Dow Jones CEO's sudden exit followed revenue slide

NEW YORK - 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 authorised to speak publicly about the company.

Dow Jones' institutional revenue fell by $11 million in the three months ended September 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 Thursday.

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 January 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 February 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 company.

"The reaction to one-product-and-one-price strategy was largely negative," said Ken Doctor, an analyst at Outsell Research.

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 per cent 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 per cent decline in total revenue to $2.18 billion for the December quarter. Total revenue had fallen a steeper-than-expected 3 per cent in the September quarter.

Shares of News Corp have fallen about 7 per cent since news of Fenwick's departure, roughly in line with the broader market.


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 recent months.

When Fenwick was CEO of Bloomberg from 2001 to 2008, he was praised for doubling revenue to $6 billion, though he was also criticised 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 Arthur said.

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 institutional strategy.

"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 memo.