Watching MarketWatch's future
Most eyes are trained on what Rupert Murdoch will do with the Wall Street Journal, but Dow Jones operates another online business publication that might fit nicely with News Corp plans.
SAN FRANCISCO (Fortune) -- Among the prizes that Rupert Murdoch gets when the Dow Jones deal closes next month will be a highly trafficked Web site that could boost his fledgling Fox Business Network - and it has nothing to do with the Wall Street Journal.
MarketWatch.com, the fifth most popular financial site on the Web, according to Hitwise, remains a largely unexplored part of the Dow Jones deal. In 2004, when Dow Jones bought the company for half a billion dollars, MarketWatch was running a profitable $80 million a year business. With traffic up, and the online ad market booming since then, the figure is presumably higher, although Dow Jones doesn't break out the numbers.
The big question for MarketWatch is what will happen if Murdoch follows through on his plan to give away the Journal's stories online for free -- a plan that looks increasingly likely, even as some at the Journal resist. Journal executives have plenty of obvious reasons to dislike the deal, most notably the loss of at least $50 million in online revenue, and the likelihood that some print readers would cancel their subscriptions if they could get the paper for free online.
Pain from the move could ripple throughout Dow Jones (Charts). The company's Factiva unit runs one of the few research databases that offer Journal content. Dow Jones Newswires also re-sell Journal stories. It could even de-rail Dow's deal with Barry Diller's IAC (Charts, Fortune 500), to build a personal finance portal, FiLife.com, which has launched in blog form and says it plans a full launch by the end of this year.
MarketWatch itself could also be threatened by the move. After all, is there any point in having two free financial news sites, MarketWatch and WSJ.com? "I don't see what positioning MarketWatch can have if there's a free WSJ.com," says Rafat Ali, editor and CEO of PaidContent.org.
In an interview last month, David Callaway, MarketWatch's editor in chief, said he had had preliminary discussions with News Corp., but would not comment for this story. (News Corp. and Dow Jones declined to comment as well, citing the deal's pending close. The Dow Jones shareholder vote on Dec. 13 should be the last big hurdle for Murdoch.)
Last month, however, Callaway noted to me: "I've always been firmly on the side of eyeballs. That's what helped build our brand."
And a free Journal site wouldn't necessarily hurt MarketWatch, according to MarketWatch's co-founder and former CEO, Larry Kramer. "One of the reasons it may mean less than you think is that MarketWatch and the Journal are two different businesses," Kramer says. "MarketWatch is a real-time Web site geared to investors. WSJ is not real-time, although it's more real-time than it used to be, but it's an analysis play. It's very different than what MarketWatch is."
MarketWatch's monthly unique visitors rose 16.9 percent, to 17 million, and its monthly page views were up 40 percent to nearly 248 million, according to Dow Jones's most recent SEC filing (figures published by outside measuring firms are lower). That's fewer visitors than the Journal's site, but nearly twice its page views, according to the company filing.
Dow Jones bought MarketWatch specifically because the subscription Journal site did not have enough inventory to accommodate the rising online advertising demand, while the free MarketWatch site had millions of pages. Kramer says that Murdoch would be wise to meld MarketWatch with the Fox Business Network, which went on the air in October. He told Murdoch as much in a lunch at News Corp.'s midtown Manhattan headquarters this summer. "I know that's being discussed internally," says Kramer, who is now a senior advisor to Polaris Venture Partners. "Why not? It brings the real-time aspects together in one place, MarketWatch and Fox Business News."
In addition, MarketWatch has some experience partnering with big media, although with mixed results. A joint venture with the Financial Times fizzled - a victim, Kramer argues, of the bursting dot-com ad market in 2001. More successful was a system whereby MarketWatch provided material to affiliates of CBS - its original owner - which generated both revenue and attention for the site. Kramer says MarketWatch could not only juice Fox Business News's Web site, but its reporters could also contribute on the air.
No matter what happens to the Journal, it seems likely that online news will play an increasingly large role in the Murdoch-owned Dow Jones. Although the Journal today makes up the bulk of Dow Jones' consumer revenues, that may not always be the case. Murdoch began his career owning newspapers, but print media now accounts for only one-fifth of News Corp.'s revenue, according to news industry analyst Ken Doctor with the market research firm Outsell. "He knows as well as anybody that news is a mature business," Doctor says. "It's not going to grow much."
Which is why he's made significant bets with MySpace and other online ventures, and is probably why he's looking at changing the Journal's online business model. In the meantime, Murdoch's got to figure out how to make best use of the free business news site he is about to own.