's presses were operating at
capacity. The staff expanded to cover such traditionally "noncore" subjects as law, real estate,
entertainment and health care. And if most Journal employees were still not going to get
rich even in the boom years, they enjoyed generous benefits.

Other media companies couldn't help but notice. Most publishers had traditionally considered
business a secondary topic, interesting only to a handful of readers. The topic of money and
how to invest it stepped out of the shadows. White-collar workers and wealthy retirees
had IRAs and tax shelters, zero-coupon bonds and reverse mortgages. Anyone who earned
an income had to become an amateur money manager. To maximize returns, they needed
information. Competitors -- Investor's Daily, Financial Times, Money magazine,
the New York Times, USA Today and eventually television -- set up shop in Dow Jones's
territory.

But something even more threatening to Dow Jones's supremacy was slowly advancing
into America's offices, including the Journal's own newsrooms: computers. Although the
Internet was still years away for most people, it was clear even in the 1980s that computers
were an extremely fast and efficient means of distributing information. In 1982,
Michael Bloomberg started a company offering a fast but user-friendly system of analyzing
and manipulating electronic securities data.

Although Dow Jones went public in 1963, the Bancrofts remained in control, and for the most
part kept their hands off the company except for taking dividend checks. They were almost
as protective of their executives as they were of their own family -- and they continued the
tradition, begun with Mr. Kilgore, of putting journalists in charge of the company. Mr. Phillips
rose from the copy desk to managing editor before serving as chief executive for 16 years;
his successor, Peter Kann, who won a Pulitzer Prize for his coverage of the 1971
India-Pakistan war, also held the position for 16 years until he reached mandatory retirement
age this year. The family accepted the leaner profit margins and sometimes big blunders
as unfortunate but pardonable.

And the chief executives returned the favors. In 1986, the company approved a new class of
shares for the Bancroft family that had 10 times the voting power of common shares.
This allowed family members to cash out some of their common shares while retaining
control. If the family stuck together, the thinking went, Dow Jones would be invulnerable
to hostile suitors. These actions buffered the company from corporate raiders, but also gave
its managers and directors a false sense of security. And management kept the family
happy with a steady flow of dividends.

It All Began in the Basement of a Candy Store
Dow Jones Saga Reflects The Forces That Shaped
The Wall Street Journal
By CYNTHIA CROSSEN - WSJ
August 1, 2007; Page B1

Clarence W. Barron's last words, a secretary reported, were, "What's the news?"
A newshound to his dying day, Mr. Barron believed something many of his contemporaries
scoffed at: You could make money selling news about business. Like the founders of
Dow Jones & Co., which Mr. Barron and his wife, Jessie, bought in 1902, he believed that
someday, financial news would be valuable even to people who didn't work on Wall Street.

Clarence Walker Barron

Everyone knew Dow Jones had to diversify. By the late '80s, it had become clear that the
Journal was not immune to business cycles. Furthermore, cable and computers were going
to sell financial information faster and cheaper than newspapers. What the Journal had that
so many competitors didn't was a superior product: Its information was valuable because it
was quick and dependable. It just needed to be repackaged. To take advantage of new
technology, Dow Jones needed to get into two businesses: electronic data publishing and
cable television. Despite spending hundreds of millions of dollars, Dow Jones didn't do
either successfully. Whether these failures were due to lack of nerve or poor execution,
the result was the same: Dow Jones was left behind.

In 1985, Dow Jones bought a 32% stake in Telerate. Founded in 1969, it was a leader in
the booming business of digital market data, particularly real-time prices of U.S. Treasury
securities, on which it had a virtual monopoly. The company had grown rapidly in the '70s,
supplying statistics to tens of thousands of dedicated terminals around the world.
In the early 1980s, the company reported annual earnings growth of more than 50%
for five straight years.

Even as the British news service Reuters was beginning to take some of Telerate's business,
Dow Jones continued to buy pieces of the company -- in 1987, Dow Jones raised its
stake to 56%, in 1988 to 67%, and in 1990, to total control. In all, Dow Jones paid
$1.6 billion for Telerate.

The two companies also turned out to be a ruinous mismatch. To hold its own with Reuters
and the wunderkind Bloomberg, Telerate would have to be imaginative, nimble and focused.
And it would have to invest millions more in developing new programs for managing data.
But Dow Jones executives had little experience with that kind of work. While Reuters and
Bloomberg were plowing millions back into their systems, Dow Jones was using Telerate
to beef up the company's bottom line.

Although Dow Jones finally realized Telerate needed a massive infusion of capital if it was
to remain competitive -- in 1997 it budgeted $650 million for a complete overhaul
-- it was too late. Bloomberg and Reuters had eclipsed Telerate. By 1998, when Dow Jones
sold the division, it had cost the company more than $1 billion.

The company's attempts to get into television were less costly but equally fruitless.
In early 1991, Dow Jones, in partnership with Westinghouse Broadcasting Co., agreed
to buy the ailing Financial News Network for about $90 million. It was an agreement in
principle only, and before it was consummated, General Electric Co.'s cable news service,
CNBC, offered $105 million, which the FNN promptly accepted.

Dow Jones and Westinghouse called foul, and a brisk bidding war ensued. When the dust
settled, CNBC owned FNN, and Dow Jones was still looking for a way to get into television.

In 1996, in partnership with ITT, Dow Jones bought WNYC-TV from New York City for
$207 million, and started WBIS. Perhaps because it had been outbid for FNN, Dow Jones
lavished millions of dollars on the project, hiring an expensive staff and building a
state-of-the-art television studio. Only a year later, Dow Jones and ITT sold WBIS for
$257.5 million, and laid off some 250 employees. That year, 1997, Dow Jones reported its
first annual loss.

Other large, traditional newspapers were also struggling. Newsprint, staff and distribution
were all expensive compared with electronic information. Advertisers and subscribers had
more choices about where to spend their money and time. But even by comparison with its
cohort, Dow Jones's profit margins were thin. Except for its profitable interactive edition,
WSJ.com (which now has 980,000 paid subscribers), there appeared to be no engines of
growth for the company, while its core product was struggling. The Journal remained one
of the largest and most respected newspapers in the country, but Dow Jones as a whole
seemed to have no clear idea of how to leverage its brand.

In the late 1990s, two sets of Dow Jones stockholders -- one from Wall Street and one from
the Bancroft family -- began agitating for change. From Wall Street, money managers Michael
Price and James Cramer, acting separately, acquired nearly 6% of the outstanding shares.
They weren't the kinds of investors who waited uncomplainingly for assets to appreciate.

Two young members of the Bancroft family, Elisabeth Goth and William Cox III, also decided
they could no longer rubber-stamp the decisions of the company's management and board.
In interviews for several newspaper and magazine articles, they made it clear they expected
more from their trust fund than they were getting.

But the rest of the family and the board hunkered down and waited for the threat to pass,
and it did. Only months after buying his Dow Jones stake, Mr. Cramer sold it, telling the
New York Times, "I'm discouraged. I'm going elsewhere." And the senior Bancrofts effectively
quashed the young cousins' rebellion.

Although Dow Jones stock performed poorly in recent years, the company was far from
death's door. Under Norman Pearlstine, the Journal's managing editor between 1983 and
1991, and his successor, Paul E. Steiger, the Journal was reinvented again. The paper added
color and photographs, grew to four sections and added a Saturday edition.

The Journal newsroom on Sept. 18, 2001, one week after the fall of the Twin Towers
The Journal's news department won 16 Pulitzer Prizes during Mr. Steiger's tenure, including
one for its breaking-news coverage of the Sept. 11, 2001, terrorist attacks -- even though
its own office was covered in debris from the collapse of the World Trade Center across
the street. Reporters and editors decamped to Dow Jones headquarters in South Brunswick, N.J.,
to produce the paper that day, and many remained there for nearly a year before the
New York office was habitable again.

Into the new millennium, readers and journalists alike continued to consider the Journal one
of the best-written, best-reported newspapers in the country. Deputy Managing Editor
Byron E. ("Barney") Calame, who retired in 2005, kept such a stern watch over the paper's
ethics and language that editors debating a questionable quote or assertion once again asked
themselves: "What would Barney do?"

The Journal's new sections -- the Weekend Journal and the Personal Journal -- and the
Saturday edition were created to expand readership and attract consumer advertising.
During the dot-com bubble, advertising was strong, and Dow Jones's stock price jumped to
more than $70 a share in 2000.

But when that bubble burst, Dow Jones, and particularly The Wall Street Journal, was hit hard.
For the fourth quarter of 2001, Dow Jones's earnings fell more than 60% from a year earlier.
Since then, ad revenue and circulation growth at the Journal have stalled. The company
has trimmed expenses as well as the physical size of the paper and, for the first time since
Mr. Kilgore banned the practice, sold advertising space on its front page. It also expanded
its electronic portfolio by acquiring MarketWatch, an online financial news service, in 2005.
With the mandatory retirement of both the company's chairman, Mr. Kann, and the managing
editor, Mr. Steiger, this year, the company presented a tempting target to the right buyer.

Now, Rupert Murdoch becomes the heir to the credo posted on Clarence Barron's office wall
a century ago: "The Wall Street Journal must stand for the best that is in Wall Street and
reflect that which is best in United States finance."

Write to Cynthia Crossen at cynthia.crossen@wsj.com