January 10, 2023

Should Bloomberg Go After Dow Jones and The Washington Post?

It’s been a few weeks since the mid-holiday break scoop that Mike Bloomberg was considering an acquisition of either The Washington Post or Dow Jones, and I can’t quite get the idea out of my head.

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Now let’s jump in…

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In late December, Axios’ Mike Allen and Sara Fischer reported that:

Michael Bloomberg, the billionaire businessman and media mogul, is interested in acquiring either Wall Street Journal parent company Dow Jones or The Washington Post, a source familiar with his thinking told Axios.

Bloomberg is friendly with, but not close to, Bezos, the source said. He sees the Post combined with Bloomberg as a formidable potential competitor to the New York Times.

A Dow Jones deal would give Bloomberg access to a premiere business title that could be leveraged to sell more subscriptions to the Bloomberg Terminal, a real-time data, news and analysis platform for financial professionals.

There’s a good rationale for both of these deals. Buying Dow Jones would make Bloomberg the financial media company to beat. FT would be far in its rearview mirror. Buying The Washington Post would give Bloomberg a massive leg up to compete with The New York Times.

Maybe none of this is even a reality, though. According to Puck, this might be an overzealous member of Bloomberg’s inner staff saying things to Axios.

One memorable anecdote from a New York magazine article by Gabe Sherman, published in 2012, depicts Bloomberg at breakfast at a hotel in Paris asking a friend, “Do you think I could buy The New York Times?” The friend then said that he didn’t think the paper was sold in the hotel. So Bloomberg responded: “No, do you think I could buy the Times?” Years later, Sherman would report that Bloomberg had pitched the idea to Arthur Sulzberger.

Then again, it’s not at all clear that either one of those men is interested in selling their media assets. One plausible scenario is that Bloomberg mused aloud on a few occasions about these ideas, perhaps boasting that he could run either paper better than it was being operated today, and someone else in the inner circle got so excited about the hypothetical that they passed it to Allen & Fischer. Maybe. Maybe not. Either way, as is often the case, only Mike knows.

But let’s assume that Bloomberg is thinking about this. Which should he choose to go after? Ultimately, it depends on his goals from a legacy perspective, and both strategies are rather compelling.

Dow Jones is the most straightforward move.

According to News Corp’s Q1 FY 2023 earnings report, Dow Jones had nearly 5 million consumer subscriptions, with digital subscriptions to The Wall Street Journal at 3.157 million. That is a monster of a subscription business. In March 2022, FT announced it had reached 1 million digital subscribers. And Bloomberg Media announced that “subscribers now total more than 450,000.”

The Bloomberg number is a little off because it does, to some extent, compete with itself. An additional 325,000 people get their Bloomberg news through the terminal.

But even if we grouped all those people together, you’re still looking at just shy of 800,000 subscribers that get Bloomberg’s news, compared to the millions that get The Wall Street Journal.

The scale that Bloomberg would have from a data perspective would be unrivaled. Remember, Bloomberg is increasingly focused on monetizing its first-party data directly to advertisers. As I wrote in October:

Bloomberg has a ton of valuable data. Its audience is comprised of some of the wealthiest people on the planet. The readers run the biggest businesses in the world, influence more purchasing, and likely purchase more luxury goods compared to most other media companies. So why would Bloomberg ever want to allow someone to underpay for that?

Open-market programmatic advertising lets marketers be lazy. They don’t have to talk to anyone and can target their ads as much as they want. So, a marketer can sit down, pick Bloomberg as their target, put a bid in, and then wait for the impressions to rack up.

Now you can’t do that. So if a marketer wants to get on Bloomberg in front of this highly influential audience, they’ll be forced to have a conversation with someone at Bloomberg. And that’s what B2B media companies have had to do forever.

Imagine taking this technology that Bloomberg Media is pushing and integrating The Wall Street Journal, Marketwatch, and the other Dow Jones sites into it. Suddenly, you are able to serve advertisers unbelievably well. Not to mention, Bloomberg will know much more about what types of reporting subscribers care about, giving the marketing and editorial teams the information they need to grow.

Now, it’s not like the combined entity will suddenly have the combined subscriber base of Bloomberg and Dow Jones. There is considerable overlap between these two entities, so this play would be less about true subscriber growth and more about the rich data it can provide. Not to mention, Bloomberg will be able to push all of WSJ and Dow Jones content into the Terminal, which is where the real money is.

Here’s the problem: Dow Jones is likely expensive. Irenic’s analysis shows that Dow Jones is valued at $9.2 billion. The company is positively crushing it right now. So, for investors to push the Murdochs on a divestiture, the price will have to be compelling. Bloomberg would be buying an asset that is in a position of unbelievable strength.

Additionally, I would anticipate buying interest from other big investors. There’s only one Wall Street Journal, so could this price get pushed up even higher?

Then we turn to The Washington Post. Strategically, this doesn’t make much sense at all for Bloomberg. WaPo is a consumer play, which runs counter to everything Bloomberg. A subscription to WaPo costs me $50 a year, whereas it costs me $400 for Bloomberg. Furthermore, it dilutes the Bloomberg brand. So, integrating the two would be complicated.

However—and this is where legacy comes into play—very few entities on the planet can compete with The New York Times. Jeff Bezos was supposed to be one of those entities that could do it, but his attention on WaPo appears to have waned for whatever reason. Bloomberg has always considered himself a media operator, so competing head-to-head with The New York Times could be his pièce de résistance.

And from a price perspective, he might get a far better deal on The Washington Post than he would with Dow Jones. Unlike the latter, which is riding high, WaPo is struggling. Its CEO doesn’t appear to have a strategic plan, the tech division is leaderless, and it’s contracting, not growing. Reports show it’s starting to lose money, which is why WaPo will undergo layoffs this quarter. Could this become just the distraction Jeff Bezos doesn’t want to deal with, but Bloomberg would chomp at the bit to fix?

Perhaps. But at this stage, a WaPo acquisition might do more harm than good for Bloomberg’s business. It’s the wrong kind of scale from an advertising and subscription perspective.

It boils down to what drives the man. If he’s leading with his legacy and ego, going head-to-head with the Sulzberger family is the choice. But if it’s purely a business decision, Dow Jones is the asset to tackle. It just fits too perfectly.

More pubs selling their data

Digiday has a story about Schibsted, which will use its own first-party data for all programmatic advertising.

As Per Håkon Fasting, head of advertising and sales at Schibsted, explained: “There’s a lot of blind buying of our programmatic inventory in Safari and Firefox where third-party identifiers are banned but advertisers continue to buy regardless.”

Doing so is a two-step process: first, the publisher is making its first-party IDs available to those programmatic advertisers that need it to frequency cap the number of ads they buy as well as optimizing bids. In other words, not targeting. That bit comes later in the year — sometime before the summer — when Schibsted will make its audience segments available via those first-party IDs. From then, this will be the only way to buy those segments programmatically across most of its ad formats (save for some video and native.)

As I have said, publishers are in a great position to know exactly who their audience is and monetize that data accordingly. Presently, ad buyers are blindly buying because that is the easiest thing. But Schibsted is effectively forcing them to be more intentional with their buys.

This helps in two ways. First, if marketers want to get on Schibsted’s sites, they’ll need to pick the segments that Schibsted has built. Second, it’ll improve the overall user experience since the ads should be related to the user’s consumption or who they are.

Both of these will contribute to better engagement with ads, giving advertisers a better bang for their buck. The reality is, as more cookies are deprecated, and more privacy laws are passed, finding targeted segments will become harder.

What I like about this strategy is that it’s still letting marketers use the programmatic pipes they’re used to. Workflows make it hard to change, so being able to sell these segments in an easily integrated way will result in more buy-in while generating greater revenue.

It will remain a mantra of mine until I retire from media, but collecting data about your audience is critical to your business’s longevity and commercial success.

Before we close, I wanted to thank everyone who reached out after last week’s AMO. Hearing from all of you was great, so please don’t hesitate to email me anytime. It was also one of the best weeks for premium subscription sign-ups. If you want to become a member, click here and register. You’ll get all the additional benefits I have planned—quarterly earnings reports, transcripts of the AMO podcast, monthly virtual discussions, the AMO Slack channel, and the Friday newsletter. Sign up here.

Have a great weekend, and see you next week.

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