Why The WSJ Is Not Necessarily A Wasting Asset

Michael Lewis has an interesting but wrong-headed argument today, saying that Rupert Murdoch is buying a wasting asset in the Wall Street Journal:

There's a catch to the status of even great newspapers: When they lose their readers they lose not just their profits but their purchase on the culture, and the source of their prestige. It's only a matter of time before even Murdoch wakes up and realizes that the Wall Street Journal is not as glorious as he remembers. And what then? He -- or his heirs -- will want out. They'll sell it, at a big loss, to some lesser figure. (Inferior status goods attract inferior status-seekers.)
The Bancrofts won't believe it now but there may come a time when they long for the days when their baby was in the hands of such a fine and upstanding press baron as Rupert Murdoch.

I can assure Michael Lewis that Rupert Murdoch has no intention whatsoever of waking up one morning to discover that the Wall Street Journal he expended so much effort to buy has become stale and worthless. Lewis's problem is that he's working off a fallacy: newspapers are declining in value, the WSJ is a newspaper, therefore the WSJ will decline in value.

But although that syllogism might work for the Akron Beacon Journal, it doesn't apply to the Wall Street Journal, because the WSJ is a brand, and not an object on newsprint. Financial markets today are broader and deeper than they have ever been, and everybody in the financial markets needs help navigating them. That's why Lewis's employer, Bloomberg, is doing so well. And if Bloomberg is one of the strongest brands in financial information, so is the Journal.

Murdoch, if he does end up buying the WSJ, will immediately extend the brand to his forthcoming business-news TV channel, and I'm sure it won't take him much longer to beef up the paper's operations significantly in the fast-growing markets of East Asia. At the moment, most of the WSJ's China coverage is of interest mainly to a US audience: the paper is a long way from being a must-read for Chinese businessmen. But the good news for Murdoch is that right now there simply is no must-read for Chinese businessmen, which means that he can step in with the WSJ and fill that niche.

What's more, Murdoch gets the web, as his purchase of MySpace demonstrates. WSJ.com can and should be a much better website, the first and last place that businessmen and women around the world need to go for all their financial news and information. Murdoch has the deep pockets necessary to make that happen.

If Murdoch can take the Wall Street Journal and turn it into a formidable global brand from its present status as an increasingly-irrelevant newspaper, then the $5 billion he's spending on Dow Jones will look cheap. And he'll have all the cachet that a newspaper magnate could ever want, to boot.