Insight - The Lex Factor roils Dow Jones
By Jennifer Saba | October 8, 2012 12:28 AM EST
(Advisory - this article contains profanity in the fourth, 27th and 41st paragraphs)
NEW YORK - He's tearing down walls. He's tossing out old business models. And he's dressing down people, publicly and profanely, in the once-buttoned-down halls of Dow Jones & Co., publisher of the august Wall Street Journal.
Lex Fenwick (pronounced FEN-nick), a long-time Bloomberg LP executive, is making his mark on Dow Jones, the News Corp
Fenwick quickly dismantled the offices in the executive suite, emulating the open-floor plan of his previous employer. He works from a desk in a corner of the seventh floor of News Corp's headquarters in midtown Manhattan, and his conversations - often expletive-laced - can be widely heard.
"This is not what I wanted! Are you a f---ing idiot?" one employee heard Fenwick screaming at a colleague not long ago. Others inside the company say they have often heard Fenwick yelling profanities and shouting at underlings.
Fenwick has been called a master salesman and business builder whose hard-charging style often runs roughshod over colleagues and subordinates. His makeover of Dow Jones comes at a crucial time for Rupert Murdoch's media empire as News Corp prepares to split off its global publishing assets from its entertainment businesses.
Murdoch needs Fenwick's shock treatment to succeed so that Dow Jones, with about $2 billion (1.2 billion pounds) in annual revenue, can be the growth engine for the new publishing company, analysts said.
Most of News Corp's newspapers are grappling with industry-wide problems of declining readership and print advertising sales, plus the fallout from the hacking scandal at its British publications. One bright spot is Dow Jones' Wall Street Journal, the top U.S. newspaper by circulation, which also boasts one of publishing's most successful digital strategies.
For Dow Jones, Fenwick's arrival in February has been more of a jolt than when News Corp bought the company in 2007. The executives Murdoch brought in, including seasoned newspaperman Les Hinton as CEO, were seen as evolutionary and, mostly, respectful of colleagues.
Former Bloomberg colleagues say Fenwick, 53, has superb sales skills. During his seven years as chief executive at the financial information and news company, revenue doubled to $6 billion.
But the British executive is erratic - charming and smooth one minute but loud and belligerent the next, according to interviews with more than 20 people who have worked with him.
Fenwick's aggressive approach helped him rise to the top of Bloomberg, but also led to his downfall just a few years later, said these people, who spoke on condition of anonymity.
Fenwick declined to be interviewed for this article and a spokeswoman for Dow Jones declined to comment.
In his first eight months at Dow Jones, Fenwick has swept aside several senior managers and replaced them with former Bloomberg colleagues. He plans to raise prices for Dow Jones Newswires and reduce discounts, a strategy that could backfire at a time when banks are under pressure to cut costs.
Fenwick also wants to transform the way Dow Jones sells its news and information to financial institutions by introducing a new Web-based platform for all its products before the end of the year, aiming to win market share from Bloomberg, Thomson Reuters Corp
As part of a stand-alone publishing company, Dow Jones will be critical. In the 2012 fiscal year ended June 30, Dow Jones contributed $180 million in earnings before interest, tax, depreciation and amortization - that is 30 percent of EBITDA from News Corp's newspaper properties, estimated Gabelli & Co analyst Brett Harriss.
"If anything is going to have lasting power it's going to be something like Dow Jones where you have a niche audience, specialized reporting and the willingness of consumers to pay for the product," Harriss said.
News Corp has not said who will run the new publishing company. Media watchers view Dow Jones Editor-in-Chief Robert Thomson a long-time Murdoch confidante who currently reports to Fenwick, as one of the front runners. News Corp declined to comment.
It is unclear what role Fenwick will play in the new structure. In an interview last July, he spoke of some nervousness about joining Dow Jones after 25 years at Bloomberg.
"It's quite strange to only know one thing and to go to a different thing," he said then. "With trepidation you step into this thing and say you know this could be really scary."
A PAGE FROM BLOOMBERG
Fenwick started as one of Bloomberg's first sales employees in London in 1987, when the company was an upstart in European financial markets against Reuters. He eventually became head of European sales and turned the region into one of Bloomberg's best, at times even outperforming the United States.
He wears purple (yes, purple) suits from the Savile Row designer Ozwald Boateng. He also favours leather pants, pork pie hats atop his bald pate, a pierced ear and modern art.
At Bloomberg, Fenwick was fond of marketing antics and extravagant office parties. One infamous Christmas party in London was based on the Seven Deadly Sins. It featured drag queens, a huge bed covered in purple satin and entertainers waving cash and shouting "Money, ain't it gorgeous!"
"He's irascible, opinionated and can be incredibly demanding," said TheStreet Editor-in-Chief William Inman, who worked for 17 years at Bloomberg and used to run its publishing unit. "He trusts his instincts and 90 percent of the time he is dead-on right."
Still, many colleagues were surprised when Fenwick was promoted to chief executive in 2001 as founder Michael Bloomberg, now mayor of New York City, stepped down to focus on politics. The strength of the European division and Fenwick's creativity won him the job, say people with knowledge of the matter. Bloomberg LP declined to comment for this article.
As CEO, Fenwick ramped up what had already been put in place: a strong brand and first-rate customer support. His desk sat in the middle of customer service, and he ordered every new member of the sales staff to rotate through that department.
But he also ran into legal trouble. In 2007, the Equal Employment Opportunity Commission filed a high-profile class action lawsuit that accused Michael Bloomberg, Fenwick and other top executives of discrimination against pregnant women.
One of the complaints alleged that Fenwick had instructed another executive to fire two women who were pregnant and said "I'm not having any pregnant bitches working for me." Bloomberg LP has denied the allegation.
U.S. District Judge Loretta Preska last year threw out the suit, saying there was insufficient evidence presented to show discrimination was the company's standard operating procedure, even if there were several isolated instances of discrimination. Some of the women are still pursuing individual claims.
Bloomberg insiders say Fenwick used fear as a tactic to motivate people.
"He would go into the office in his purple suit and stand there like a peacock and scream at people," said one former Bloomberg veteran. "He felt that he was keeping people off balance constantly... so they would look at things differently."
For his part, Fenwick has talked about the tough love he experienced from his parents. He once told a colleague that when he turned 21, his father gave him a one-way ticket to Australia to force the party-loving youth to learn to fend for himself. Fenwick wanted to refund the ticket and pocket the cash, but his father followed him to the airport to watch him board the plane.
Fenwick's take-no-prisoners attitude led him to butt heads with other Bloomberg executives and ultimately led to his downfall there, people with knowledge of the situation said.
By 2005, he was stripped of some major responsibilities though he held on to the CEO title until 2008, when he was demoted to lead Bloomberg Ventures.
REVAMPING DOW JONES
Fenwick began to explore other opportunities. His chance came when Hinton, a long-time Murdoch lieutenant, resigned as Dow Jones CEO in July 2011 at the height of the hacking scandal at the British newspapers, which Hinton had once overseen. In finding a successor, News Corp wanted to address the Newswires business since Murdoch had primarily focused on the Wall Street Journal.
A source close to the company said Fenwick is supposed to concentrate on the business and leave Thomson to run an autonomous newsroom. News Corp management knew Fenwick could be combustible, but felt he was worth the risk, the source said.
Fenwick brings new energy and drive to Dow Jones, his supporters say. They contend that the company had become too cautious.
"The history of Dow Jones is a series of opportunities lost," said Peter Appert, an analyst who covered the company when it was controlled by the Bancroft family and is currently with Piper Jaffray. "The hegemony of Dow Jones is significantly diminished in all parts of the financial information sector."
Fenwick has told employees he has Bloomberg and Thomson Reuters in his sights. He plans to create a Web-based platform to house all Dow Jones content, so he can better control the customer experience and be less dependent on third-party distributors like Bloomberg, Thomson Reuters, FactSet Research Systems Inc
He has also brought some of Bloomberg's focus on customer service to Dow Jones. He has shortened the customer service department's email response time to four hours from 24 hours. The company also plans to launch in November a 24-hour, seven-day-a-week online chat system to address customer issues.
Fenwick has rattled Dow Jones employees used to a more genteel style.
In a meeting with dozens of Dow Jones sales people and senior managers last spring, Fenwick was asked if he would seek customer advice on his changes. "F--- the customer," Fenwick replied, adding that he only cared about Dow Jones, according to four people who heard, or heard about, the outburst.
And Fenwick has backpedalled over some decisions.
After a presentation about Factiva, a news database that draws upon roughly 35,000 sources, Fenwick was surprised to learn that a default search ranked stories by relevance and did not give prominence to Dow Jones content. He pressed for changes to make Dow Jones articles pop up first, but had to undo them after customers reacted badly.
Some Dow Jones employees have reached out to Murdoch and News Corp President Chase Carey to complain about Fenwick, said another source. It is not clear how Murdoch and his lieutenants viewed the complaints.
At least a dozen high-level executives at Dow Jones have left since Fenwick joined. Many others are discreetly looking for new jobs. Some insiders fear layoffs are in store, partly because Fenwick is expected to consolidate journalists from Dow Jones Newswires into one newsroom under the Wall Street Journal moniker.
Several Dow Jones clients said they were impressed with the new CEO. One senior banker said Fenwick was smart and direct, adding, "He is what they need over there." Other clients said they were concerned about his plans to raise prices, which could affect decisions to renew contracts.
Ultimately, Fenwick's ability to boost Dow Jones's bottom line will determine his success or failure. "I would love to tell you we are making so much money here that we could lose a few million," Fenwick said in the July interview with Reuters. "I can't really say that. We need every dollar."
(Additional reporting by Miranda Maxwell in Melbourne; Editing by Tiffany Wu and David Gregorio)
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