Dow Jones Proposal June 20th, 2007
Dow Jones & Company, Inc.
200 Liberty Street
New York, NY 10281
Attention: Board of Directors
Ladies and Gentlemen:
I am the founder of Myspace and following its sale to News Corp. in 2005 have remained very active in the internet space owning, among other things, majority stakes in privately held Live Universe, Inc. and BroadWebAsia, which in the aggregate are composed of over 30 websites that reach approximately 75 million unique users a month across the U.S./Europe/Asia. I do not believe any current publicly disclosed acquisition offers for Dow Jones & Co. fully recognize the potential which Dow Jones’ unique assets, properties, and brands represent.
Accordingly, I, Brad Greenspan (www.bradgreenspan.com) and my advisors would like to meet with you and your representatives at your earliest convenience to discuss an alternative proposal that I believe should be preferable to all of Dow Jones constituencies and which I believe is likely to produce meaningfully greater shareholder value than currently proposed options.
My proposal is as follows:
An investment group led by me (”Journal Investment Group” or “JI”) would purchase from existing DJ shareholders approximately 25% of DJ’s stock at $60 per share for an aggregate of $1.25 billion. The purchase would be structured so that all shareholders could sell at least 25% of their stock, but those shareholders who did not wish to sell any shares would not be required to do so.
Separately, JI would purchase $250 million in stock from the Company at $60 per share, thereby providing the Company with substantial incremental cash with which to accelerate the expansion of its high growth potential internet/online/digital/broadcasting businesses.
I believe that by pursuing the aggressive growth of these “new technology” businesses while at the same time nurturing DJ’s core businesses and maintaining the independent Dow Jones’ culture of integrity and high quality reporting and editorial context, substantial incremental value can be created for both existing shareholders and new investors as well.
Our proposal provides our investment group with a “non-control” minority stock position. We would propose to expand the DJ Board by two seats with which we can hope to submit candidates for your consideration that can add value and help efforts specifically in the online/broadcast areas.
Among the strategic initiatives and goals that I believe should be considered are the following:
Online
1) Grow the WSJ.com and Marketwatch.com websites in the aggregate from current approximate size of 4.3 million U.S. unique users per month combined (according to Comscore/April07) to 15 million U.S. monthly unique users per month. This will vault WSJ/Marketwatch to the position of the most visited/popular/viewed online business website ahead of Yahoo Finance at 10.97 million monthly unique users (Comscore/April07). Execute similar growth goals for European & Asian markets. Goal –
Within 18 months
2) Launch Ad Supported Video Content Network in domestic and international markets (Europe/Asia). Combination of creating original content around current brands (WSJ/MarketWatch/Barrons, and other brands), licensed content, and user generated content. Goal –
Within 24 months, 500 million video views per month across DJ/WSJ Video Network (U.S. and International).
At $30 CPM (current average in technology video space), such video ads alone by month 24 would generate $15 million in revenue per month or $180 million annually of high margin revenue for the Consumer division. We believe this could increase EBITDA of Consumer division of DJ by 300%+ annually.
3) Launch User Generated Content / Business Networking platform to wrap across DJ properties. Platform will generate incremental page views/user activity. Goal –
Within 24 months, increase aggregate non-video monthly page views of the WSJ/Marketwatch properties by 300%.
Broadcast/Satellite/Cable
4) Initiate New Broadcast Strategy. Leverage growth of online audience to cross-promote, invest in creation of, and launch DJ branded content on television both domestically and in European/Asian markets.
-As a point of reference, CNBC generates approximately $300 million per year in operating profits.
-CNBC generates this revenue off 185,000 average viewers per day.
-DJ brands (online/offline) on a daily basis touch approximately 2.7 million people. JI believes that a reasonable effort in promotional efforts could quickly get 10% cross-viewership or 270,000 daily viewers of the DJ financial channel. Within 36 months, a financial channel strategy/effort could create the #1 business brand with 270,000 daily viewers or a leading broadcast brand or family 30% larger then CNBC today. Goal- Within 36 months, have DJ financial news channel/programming that has larger daily audience then CNBC.
In addition to the cash infusion discussed above, JI is in a position to provide strategic assistance in key areas to DJ, including Online Distribution and Technology Partnership. For example, in the areas of Promotion and Distribution, JI would provide both strategic resources, planning and guaranteed online promotion for DJ online/media initiatives.
Two online strategic partners of JI will provide promotion of DJ online/media brands across online network reaching over 75 million unique users per month across 35 websites in the U.S., Europe, and Asia. These are:
LiveUniverse, Inc. - A Los Angeles-based company that consists of a a network of over 20 websites across the U.S. & Europe focused on video and social networking that reaches over 35 million unique visitors per month.
LiveUniverse also holds a 30% non-control stake in:
LiveLeak.com –
A U.K.-based leading Citizen Journalist / Breaking Video News aggregator in which LiveUniverse holds a 30% non-control ownership stake.
BroadWebAsia- A network of over 15 partnered websites focused on the Chinese market that reaches over 40 million unique visitors per month. Two properties, leading video sites Mofile.com and Hubotv.com, together generated 200 million video views in May.
Similarly, in the Technology space, as an interim or permanent solution, LiveUniverse will make available technology solutions/assets for DJ to reach its strategic goals. LiveUniverse has a robust video delivery system and networking platform. LiveUniverse and BroadWebAsia will also leverage their existing infrastructure to pass on economies of scale for DJ’s online hosting/bandwidth costs.
Once again, the transaction I am proposing has numerous advantages over existing proposals to date. Among other things, it:
1) KEEPS THE DJ/WSJ INDEPENDENT FOR THE BENEFIT OF LARGE CONSUMER BASE. Both large shareholders of the DJ and the employees who breathe life into these important objective ’news assets’ have indicated that the DJ and its consumer base is best served if the DJ is independent and not being assimilated and absorbed under a pre-existing major media conglomerate.
2) PROVIDES PREMIUM LIQUIDITY EVENT. Our proposal will facilitate premium liquidity event for all shareholders while allowing them continued upside in publicly traded DJ.
3) ALLOWS DJ TO GO ON OFFENSE - JI will provide capital infusion of $250 million to supercharge online/broadcast/satellite/cable initiatives which have clear growth opportunities in highly lucrative and fast-growing markets.
4) UNLOCKS HIDDEN VALUE - JI will provide injection of knowledge via minority board participation along with hands-on assistance for online/digital strategies to help unlock significantly undervalued and unappreciated DJ-held assets by the public marketplace.
5) PROVIDES UPSIDE FOR EVERYONE! –
Proposed transaction should yield a significant ROI over the next few years for the investors of JI and all shareholder classes/groups along with employees.
I very much look forward to meeting with you and your advisors at your earliest convenience to discuss this proposal. I am also available to travel to NY to meet in person this week or early next week. I am confident that we can work together to consummate this transaction very promptly. Please contact me at Brad Greenspan, Journal Investment Group, c/o Irell & Manella LLP, 1800 Avenue of the Stars, Los Angeles, CA 90067, attention: Al Segel. You can email me directly at Brad@liveUniverse.com.
Very truly yours,
Brad Greenspan
Dow Jones & Company, Inc.
200 Liberty Street
New York, NY 10281
Attention: Board of Directors
Dow Jones & Company, Inc.
June 19, 2007
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Gualberto at gualbertodiaz.com writes:
But what I find even more interesting, is Brad Greenspan’s (the guy who used to own Myspace) bid for Dow Jones. I think he’s the best option for a couple of reasons. First, he’ll represent free and unbiased press, something which is very key, and wouldn’t likely happen under Murdoch or any other big business. Second, with a base from WSJ, he could create so much value in the brand, just by introducing the social networking concepts. And that is ultimately what the company needs if it wants to survive. We all know the paper and print business is done. TV is on it’s way out. The Internet is the future.
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