After suffering years of losses in pursuit of bigger audiences, Dow Jones & Co. and NBC announced plans Tuesday to join forces in business news ventures on TV in the United States, Europe and Asia.
The marriage linking some of the best-known names in business journalism, such as The Wall Street Journal, the Dow Jones news wires and CNBC, should enable the two companies to cut their financial losses, combine their editorial and technological expertise and take better advantage of the growing popularity of business news.
“This truly transforms business television in the United States and around the world,” said Peter Kann, chairman and chief executive of Dow Jones. “It brings television . . . even closer to the global village of the worldwide business community.”
Specifically, Dow Jones and NBC, owned by General Electric Co., will combine their money-losing Asian and European business TV units. Although Robert Wright, NBC president and chief executive, characterized NBC’s losses only as “larger than a mortgage but smaller than a GNP,” Wall Street analysts estimate the network is losing $15 million to $25 million a year in Europe and Asia, while Dow Jones is losing about $50 million on its overall TV operation.
In the U.S., the two companies will team up to create business news programming and cross-promote each other’s services on CNBC, MSNBC and on the Internet, using the immediacy of television with the in-depth editorial expertise of The Wall Street Journal. Financial details were not revealed, although Wright said the network will pay a licensing fee to Dow Jones over a 15-year period for editorial content.
“Obviously, this is a positive for Dow Jones. It helps them scale up in the global financial television market and enables them to lower their costs,” said PaineWebber analyst William Drewry. “And it removes a bit of a question mark for Dow Jones’ profitability.”
The announcement was made at Rockefeller Plaza, in the main studio of “Saturday Night Live,” one of NBC’s most successful creations. Although business news never will draw the audience of entertainment television, viewership for business news is growing as more people invest in the stock market.
Much as CNN’s ratings skyrocketed with the Persian Gulf war and the O.J. Simpson trial, the appetite for immediate business news is voracious during events like the Oct. 27 stock market plunge.
NBC and Dow Jones recognized this in 1991 and competed to buy the Financial News Network. NBC won the battle, paid $154 million for the cable channel and merged the operation with CNBC.
The market for business news, however, may not be big enough for everyone in it to prosper, which is why–at least on paper–the NBC/Dow Jones marriage makes economic sense.
Kann said it is not realistic to expect profits for both companies within six months, “but they will become profitable sooner than they would have as separate entities,” he said.
CNBC, which reaches 65 million U.S. homes and 150 million worldwide, will combine its European operation with Dow Jones’ European Business News to launch a new channel early next year that will be available full-time in 15 million homes and part-time in 50 million.
In Asia, the companies will merge CNBC Asia and Asia Business News. The combined service, which also will be available early next year, will be called CNBC and should reach about 10 million households full-time and 30 million on a part-time basis, NBC said.
“This brings us a whole complement of on-the-ground journalists,” said Wright, who predicted a ratings improvement for CNBC in the third quarter next year.
The agreement also calls for Dow Jones and CNBC to develop cable, satellite and other TV business news for MSNBC, the cable and Internet venture launched by NBC and Microsoft Corp. in 1996. Dow Jones will take a financial interest in MSNBC Business Video, which is co-owned by NBC and Microsoft.
As part of the cross-promotional plan, the MSNBC World Wide Web site will include highlights from The Wall Street Journal.
On Tuesday, General Electric stock gained $1.06, to $74.62, while Dow Jones shares lost 75 cents, to $53.87, both on the New York Stock Exchange.
