Finance Matters

Archive for January 4th, 2010

Dow Jones is combining two of its business units: Its consumer media group — which includes The Wall Street Journal, Barron’s and MarketWatch — and its research tools and news wire services.  

In a top-management shake-up, Todd Larsen, the former head of consumer business, was named president of the company. Stephen Daintith, Dow Jones’ chief financial officer, will take on the additional job of chief operating officer.

Clare Hart, who was president of the enterprise media group, is leaving the company.

“This isn’t about personalities, and it’s not about costs,” Les Hinton, chief executive of Dow Jones, said in a statement. “It’s about the best way to operate an information business at a time when technology provides new tools for delivering news and new opportunities for keeping businesses and individuals informed.”

Dow Jones’ local media group, which is the company’s community news division and includes eight daily newspapers and 15 weeklies in six states, will operate as is.

Read more from the release:

As president of Dow Jones, Mr. Larsen will lead the business operations of the Journal, Newswires, Factiva and other products, including advertising, sales, marketing and product development. Prior to this year, he was chief operating officer of the Consumer Media Group where he was responsible for strategy, business development, financial management and day-to-day operations of the unit. Previously, he had been president of what Dow Jones then called the Consumer Electronic Publishing business, which included WSJ.com and other online businesses. He joined Dow Jones in 1999 from Booz Allen & Hamilton.

As chief operating officer for Dow Jones, Mr. Daintith oversees finance, technology and other administrative functions for the company. He joined Dow Jones as chief financial offer in 2008. Prior to that, he had been the CFO at News International, the publisher of The Sun, The Times, The News of the World and The Sunday Times since 2005. Mr. Daintith previously held several executive positions at British American Tobacco.

That’s the new pres, Todd Larsen, hiding in the back below.

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In her latest column, The Daily Beast‘s Tina Brown gets cozy with Rupert Murdoch, the News Corp. chairman and chief executive.

“Rupert Murdoch has greatly improved The Wall Street Journal,” she writes. “Leave it to an Aussie to give American journalism a swift kick in its down under.”

How sweet!

Brown also comes to Murdoch’s defense, after New York Times media columnist David Carr recently examined his right-wing influence on the Journal.

She also seems to be making amends with Murdoch, even though he has called for a revolt against “thiefs,” or, aggregators like her own Daily Beast. 

In Brown’s article, titled, “Things to Stop Bitching About in 2010,” she has a little jab for those accusations:

As for the Internet thieving the bona fide news reporters’ hard-worked stories, “Back at ya!” is all I can say. Online writers for years have had their stories ripped off by newspapers with no credit. At least the Internet links to the things it steals.

Read more of Brown’s column, in which she writes about more things we can stop whining about, including Obama’s stoic connection with Americans, Goldman Sachs’ big bonuses, and the GOP.

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See Also:

• Wall Street Journal And New York Times Get In Mud Flinging Contest
• Rupert Murdoch Spending $15 Million On A New York Edition Of The Wall Street Journal
• Tina Brown: The Internet Is About To Deliver A Golden Age Of Journalism

Charlie Gasparino thinks Goldman Sachs might be throwing anonymous sucker punches to revamp its image.

HuffPost: There are almost too many ways to attack the posting from the anonymous blogger (who goes by the name “Dear John Thain”), titled “2010 Will be A Challenging Year for Goldman Sachs,” (this guy obviously has a flair for understatement) so I will make the following points. Because he’s anonymous, we don’t know if he’s a Goldman executive (one way Goldman is now looking to attack its critics is by blogging positively about the firm, I am told) an investor with holdings of Goldman Sachs stock (a substantial conflict of interest if this is true), or just some guy with too much time on his hands.

Dealbreaker asked Goldman spokesman Lucas Van Praag if it was him.

Van Praag’s response: “If I were going to be propaganda blogging, I’d do so under a more anonymous name. Something of an Italian origin, maybe.”

And we agree, based on our knowledge of the situation, we’re reasonably sure that Dear John Thain is not in any meaningful way associated with Goldman.

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See Also:

• Goldman Finally Loses
• Gasparino: Goldman’s Image Crisis Puts PR Chief Van Praag On The Hot Seat
• Lloyd Blankfein Should Resign!

Like the rest of the world, big law firms are glad to see 2009 go. 

It was overall terrible — 12,196 people (4,633 of which were attorneys) were laid off by major firm in 2009, according to tracking by Law Shucks, which also notes that layoffs are underreported and these numbers, therefore, are likely even higher.

So coming off the worst year ever, there seems to be no place to go but up.

Still, there are some naysayers. The ABA Journal wrote today about “legal industry insiders” warning of decreased profitability in 2010 without major changes in business practices. We think firm profits will generally go up this year — mergers and acquisitions are picking up, banks are starting to lend again and litigation resulting from the financial crisis will last well into 2010 and beyond.

But the major topics of firm life from 2009 will remain the major topics for 2010, except hopefully we can move past the general anecdotes and start seeing hard evidence of widespread change or, conversely, hard evidence that firms may not be too big to fail, but are too big and too old to embrace massive policy shifts without a gun to their head.

And if they did not feel like they had a gun to their head this year, they likely never will.  Here’s what we  think will happen in 2010:

Layoffs: Let’s hope we’ve seen the end of the layoffs. Firms used the financial crisis to slim down significantly, both out of necessity and as a chance to unload unproductive associates they’d kept on the payroll for too long. But the firings dwindled as the year went on and, barring another massive financial collapse, firms should be more or less done.  In other words, no way we’ll see Latham lays off 190 associates 2.0.

Salaries: In 2009, salaries were frozen, they were cut, they were predicted to never go up again. But already today, Above The Law reported that Latham (again with the Latham) is giving associates class-appropriate raises that will return them to the standard scale. No one is predicting any jumps in big firm’s base salaires, but we expect a return to business as usual.

The base scale, of course, ignores a move to merit-based pay. One big firm partner we spoke to confirmed what we’ve believed all along — there’s been a lot of talk but not a lot of movement. Some firms are planning to do it, but it takes a whole lot of work. Parnters hate doing admin stuff too much for merit-based to really sweep the industry.

Partnership promotions: Like the economy, there will be a little uptick, but nothing crazy. Firms promote partners conservatively and will continue to do so. Plus, parntership politics vary so much from firm-to-firm that it’s nearly impossible to pigeon-hole the industry the way it is areas such as salary.

Alternative Billing: Ah, alternative billing. Big companies are demanding it (Microsoft said 45% of its U.S. spending on legal services will be based on alternative billing methods, the Chicago Tribune noted) and more and more firms are using it, or purport to be. And we imagine that number will continue to increase. But we think it will be years before it actually overtakes the billable hour.

The fact is when Levi Strauss announced its fixed fee arrangment, it was major news in the legal world. When a type of fee arrangment between one company and one firm is a huge story, it means it is still well outside the norm.  For the sake of law firm attorneys everywhere, we wish the billabe hour would go, but while 2010 may cut into its power, its obituary will not officially be written for years.

Recruiting: The spring recruiting season for 1Ls (and hopefully some January hiring for 2Ls and 3Ls) might give some indication of of whether firms are being a little less conservative, but the true indicators will not come until next fall when the real hiring season begins.  Conventional wisdom is continued conservative hiring — we will not be up to 2007 and 2008 levels for a long time. And maybe not ever.

We think the most interesting thing, however, is how firms are going to have to do a lot of shuffling to staff their cases with associates of varied experience levels in the years to come.  Huge 2007 classes compared to small 2009 and 2010 classes will lead to a pretty obvious imbalance in firms.  But we’ll deal with that in 2011.

So, here’s hoping to a sunnier 2010 and, with some luck, a return to the daily grind for those nearly 5,000 associates who lost their jobs this year.

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See Also:

• 2009 Firm Firings Highly Concentrated in Big Firms and Big Cities
• 10 Law Firms That Are Loving The Financial Crisis
• Surprise! The Billable Hour Is Not Dead

Eric Schmidt has been on Twitter for about a month, and he’s yet to take a real liking to it. He’s only blasted out eight tweets.

So, on the rare occasion that he does send out an update to his 20,993 followers, we like to see what he’s talking about.

Today he sent out two tweets, one a link to the Op-Ed column from Ross Douthat at the NYT, another to a story that Douthat cited.

Douthat’s column deals with America’s rise through the nineties, its stagnation in the last decade, and its prospects for this decade.

Douthat isn’t particularly optimistic about what the government is doing:

…instead of seeking a new post-Reagan consensus, the Obama Democrats are returning to their party’s long-running pursuit of European-style social democracy — by micromanaging industry, pouring money into entitlement and welfare programs, and binding the economy in a web of new taxes and regulations.

…Social democracy has its benefits, but global competitiveness isn’t one of them. As Jim Manzi points out, in an essay on “Keeping America’s Edge” in the latest issue of National Affairs, “from 1980 through today, America’s share of global output has been constant at about 21 percent. Europe’s share, meanwhile, has been collapsing in the face of global competition — going from a little less than 40 percent of global production in the 1970s to about 25 percent today.”

If we hope to avoid a similar plunge, the Obama-era tilt toward government intervention needs to be balanced, and soon, by a new growth-oriented agenda.

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See Also:

• Eric Schmidt Has A Thing For Heidi Montag (On Twitter)
• Eric Schmidt Joins Twitter*
• Eric Schmidt: Google Isn’t Killing The Newspaper Business