We believe facts are facts and that they are ascertainable through honest, open-minded and diligent reporting. We thus believe that truth is attainable by laying fact upon fact, much like the construction of a cathedral. News, in short, is not merely a matter of views. And truth is not merely in the eye of the beholder.


Peter R. Kann
Letter From the Publisher: A Report to The Wall Street Journal’s Readers
2240 words
12 January 1993
The Wall Street Journal


Truth is attainable. See, I read those words in the Providence Journal newsroom, where I was on the investigative team, and it may have been then and there that I decided I wanted to work for someone who would write something like that. Within a couple of years, I would meet Peter Kann, along with a bunch of other newly hired Journal staffers.

Kann is modest, smart, soft-spoken, funny, informal, given to rubbing his balding head and saying “uh,” before saying something self-deprecating or in praise of great reporting, which he clearly loves. He was a protégé of the great Barney Kilgore, the post-war inventor of the modern Wall Street Journal, which is like being a psychoanalyst who trained under Freud. He risked his neck in Vietnam and won a Pulitzer for reporting on the Indo-Pakistan War of 1971. He once responded to an editor’s cable ordering him out harm’s way thus: “Message unreceived.” He is one of long tradition of former reporters—that’s right, reporters—dating to at least 1933 to run the Journal’s publisher, Dow Jones & Co., a global media company.

He is also without question the last reporter who will ever run Dow Jones, mainly because there’s not going to be a Dow Jones much longer—in large part because of Kann himself. Two weeks after Kann retired, Rupert Murdoch News Corp. announced its $60-a-share offer for the company, exposing DJ’s financial weakness for all to see.

I take no pleasure—none—in saying what every media analyst and WSJ staffer already knows: no single person did more to put Dow Jones in peril than Peter Kann. Not by a long shot.

The tragedy is that no one knows better the consequences of Murdoch getting DJ than Kann himself. And no one would feel worse about it.

As he said himself In a letter two weeks ago, praising the controlling Bancroft family for their opposition to the News Corp. bid:

“There is a higher calling to what the people of Dow Jones do each day,” Mr. Kann wrote. “They are not merely producing and selling products like corn flakes or computer chips.” Rather, he said, they are producing products that “empower the citizens of free societies.”

Yeah, but you gotta pay for it. That’s the CEO’s job.

One could argue about Kann’s responsibility, but who else gets the nod? His wife? That doesn’t seem fair. Rich Zannino, his successor? No way. Mike Bloomberg, for whipping his rear end? I don’t think it works that way.

Kann was in charge from 1991 until last year, the period when Dow Jones fell from being a great power among media companies—let’s call it France, because it’s classy—to become the industry’s Ottoman Empire. It still had its glittering palace on the Bosphorus—that would be the Journal—but it was one hard push away from crumbling. That push has now been provided by the chronicler of Keira Knightley’s “t*ts.”

But it’s not just a matter of having titles. It’s what you do with them, how you react to bad news and whether you nurture a culture that acknowledges problems so they can be fixed.

But at DJ, candor grew ever more scarce, accountability seemed to stop at the newsroom door and management discourse began to resemble one long Medal of Freedom ceremony. This is corrosive to any institution, no matter how great.

The troubles begin with something called Telerate, which, an analyst quoted in a Fortune story in 1998 would correctly call, “the mother of all write-downs.” This would be Dow Jones’s Iraq.

As DJ cognoscenti know, Telerate was a financial data provider that DJ bought in stages under Kann’s predecessor in the late 1980s. At the time, the company was a giant among financial information companies, and Bloomberg—the Dow Jones of today—was still stoppable. But while Telerate’s data were limited, static, and hard to manipulate, Bloomberg reinvested in technology that allowed traders to make information stand on its hind legs and bark like a dog. Reuters, too, invested more than $1 billion in technology in the early 1990s, trying to keep up, according to Joe Nocera in Fortune. Dow Jones just pulled out profits. This went on for years—and that was Kann.

Finally, soon after I arrived in 1996, Kann’s board announced a $650 million plan to fix Telerate, internally called “Rolling Thunder,” which inevitably became known as “Rolling Blunder,” and which executives quoted in Fortune described variously as “schizophrenic,” “total confusion,” and worse. Customers complained that using “Dow Jones Markets” products was like buying a car you had to assemble yourself. Think: Coalition Provisional Authority.

Telerate led to a $900 million write-down in the fourth quarter of 1997. I don’t remember the building shaking at the time, but it may as well have. DJ really never recovered, while Bloomberg sped off without a glance in its rear-view mirror.

In a story earlier this year on Bloomberg’s “money machine,” Fortune’s Carol J. Loomis wrote: “in the annals of business, the fall of Dow Jones from its financial-information throne and the rise of Bloomberg must be counted one of the great competitive turnabouts in history.”

In the “annals of business,” one of the “great competitive turnabouts” is not something you want to be on the wrong side of. The ‘69 Cubs had one of those.

Today, a monument to Telerate sits in South Brunswick, New Jersey, in the form of a vast and mostly empty office complex built for the now defunct data-provider. Walking through South Brunswick is like visiting the set of “The Omega Man,” the 1971 Charlton Heston movie about the earth’s population being wiped out by biological weapons. The buildings are there, but all the people are gone.

A more symbolic but telling venture was WBIS, also called, “S+,” an over-the-air business-and-sports TV channel in a joint venture with the conglomerate ITT Corp. The station’s slogan—“Sports, money, and, oh yeah, life”—was much mocked by us newsroom know-it-alls, but in fact it did foreshadow the corporate humbug that would come to mark even mundane internal communications.

One day, I was riding up from the newsroom on the tenth floor to the cafeteria on the fourteenth. The elevator stopped on eleven — ding!—and about two dozen chattering twenty-five-year-olds, new WBIS employees, shuffled on. That happened every day until July1997, the day the elevator opened onto a gutted twelfth floor. The reception desk was gone and wires dangled from the ceiling panels. A single maintenance worker got on. Ding!

In the wake of Telerate, etc., dissident members of the Bancroft family, which controls DJ’s voting shares, began to speak up, with some calling for Kann’s ouster. One heir, Elizabeth Goth, was quoted as saying—correctly—that the problems at Dow Jones were more systemic and more deeply rooted than one troubled unit. “There is a history with this company,” she said. “We have had questionable outcome after questionable outcome in various business deals.”

This is 1998.

Defenders of Kann, who didn’t reply to requests for comment, will say that this is all old news, and it is. They will also say he deserves credit for launching Weekend Journal, Personal Journal, and the database company Factiva; for making the online Journal a pay site, redesigning the paper, and other measures. And they’re right.

But as they say on Wall Street, all that’s not going to move the needle, generate enough earnings to make a difference and build the financial base to support the Journal through down ad cycles and difficult industry transformations.

Look, I don’t say being CEO of Dow Jones is easy.

But to me, the most regrettable chapter wasn’t Telerate, but repeating the mistake of underinvestment during the late-1990s tech bubble, when financial-service and tech ads made the Journal on some mornings as thick as a phone book.

Don’t take my word for it, ask Zannino, who is talking here about investing to spread out the paper’s advertising beyond financial and tech ads, but might as well have been speaking more generally. “In hindsight, sure, it would be hard for me not to say we should have been diversifying (our advertisers) back then. Next time.”

He said that to Newsweek in 2003, when he was DJ’s relatively new chief operating officer.

And while DJ was nibbling around the edges, trying to squeeze both growth and dividends out of a single newspaper and a handful of other stuff, mostly by beating the staff like so many rented mules, others acted like capitalists—you know, “free markets, free men,” and all that.

In the early 1990s when Kann took over, Thomson Corp. was a newspaper company that had expanded into textbook and law book publishing. In 1996, it bought West Publishing. Last year, its legal division alone posted operating profits of $1.1 billion, ten times that of all of Dow Jones. True, it sold off its newspapers in 2000, but it certainly could have supported them during this transition from print to digits.

Now, guess what? It’s buying Reuters, a news service and financial data provider. With Reuters, Thomson gets the last viable competitor to Bloomberg and the ability to pressure Dow Jones Newswires, one of DJ’s few remaining profitable segments. And if you think the old Thomson papers could even approach the Journal’s readership demographic, you have a strangely high opinion of the Guelph Mercury or the Fond du Lac Reporter.

In recent years, DJ’s culture seemed to curdle as the company stagnated financially. In 2002, Kann named his wife and another former reporter, Karen Elliott House, publisher—that is, the chief ad salesperson. Senior management grew more remote, and cost-cutting came with an unnecessary helping of monkeyshine. Kann once referred to the end of DJ’s great pension program as a way to “modernize” it; the shrinking of the physical size of the paper would be called a “design enhancement” or something. WSJ staff writers were reduced to appeals to the board’s conscience with stories about relatives saved by DJ’s soon-to-be-cut health benefits, impassioned letters from war correspondents and marching around a big inflatable rat (1). That’s embarrassing, let me tell you.

In April 2005, what I believe was a revealing moment arrived. After years of overpaying the dividend to the benefit of the controlling Bancrofts—in effect, his patrons—Kann supported a corporate rule change that lowered the number of super-voting shares to 7.5 million from twelve million, allowing the Bancrofts to retain voting control of the company even as they sold large blocks of stock.

The family said it needed “to provide funds for investment diversification and to meet anticipated financial needs.”

Ah, skip it.

Last year, the company reported that it took a charge of $4.5 million for Kann’s severance as part of $14 million in charges it took for senior executive severance, include Kann’s wife’s.

Is that a lot? Not really. But it’s more than Dow Jones had in cash on its balance sheet at the end of last year.

In the end, I’m afraid Peter was right. By laying fact upon fact, truth is attainable.


(1) See: “Dow Jones Employees Protest,” New York Post, April 21, 2004.


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Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.