August 26, 2009 > Dow Jones might sell storied stock index
Dow Jones might sell storied stock index
By Stevenson Jacobs, AP Business Writer
NEW YORK (AP), Aug 21 _ The Dow Jones Industrial Average could get a new name.
The Wall Street Journal reported Friday that its publisher, Dow Jones & Co., is considering selling its stock-market indexing business and has reached out to potential buyers. A sale of the unit would open the door for the new owner to rename the 125-year-old Dow Jones Industrial Average, one of the world's best-known stock-market benchmarks.
The Journal, citing unnamed sources, said the process is still preliminary, and could result in a joint venture or no sale at all.
Dow Jones & Co. is owned by Rupert Murdoch's News Corp. In an e-mail message, Dow Jones spokesman Howard Hoffman said, ``We're not commenting on speculation of this sort.''
The sale of a prime Dow Jones asset would be among the first since News Corp. bought the publisher in 2007 for $5.7 billion after a long effort to persuade the families that controlled Dow Jones & Co. Since then the value of the business has plunged, with the newspaper industry suffering huge declines in advertising.
News Corp. also owns the Journal, the Fox television network, 20th Century Fox movie studio and media outlets in Europe and Australia.
Dow Jones offers more than 130,000 stock indexes that are used as benchmarks by investors and licensed for use by mutual funds and other investment products, according to Dow Jones Indexes' Web site.
Its best known index is the Dow Jones Industrial Average, which was introduced as a basket of 11 stocks in 1884. Today, it includes 30 stocks, including Caterpillar Inc., Microsoft Corp. and Wal-Mart Stores Inc., and is used as an indicator by investors around the globe.
The Dow index is named after Dow Jones and Co. co-founders Charles Dow and Edward Jones. It's synonymous with the stock market for many investors, and is a fixture at the bottom of TV screens during financial news broadcasts. While it's not the most comprehensive measure of the market _ the Standard & Poor's 500 index is widely used as a broader benchmark _ the Dow Jones industrials are perhaps the most widely followed metric.
For instance, investors were glued to the Dow during last fall's market convulsion. On Sept. 29, nine days after the collapse of investment bank Lehman Brothers, the Dow plunged a 777.68 points, the largest one-day point drop ever. About two weeks later on Oct. 13, the index shot up 936.42 points in the biggest-ever one-day gain.
If a deal is reached for the unit, a big question is whether the buyer would be allowed to keep the iconic Dow Jones name on the index, said Dave Novosel, a media analyst with Gimme Credit.
``Obviously if they do, it'll be worth a lot more. People can relate to the Dow Jones index so well,'' he said.
In the nine months to September 2007, the last period before Dow Jones & Co. was acquired, Dow Jones Indexes took in $101.3 million in revenue, according to a quarterly earnings report. That was up 18 percent from a year earlier.
However, the unit included revenue from selling reprints of The Wall Street Journal and Barron's magazine, as well as Dow Jones Financial Information Services, a journalism and database service for private equity, venture capital and other niche markets. Both of those divisions might be excluded from a potential sale.
The Journal said the sales process is being conducted by investment bank Goldman Sachs. A Goldman Sachs spokesman declined to comment.
AP Business Writers Andrew Vanacore in New York and Ryan Nakashima in Los Angeles contributed to this report.