With the International Herald Tribune Going from One Strength to Another, And the Financial Times Finally Emerging From Its Financial Darkness, Is There Room For the Compact Asian and European Wall Street Journals On The International Newspaper Stage?

Philip M. Stone June 9, 2005

Ever since the New York Times bought out the Washington Post’s share and took 100% control of the International Herald Tribune (IHT) in 2003, it has been making the type of investments the newspaper had desperately needed for years. Financially and editorially things have been looking up for the Paris-based daily that has been a staple of American expatriates and tourists since 1887, and more lately European and Asian nationals, particularly business leaders.

The Times very cleverly retained the IHT’s separate identity – it did not turn it into a European edition of the New York Times although for sure there are plenty of New York Times articles each day, and senior management has been sent in from New York.

Advertising is up, partly because of packages that give access to both the New York and Paris newspapers, the Times has made major editorial investments, improvements in printing (increased pagination and more color), it is reshaping the newspaper with new sections and features, and it has redesigned the Trib’s website. Management boasts that with its 240,500 circulation with sales in 180 countries the IHT is the world’s daily newspaper.

The UK’s Financial Times, however, believes if there is a premier global newspaper then it is the FT. Certainly its total circulation of 426,000 outpaces the IHT, and even stripping out it’s domestic circulation still leaves the FT with some 300,000 daily overseas sales. It’s management calls the FT the world’s business newspaper.

The past couple of years have been tough ones for the FT – mounting losses (some £32 million in 2003 alone), a 15% cut of commercial staff following a 40% slump in advertising revenues, killing the sports page and a weekly pull-out, but also making a larger investment in its FT.com web site and in overseas printing, becoming the first global paper, for instance, to actually print in Australia.  The FT has reported it broke even in Q4, 2004, and the worst is behind it.

That same time period was not a happy one either for the two international editions of the Wall Street Journal (WSJ). Like their mother ship in the US, both newspapers have been hit by the tough advertising climate -- in just April alone the WSJ Europe experienced a 8.8% decrease in advertising linage due to poor financial and technology advertising and that followed a 21% hit in the first quarter. Circulation has hardly moved, edging up just 997 subscribers in the past 12 months to its current 86,156. In Asia things were a bit better with advertising improving in April by 5.2% following a 8.3% decline in Q1. Daily circulation stood at 80,883 subscribers. 

Both editions are a far cry from the multi-sectioned US WSJ which has some 2 million subscribers, but which also is suffering from a severe downturn in technology and financial advertising.

The loss of visibility for the Washington Post in the IHT brought it and Dow Jones closer together. The international editions of the WSJ carry up to five Post stories a day and beginning this month the Post can now use up to five WSJ articles a day in its business section.

With all the financial tribulations within Dow Jones it was becoming questionable whether the company would allow the losses to continue at its two international editions. Certainly, something had to be done. And that something turned out to be quite a shock. Dow Jones announced it would downsize the European and Asian Journals into compacts in October. Besides an easier read, Dow Jones said it intended to truly integrate the newspapers and the WSJ web site into a 24/7 operation. Currently only about 5% of the Journal’s 750,000 web subscribers are outside the US.

With the company spending big-time on web purchases (some $500 million for marketwartch.com), the mainstay US paper still suffering advertising declines but investing in a Saturday edition start-up for the Fall, its participation in CNBC draining even more funds, the compact move sent a message that the company would still remain in the global newspaper business for quite a while longer.

Experience has shown, for instance, that when a newspaper changes from broadsheet to compact it can take two years or more for advertising revenue to recover since advertisers refuse to pay the same for a full-page ad in a compact as they did in a broadsheet. The switch to tabloid will, however, present new advertising opportunities including the sale of color advertising on the front page. To save some money Dow Jones is sending some of its high-cost expatriates back to the US.

Reports continue to circulate in London that the FT may also try its hand at something smaller than broadsheet, something that management does not flatly reject, indeed there are signs they are warm to the suggestion as part of an overall redesign. Already the FT produces an A4 (equivalent to the US 8 ½ x 11 inch letter size paper) single sheet newsletter called FT PM which it distributes within the London financial community every afternoon that acts as a teaser for the next day’s newspaper. Lest you think that A4 is a bit small, Mario Garcia, the world’s leading expert in turning newspapers compact, predicts that within 20 years most compact newspapers may well be sized at A4.

And although USA Today also lurks in the international shadows, these are really the main players as English-language gloabal internationals and the question boils down to whether there are enough people out there willing to take out subscriptions and spend time reading what is a second daily paper for most of them, and whether the advertising climate becomes such that it can support all of them.

With Europe still in circulation and advertising retraction, the battlefield is looking more and more likely to be in Asia. The IHT announced that its sales in Asia alone had increased by 1,820 in 2004 to 83,348— some 3,000 more than the Asian Wall Street Journal’s circulation and more than twice the circulation of the FT, although, to be fair the FT has only been marketing in Asia for the past couple of years.

The IHT recently expanded its Hong Kong bureau and has promised more and better Asian coverage. The Asian WSJ counters by claiming it is Asia’s “most important business reading for the past 10 years.”  The FT claims the so-called C-suite executives -- that 53% of its readers are chief executive officers, chief financial officers, basically the chief decision makers.

With the IHT already out with its new free web site, and the WSJ saying it is planning closer international integration with its subscriber web site, the question then falls on what the FT is planning. 

Whereas the WSJ web site has 750,000 subscribers, 95% in the US, FT.Com has just 80,000 subscribers, the majority within the UK. The FT says it is putting the finishing touches to installing a new publishing system that will totally integrate print and online, something the WSJ is promising for its October compact launch.

Market research told the New York Times to ensure the IHT maintained its own international identity. One problem for the WSJ editions is that they have a very American identity even though they throw “Europe” and “Asia” into their mastheads. The trick is to convince readers the coverage has more breadth than that.

But the Trib has not announced any plans to turn compact – something that Europeans and Asians say they really prefer to broadsheet. With the WSJ editions committed to the compact change in October, and the FT not ruling out a size change, it will be fascinating to see exactly what difference to circulation and advertising revenues a size change can make for an international newspaper.

Most pundits believe that within 10 years the weakest of the bunch will probably be gone. At least Dow Jones is trying one more time to make a success of its international editions, but if compact and integration with its web site doesn’t work then one wonders what will. 

What is clear is that the three newspapers recognize that whoever wins the global circulation/advertising battle stands to make a fortune, and for the moment at least each appears ready to continue investing whatever it takes to make that success.

But it is refreshing to see an old-fashioned newspaper circulation war – particularly when it is fought on a global scale.