Murdoch Loves To Put The Cat Among The Pigeons Which Is What Selling The WSJ US Edition In London Does, But The Newspaper That Should Be Most Worried Is Not The FT As Many have Suggested But Rather The IHT

Philip M. Stone April 3, 2008

The Wall Street Journal’s announcement that is to start selling its US edition (USWSJ) in London starting April 16 is a masterstroke but whereas many people seem to consider this a direct attack on the Financial Times in its home city the people who should really be watching and worrying about this the most are across the English Channel in the Paris suburb of Neuilly, the home of the New York Times owned International Herald Tribune (IHT).

For it is the IHT that could be hit hard if the USWSJ does well in London and then expands elsewhere in Europe. And, of course, there is always the question of whether there is a need for two WSJ’s in Europe – if the US edition becomes a hit does Dow Jones really need to continue the Wall Street Journal Europe (WSJE)?

As things stand now the USWSJ and the IHT are two very different animals. For €2.50 ($3.90) across most of Europe’s newsstands the IHT offers just 20 pages of New York Times general news stories, Reuters business stories, plus fashion, culture and sports but it’s true to say that read everything there and you really know what you should know about what happened in the world during the past 24 hours.

So, why could the USWSJ become a problem to the IHT? Because apart from the American expats who like to get their dosage of general Americana each day, most readers of the IHT are European business professionals and no one covers the US business scene like the USWSJ, and no doubt the FT and the USWSJ will argue on who has the best coverage of business outside the US.

The past few months have shown the world’s stock markets in turmoil but if you watch closely enough you’ll see that it is the US stock market that drives stock markets around the world. As a general rule – and the exceptions are few and far between – as the New Stock Exchange (NYSE) goes today, Asia and Europe will go tomorrow. You can even see that in mid day European trading. Europe could be up or down significantly, but when New York opens late in the European afternoon whichever direction that New York  goes then invariably the European markets follow course, no matter what they were doing before Wall Street opened.

And what is the newspaper that the people who work on Wall Street read before the market opens? Of course, it is the WSJ with a circulation of near 2.1 million daily   And since that same paper will be distributed to subscribers and retailers by 7 a.m. in London  (2 a.m. New York time, well before the East Coast wakes up) -- then those people in London whose livelihood is often dependent on stock market performance will make an early read of the USWSJ required reading, and that gives them an advantage over American readers.  

Because the IHT is so generalist in nature the argument will likely be that those who want a generalist approach will find the USWSJ much too business oriented and therefore no threat. But that was yesterday’s WSJ; it has already changed in its three months under Murdoch, and it is continuing to change.

Already Murdoch mandated changes are being seen on the Journal’s front page, especially more political stories. The mandate is to compete aggressively in general-interest news. And a new Friday sports page will eventually become daily. The basic editorial drive is that if readers are interested in politics, economics, culture and the arts and so on then the WSJ will be all they need. Murdoch and his new WSJ publisher, Robert Thomson, formerly editor of the London Times, have made no secret they are targeting the New York Times. If they can target the Times in the US then in Europe surely the IHT must be within their sights?

The broadsheet USWSJ is starting slow in London. It will go on sale at some 250 locations, particularly near the financial centers, as well as the City Airport and Heathrow.  The initial print run is just 3,500 copies daily and it will sell for £2.50 ($5, €3.15), not cheap but not that much more expensive  than, say, the Financial Times at £1.50 and one could really argue whether a 20-page IHT is worth its price when you consider that for the USWSJ you’ll get four sections including coverage  of US and international  corporate, political and economic news, a Money and Investing section, sections on health, personal finance, and technology,  media and marketing and the Friday edition will also have the Weekend Journal focusing on lifestyle stories about movies,, wine, travel, real estate and the like.

The tabloid 36-page or so WSJE by comparison sells for £1.30 in the UK nearly half the price of the American edition. It is said to have a readership of some 220,000 daily, but its circulation has sat around 81,000 for some years. Although the WSJE offers the Journal’s web site as part of its subscription package, wsj.com has relatively few other European subscribers.

There is a perception that the WSJE and the IHT have a mostly American readership, but the opposite is true. Each has more European readers than American, and in the case of the WSJE some 80% of its readership is European. With its European bias, will the WSJE hold onto its circulation because most of its readers are European who will find the USWSJ to be too American centric, or will they leave in droves for the “real thing” which is what they wanted all the time?  

Michael Bergmeijer, managing director of Dow Jones Consumer Media Group in Europe, said in a statement, “We’re offering the US edition of the Wall Street Journal to London readers in a particularly significant year for global business and political issues, with the credit crunch crisis and U.S. elections making front-page news most days. We believe a large number of internationally-minded people living and working in London will value the U.S. edition, and we’ll now be able to give them the competitive advantage of having the world’s best business newspaper five hours ahead of U.S. readers.”

Many analysts seem to think the object of selling the USWSJ in London was to take on the Financial Times head-on but; in fact because their subject matter is so varied it will probably be an issue of not dropping the FT but rather how many will add the USWSJ to their daily read. But one could well envisage an IHT reader comparing costs with the USWSJ and comparing the amount of content and if that content fits the need then making the decision the USWSJ offers more value for the money.

And it’s that value for money that the IHT managers should be worrying about.  Already this year the newsstand price in Europe increased from €2.20 to €2.50 and bloggers took them to task on that. The USWSJ may cost more but then it is four sections. How applicable those sections are in Europe – will they be considered too US centric or not – will decide just how much the IHT needs to worry.