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Sun, Aug 23, 2009 - Page 10 News List

Dow Jones explores sale of stock index business

POTENTIAL: While Goldman Sachs is exploring a sale on behalf of Dow Jones & Co, the process could result in an arrangement other than a sale, such as a joint venture


Dow Jones & Co Inc has been talking to potential buyers about the sale of its stock market index business, including the Dow Jones industrial average, the company’s Wall Street Journal reported on its Web site.

WSJ.com, citing people familiar with the matter, reported on Friday that Goldman Sachs was leading the discussions on behalf of Dow Jones, a division of Rupert Murdoch’s News Corp since it was purchased in 2007 for US$5.7 billion.

Since then, Murdoch has come under criticism for paying such a hefty price for a publishing company whose businesses have suffered from the sharp drop in ad sales. Earlier this year, News Corp wrote down US$2.8 billion in Dow Jones’ value.

Even though the index business is not dependent on advertising — making it a steadier revenue source during downturns — industry analysts never felt it was much favored by Murdoch, a passionate backer of newspapers and one of the best-known media moguls.

Indeed, a number of analysts expected him to consider a sale of the index business soon after striking the deal for Dow Jones. Representatives for News Corp declined to comment.

Potential buyers might include McGraw-Hill Co’s Standard & Poor’s, Russell Indexes, MSCI Inc, Bloomberg, Pearson PLC’s Financial Times and Thomson Reuters Corp. All of those companies declined to comment.

The Wall Street Journal, in its report, said the process was still in its early stages, and could result in an arrangement other than a sale, like a joint venture.

Anchored by the Dow Jones industrial average, the best-known measurement of US stocks, the company’s indexes business creates and licenses trading indexes.

Dow Jones Indexes has more than 700 licensees and a supporting staff of more than 160. It has offices in New York, Boston, Los Angeles, Princeton, London, Paris, Stockholm, Zurich, Madrid, ­Frankfurt, Hong Kong and Beijing.

Charles Dow, Edward Jones and Charles Bergstresser introduced the index in 1884, and today it contains such corporate blue-chips as General Electric Co, IBM and McDonald’s Corp.

Because the name is so well known — even if the index itself has been somewhat eclipsed by broader measurements like the Standard & Poor’s 500 in recent years — any buyer would face a dilemma: Change the name and use it for branding; or keep it, stick with tradition and miss out on the opportunity to market a new brand.

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