On a late August morning, Wall Street Journal managing editor Paul Steiger arrived at his downtown office confident that his paper had navigated a tricky turn. In three weeks, the broadsheet would kick off its wingtips and launch a more lighthearted Saturday paper, dubbed “Weekend Edition,” with recipes, fashion tips, and sports. For all the talk of a “casual” Journal, however, the birth of the new paper was three hard years in the making. Focus groups had guided its design. New circulation schemes had been devised to reroute paperboys away from empty offices so the Saturday paper could land on readers’ home doormats. Steiger recruited about 80 employees to staff the Saturday paper. The reporting and editing of live stories was well under way.
The venture is so expensive and complex that Journal management considers it the most important gamble in the company’s recent history. Which is why Steiger had entrusted it to his loyal protégée, Joanne Lipman. The 44-year-old editor had already created the paper’s most financially successful innovation of the past decade: the advertising-packed Friday “Weekend Journal.” This success elevated her to the highest editorial post ever occupied by a woman at the Journal and made her likely to rise higher.
So, when Lipman closed the door to Steiger’s office and told him that she was quitting the Journal for a formless, nameless Condé Nast business magazine, he hadn’t seen it coming. “He’s not very happy, to say the least,” one of his friends told me. The news was bad, the timing worse. Steiger hoped to avert a PR debacle by delaying Lipman’s announcement until after the September 17 launch of “Weekend Edition,” but Condé Nast, worried about the project’s leaking to the media, insisted on a press release the day after Steiger learned of Lipman’s plans.
At that point, there wasn’t much Steiger could do to entice Lipman to stay. Condé Nast offered her a salary close to his own, then piled on bonuses and the vaunted Si Newhouse–funded expense account.
Steiger and the paper were badly stung. From the start, three editors had shepherded the Saturday edition. There was Larry Ingrassia, who left the Journal to run the Times’ business section, and Steve Adler, who abandoned the paper to take over as editor of BusinessWeek. With Lipman headed uptown, Steiger had lost all of “Weekend Edition” ’s primary editors—and it hadn’t even launched yet.
These are apocalyptic times for the newspaper business, especially for the Journal, with its historic dependence on advertising from financial services and tech companies. No major media company has suffered a string of bad luck and management missteps that quite compares to the recent bum run of Dow Jones, the company that owns the Journal. Over the past five years, its stock has plummeted 45 percent—trailing the New York Times Company and the S&P average by 25 percentage points. Where it once aspired to conquer the global market, this spring it shrunk its European and Asian editions into tabloids, a step many consider a prelude to their euthanizing. The domestic situation is less grim, but only a bit. With ads scarce, it often publishes waiflike editions of the Journal. In five years, there have been four heads of ad sales.
It is an obvious irony: that the great chronicler and champion of capitalism has become a poor example of it. Reporters at the Wall Street Journal seem personally offended by this condition and disdainful of their management. “We write stories about shareholder culture and corporate abuses. And then they seem to go make all the same mistakes we describe,” one reporter complains. In part, they gripe because they have been victims of the company’s austerity program. Last year, their union suffered through bitter contract negotiations, a dispute that caused even the fustiest stock-market reporters to participate in work slowdowns and denounce the “greedy bastards” in the boardroom.
But there’s another reason for the griping. Covering companies like Google and Yahoo and the Washington Post, they see other media outfits that have found ways to grow in these lean years. Of course, you don’t need to look at annual reports to know this. You could just look at the skyline. On Lexington, there’s the freshly constructed Bloomberg Tower, and the stack of steel triangles that Sir Norman Foster designed for Hearst. Renzo Piano’s New York Times building will soon stare crosstown at Condé Nast and up toward the Time Warner Center. Dow Jones has, humiliatingly, experienced the reverse of this media building boom. For two decades, Dow Jones has resided in Cesar Pelli’s World Financial Center, where brass letters at the entrance modestly announced it as the building’s marquee tenant. But earlier this spring, reporters and editors arrived to find that workers had removed Dow Jones’s name and replaced it with that of a law firm.