| NEW YORK
NEW YORK Feb 4 Lex Fenwick's surprise exit from
Dow Jones came after some banks and other financial clients
balked at the former chief executive's ambitious new product,
DJX, which sent sales tumbling, according to people familiar
with the matter.
Several sources said institutional sales have dropped
significantly since the April 2013 launch of DJX, a single
Web-based platform that bundles together Dow Jones Newswires,
Factiva, the Wall Street Journal and other Dow Jones products
for institutional customers.
DJX's rigid pricing structure left little room for
negotiation, and alienated some retail brokerages, banks and
other financial institutions that prefer to cherry pick products
and bargain on price, said the sources, who include Dow Jones
customers. They did not want to be identified because they were
not authorized to speak publicly about the company.
Dow Jones' institutional revenue fell by $11 million in the
three months ended Sept. 30, according to the fiscal first
quarter results of parent News Corp, which did not
provide the total figure. Figures for the December quarter have
not been disclosed ahead of News Corp's results report on
A spokeswoman for News Corp declined to comment on Fenwick
or the sales performance of DJX, which is still in beta. Fenwick
did not respond to emailed requests for comment.
When Fenwick's departure was announced on Jan. 21, News Corp
CEO Robert Thomson said in a statement that the company was
reviewing its institutional strategy and planning improvements
to DJX. News Corp did not give a reason for why Fenwick was
leaving less than two years after joining, and it is not clear
if DJX's performance was the key issue.
"We're identifying how best to improve DJX, including making
the product more flexible in order to better serve customers,"
said Ashley Huston, a spokeswoman for News Corp. "We'll have
more specific details on this, including product announcements,
in the very near future."
Some analysts said Fenwick's departure was a signal to
investors to brace for weak quarterly numbers from Dow Jones
when News Corp reports results on Feb. 6. Since News Corp split
off its more lucrative entertainment and cable properties into
21st Century Fox Inc last year, Dow Jones is among the
most important profit generators for the global publishing
"The reaction to one-product-and-one-price strategy was
largely negative," said Ken Doctor, an analyst at Outsell
Still, Doctor noted that Fenwick should get credit for
tightening a pricing structure that was too loose, as well as
raising subscription prices at The Wall Street Journal, which
has historically cost less than the New York Times.
The Journal's circulation revenue rose by $9 million in the
September quarter, according to News Corp, which did not give
the total circulation revenue.
Dow Jones contributes about 27 percent of News Corp's
earnings before interest, taxes, depreciation, and amortization
(EBITDA), according to Evercore Research estimates.
Evercore forecasts News Corp will report a 6 percent decline
in total revenue to $2.18 billion for the December quarter.
Total revenue had fallen a steeper-than-expected 3 percent in
the September quarter.
Shares of News Corp have fallen about 7 percent since news
of Fenwick's departure, roughly in line with the broader market.
ONE PLATFORM, ONE PRICE
Fenwick, a 25-year veteran of Bloomberg LP, was appointed
Dow Jones CEO in February 2012 and assigned with fixing the
troubled institutional part of Dow Jones' business that was
losing market share to competitors such as Bloomberg and Thomson
Reuters Corp .
His overhaul came at a difficult time in the marketplace,
with banks under pressure to cut costs. Other financial
information providers struggled as well. For instance,
cancellations of Thomson Reuters' terminals had outpaced new
sales in recent years, and only started to turn around in the
third quarter of 2013. Sales growth at Bloomberg
has also slowed over the past two years but has picked up in
When Fenwick was CEO of Bloomberg from 2001 to 2008, he was
praised for doubling revenue to $6 billion, though he was also
criticized for being abrasive and mercurial. ()
After joining Dow Jones, Fenwick brought over some Bloomberg
executives and adopted its one-size-fits-all product and pricing
strategy. But that strategy angered some Dow Jones' clients.
"It was a very risky move trying to take a bunch of
well-established products that are not growing that rapidly with
established customer bases and merge them into one platform in a
market that is not growing," Evercore Research analyst Doug
DJX costs $249 per month but could go up to $399 per month
depending on how much a subscriber uses Factiva, said an
investment banker familiar with the pricing. The banker said
that was more than two-and-a-half times what the firm previously
paid for Factiva alone.
Another source familiar with Dow Jones said that before DJX,
clients paid anywhere between $15 and $200 per person per month
for Dow Jones Newswires. Given that wide range, it made sense
for Fenwick to try to bring all the products on to one platform
and standardize pricing, the source said.
Dow Jones' interim CEO, William Lewis, said in a staff memo
that it was a "clear priority" to review the company's
"We have created a DJX task force with cross-company
representation in order to carve out next steps. This team has
been working hard with input from many people. We look forward
to sharing the outcome with you shortly and to working more
closely with our institutional customers," Lewis said in the