Hot lead meets high-tech.
But she urges him to return to Bosnia, using his photos to inform outsiders about the conflict and "taking a side."
A Pulitzer Prize winner himself, 52-year-old Kann spent his early career pounding a beat in Asia, writing for The Wall Street Journal on the Vietnam War, and later, on the 1971 India-Pakistan War. As an eyewitness to bloodshed, did he ever take a side? "A complicated issue," Kann half-grunts after a momentary silence, leaning back in his chair, fingers locked together on top of his head, eyes turned toward the ceiling. "As a journalist, one should try pretty hard not to take sides. And yet there are situations where there is a clear-cut distinction between right and wrong. I recall going out with a unit of CIA mercenaries in Vietnam on a so-called secret operation. They picked up a suspected VC [Viet Cong], put a gun to his head, and blew him away." Bracketing his response with another pause, Kann inches forward cautiously, defining both his values and those of the organization he runs -- Dow Jones & Co., best-known for the Journal, its staunchly conservative flagship newspaper. "There are a lot of questions you ask yourself in a situation like that," he continues. "Asia in the 1960s and 1970s was a laboratory, with nations deciding economically and politically which way they were going to go. You'd have to be a dunce not to see that the societies moving in the direction of freedom were the successful ones. Philosophically, that probably had as much influence on me as anything else."
The implication is clear: Ultimately, beneath a veneer of reportorial objectivity, Kann took sides. The experience generated an instinct -- one that has served him particularly well in his second life as a publishing executive. Though he swears minimal involvement in determining the Journal's content, Kann is a fierce supporter of the right-thinking mortar rounds delivered by editorial page editor Bob Bartley, whose staff of 18 men and women helps define the agenda and parameters of U.S. conservatism. Meanwhile, after a slow start as CEO in 1991, Kann also seems to be reversing some of the costly caution of his forebears, unleashing Dow Jones' full capabilities in information technology and driving the company deeper into electronic media.
The results have been mixed. For three consecutive years, Dow Jones' earnings have increased by 20 percent-plus, excluding nonrecurring items. Revenues in 1994 exceeded $2 billion, an all-time high. Yet newsprint prices are soaring; advertising is spotty; and Dow Jones stock remains in the doldrums, recently trading at $35 a share, a deep discount to the $56 it fetched before the 1987 stock-market crash. To be fair, many other newspaper groups aren't performing any better. But with fast-growing electronic publishing comprising more than half of its revenues -- and with nearly 40 percent of its business coming from offshore -- Dow Jones argues that it doesn't fit that traditional category. Problem is, investors seem to be missing the message. And ironically, Dow Jones, perhaps the world's most powerful opinion factory, feels misunderstood.
"The market just doesn't get some of our electronic ventures," says Dow Jones communications chief Roger May. Adds Kann, "We might blame ourselves for not having told our story clearly enough." The CEO professes faith that markets are efficient "in a macro sense," and that the share price eventually will reflect Dow Jones' true value. But Dean Witter analyst Jim Dougherty counters: "I never met a CEO who felt his company wasn't undervalued." In fact, Dougherty concludes in a recent research report, Dow Jones may actually be overvalued: Based on 1995 earnings estimates, the company trades at a multiple premium to Gannett, Tribune Co., Knight-Ridder, and Britain's Reuters plc. The latter derives all its revenues from global electronic financial news and transaction services, Dougherty says. "So if you base your play on Dow Jones' activities outside print or the U.S., you still don't have a good reason."
Nevertheless, Kann is moving quickly in electronic publishing, winning above-average marks for his efforts. Dow Jones' Telerate information service is a strong No. 2 in a market dominated by Reuters. There are newly launched business television stations abroad. On the print side, there are five-day journal spin-offs in Asia and Europe; Barron's; a string of magazines; a chain of local newspapers; and, of course, the Journal itself. Given such global extension, onlookers muse that Kann may be among the most powerful chief executives in the U.S. Is there a way for him to address that without immodesty or self-deprecation? "No," he says, laughing, fidgeting in his seat. There's a scripted sermonette Kann has delivered many times about how the press should never aspire to power, a discourse and defense passed down through the generations at Dow Jones from one CEO to the next. But it follows another brief communion between Peter Kann and the ceiling.
If bluebloods trace their lineage to the Mayflower's landing on Plymouth Rock, many blue chips trace theirs to early membership on the New York Stock Exchange. While Dow Jones did not join the exchange until years later, it set up shop in 1882, providing inside information on the railroad, iron, and steel businesses that dominated early trading.
Over the years, Dow Jones simultaneously covered and supported the interests of both conservatives and the business community. But when The Wall Street Journal hired Bob Bartley in 1962, it planted the seeds of a political revolution. Bartley, who advanced to editorial page editor in 1972 has a simple agenda: to make history rather than merely to comment on it. Thus, his self-described "journalism of opinion," brass knuckles wrapped in prose. Despite Kann's self-effacing homily that the press should not empower itself, he is an impassioned advocate of Bartley: "I'm very much in synch with the way Bob sees the world," he says. Though Kann disdains "the blurring of the lines between news and entertainment," he is aware that in any media business, personalities -- showmanship -- are part of the product, and Bartley, a top-notch high-wire act, is among the most valuable commodities on Kann's shelf. Like an experienced vintner, Kann seems to sense the precise conditions under which Bartley and his crew will thrive. Among these are an autonomous charter and unequivocal institutional legitimacy.
The editorial department is Dow Jones' free-trade zone, the rough equivalent of "American Gladiators," with Bartley's Blue Team drawing a bead on anything that moves left of center. After a period of waffling on moderate George Bush, Bartley opened fire at "muzzle velocity" with the 1994 election of Bill Clinton. (Liberals joke the "muzzle" ought to be slapped around Bartley's jowls.) After years of snacking on scraps, the beast is insatiable: Recently it has consumed FOBs including Surgeon General Jocelyn Elders; Attorney General-nominee Lani Guinier; and the late-Vincent Foster, a White House deputy counsel who shot himself to death with a Colt revolver, claiming in a suicide note that the Journals editorial page twisted the truth by playing up his circumstantial ties to the BCCI scandal. More than an effective source of criticism, however, the page has developed a reputation as a policy-maker. A prime example of this was Bartley's role in popularizing supply-side economics, a once-obscure theory advanced by economist Arthur Laffer and adopted by the Reagan administration (see sidebar, p. 44).
For his part, Kann occasionally is summoned to finish the fights Bartley & Co. pick. When a March 93 editorial by D a n Henninger ascribed the murder of an abortion doctor to a decline in American values that began with hippie demonstrations outside the 1968 Democratic convention in Chicago, liberals went ballistic. Firing back, Kann took out a full-page ad in the New York Times defending the piece. The CEO jokes that readers get two papers for the price of one, but adds that he declines to play policeman with managers whose beliefs he endorses.
I am glad to see the press take note of the influence Bartley and the editorial page have," Kann says, referring to a spate of critical magazine articles a year ago. Indeed. Balance sheets reflect the value of brands, and Q-ratings gauge the star power of celebrities. But no one has yet conceived a way to take the full measure of Bob Bartley. Unless, perhaps, archnemesis Michael Kinsley's New Republic revives its "Zeitgeist" feature and takes to tracking Bill Clinton's blood pressure.
Dow Jones made three momentous decisions over the last 15 years. The first, driven by then-CEO Warren Phillips in the early 1980s, was to turn essentially a two-cylinder operation, comprising The Wall Street Journal and Barron's, into a big business. The second, in 1985, was to test the waters in electronic publishing with the phased acquisition of Telerate, then run by high-flying entrepreneur Neil Hirsch. The third was the decision to name Phillips' protege Peter Kann as CEO over Information Services chief William Dunn, who advocated a more radical transition into high-tech. Dunn quit when Kann got the nod. Given Dow Jones' difficulties outside the print arena, some armchair quarterbacks have been playing "What If?" ever since.
In selecting Kann, however, Dow Jones stuck to the script: Never has it had a CEO without a print pedigree. Harvard-educated Kann -- witty, urbane, cosmopolitan -- started with the Journal in 1964. He became the paper's first resident reporter in Vietnam. Kann was awarded a Pulitzer Prize in 1972 for a series of articles on the India-Pakistan war, which led to the birth of a nation, Bangladesh (see sidebar, p. 43). In 1987, after a stint as publisher of The Asian Wall Street journal, he returned to the U.S. as publisher and editorial director of the domestic journal. Kann became Dow Jones CEO in January 1991 and added the chairman's feather a few months later.
What's singular about Kann is the convergence of his business and personal ethics -- a characterization that emerges both in conversation with the CEO, and in interviews with analysts and past and present Dow Jones executives. Whatever the topic, Kann recycles a short list of key concepts. Consistency. Tradition. Family. Family is everything to Kann. Like many core values, this was shaped by a loss: He married at the age of 26, but his wife died 13 years later. He has a 21-year-old daughter, Hillary, by that marriage. Two adopted children -- Petra, 8, and Korean-born Jason, 6 -- are a part of his second marriage to Karen Elliott House. Also a former Pulitzer-winning reporter, House is Dow Jones president, international. Now, business is family.
Given his perspective, it's not surprising Kann views Dow Jones as an extended family. Associates, in turn, cast the boss as a consensus-building patriarch. "Peter never comes down and slams his fist on the table," says Larry Armour, a 25-year veteran of Dow Jones and director of corporate relations from 1981 to 1988. "Instead, he makes suggestions in a nonthreatening way. He is nice, which some people take as a sign of weakness. But he's a lot tougher than he looks."
In terms of corporate culture, sometimes the tribal approach works, and sometimes not. "The family concept is wonderful in that it builds loyalty," says a publishing industry insider who requests anonymity. "It's bad on the creative [hiring] side in that you don't get many new ideas." Insularity aside, Dow Jones also has a reputation in some quarters as a pinstriped, tight-lipped, "I'm-All-Right, Jack" organization. Managing Editor Paul Steiger concedes he's been overruled by Kann, though the specifics elude him. On the record, DJ executives sidestep questions about the boss' limitations. And a question for Dow Jones President Ken Burenga about the company's appetite for technology and investment risk, based on a cutting 1992 profile in Forbes, draws a polite follow-up call from public relations -- spin control with a smile. What may appear to be a mild case of xenophobia is really excessive modesty, says Jim Riordan, former vice chairman of Mobil Oil and a Dow Jones board member. "Peter and the others don't like to speak about themselves," Riordan explains. "The idea is to let quality products speak for themselves."
In fact, it's only when talking about his stint as a beat reporter that Kann becomes truly effusive. In the midst of describing a 1967 tour of Vietnam he took with two fellow correspondents in a beat-up Volkswagen, Kann leaves the room to field a phone call from another board member, former Ford CEO Don Petersen. He returns 10 minutes later, re-entering the conversation like a bookmark in text: "You had us riding a Jeep or something." Talk shifts to touch on a papier-mache mask made by one of his kids and several technology questions. "About technology," Kann says and abruptly halts. Downshift. "A one-minute digression. It's been 20 years since I stopped writing for a living. I was the only Dow Jones person between Tokyo and London. I used to wander off for weeks at a time, filing from some [telegraph] office in Phnum Penh...
"There's nothing that has the immediate satisfaction of seeing your byline on a story. You get 50 phone calls" from coworkers, he says, romantically disregarding the fact that his activities as CEO may affect thousands of shareholders and millions of readers. Downshift again. "But you were talking about some Jeeps from Vietnam..."
"Peter Kann is a newspaperman," says Ed Atorino, who follows Dow Jones for brokerage Dillon Read. "And Dow Jones is a newspaper culture. To succeed in a culture like that, you gotta be a true believer in everything the Journal stands for, and he is."
"Journalism is his first love," adds Armour, now director of executive communications for Lou Gerstner and IBM. Armour chuckles over the phone as the conversation with Kann is related to him. "It's been six years since I worked with Peter. But he hasn't changed a bit."
It's midday, and a Dow Jones executive snakes through a labyrinth of broadcast studios on the 12th floor. Inside one booth, an engineer with a headset is flanked by a producer and a news assistant: They're waiting for Alan Greenspan to emerge from a Fed meeting with news on whether interest rates will jump a quarter point. The announcement will be broadcast live over the Dow Jones Investor Network, a video service delivered to traders via personal computer. Typically, such a move by the Fed triggers seismic shifts in the trillion-dollar foreign-exchange and government-securities markets, with a profound ripple effect in economies worldwide.
Strange that the lord of this global village is a guy who still relies on a beat-up Smith-Corona typewriter. In fact, Kann owns several typewriters, including one from the 1920s, and a red, Olivetti portable he used as a reporter in Asia. He recently expropriated a "Personal Technology" column in the Journal to extol, half tongue in cheek, the virtues of his vintage machines.
When he became CEO in 1991, Kann seemed to fall in with the loping stride of the previous regime on technology: Observers speculate that may be one reason he whiffed on the acquisition of the Financial News Network, losing out to GE Jack Welch's Consumer News and Business Channel by a paltry $5 million in a $170 million sale. "Peter missed the opportunity to be broadcast financial news in the U.S.," says analyst Atorino. "He'd buy it tomorrow, whatever the price, if Welch wanted to sell it."
But consensus holds that Kann has made up plenty of ground since, moving boldly and reburnishing Dow Jones' reputation as a technology innovator. Much of that elbow grease has been applied to the once-troubled Telerate service, which competes straight up against Reuters around the world. Each company has areas of strength: Reuters in foreign exchange and Telerate in U.S. government bonds. Each entered the other's backyard in recent years and paid for it dearly. Depending on whose figures you quote, Reuters' electronic operation is two to three times the size of Dow Jones', but Kann says he's closing the gap. Telerate has captured market share from its British rival two years in a row, though a spate of smaller, innovative companies -- including analytic tools specialist Bloomberg Financial Markets -- is nipping at the heels of both companies.
Not long ago, Telerate was in disarray, and Wall Street reacted by hammering Dow Jones stock. Contrary to Bill Dunn's recommendation, Dow Jones acquired Telerate piecemeal, eventually paying a considerable premium for a business it wound up owning 100 percent of anyway. Cultures clashed, with journal veterans bristling over their sales-driven, power-lunch, 10 a.m.-to-4 p.m. cousins. Carl Valenti, Dunn's former right-hand man, was summoned from the Information Services division to stop the bleeding in 1990. The triage is almost complete, and Telerate's operating income surged nearly 30 percent last year. Ken Burenga acknowledges the perception among investors that Telerate was a poor investment and a drag on earnings, but interestingly, he places most of the blame on the press. "These things never die," Burenga says. "They're resurrected and people pull out quotes even if they were not totally on the mark when they were written."
With the recent launch of a Telerate workstation product, Kann has embraced a model based on open systems and multimedia -- the service's users now can monitor the Dow Jones Investor Network on screen (see graphic, p. 42). Analysts say he has immersed himself in technology and injected life into DJ roadshows. "Peter's presentations have become filled with electronic information," says Atorino of Dillon Read. "He's spent the last year behind closed doors cranking out a whole family of products. Now, it's payoff time."
The electronic roster is growing. There's Personal journal, a first-generation interactive product that downloads customized information from the Journal onto a PC. Dow Jones' Business Information Services is marketing its products and services to corporations, consumers, and individual investors. Dow Jones last year acquired a minority stake in Hubbard Broadcasting's U.S. Satellite Broadcasting Inc. It will be the exclusive provider of business and financial news to the 150-channel service, which viewers receive through 18-inch dish antennas. Of course, there are the TV channels in Asia and Europe: "With FNN, Peter missed on the chance to work from the U.S. out," Atorino says. "My bet is that he'll work from the outside in."
Whatever direction he chooses, Kann could use some help from the Street: While Dow Jones skillfully deploys technology to provide value to customers, that value hasn't yet trickled down to shareholders. In plotting a course, however, don't expect Kann to be seduced by high-tech bells and whistles, or to stray too far from Dow Jones' core competency: providing critical business information fastest and first.
"I don't think this business is fundamentally technology-driven. I think it is content- and functionality-driven," says the guy with the typewriter. "We're not trying to be an entertainment company or a media conglomerate. We're a simple company. Our core is content, and our business is business."
Related Article: Morgan Of Applied Materials: Planning For
James Morgan, 56-year-old chief executive of Applied Materials, is the kind of leader Wall Street adores and business schools put on pedestals. Under his aegis, Applied's stock price rose more than 379 percent between 1992 and 1994. The company expects to boost 1993's $1 billion in sales to $2.4 billion this year, and projects annual sales as high as $5 billion by 2000. Buyers such as Motorola, Intel, and Samsung have made it the world's leading producer of semiconductor wafer fabrication systems. Its largest competitors: Tokyo Electron and Nikon.
"We work on our long-term profitability quarter by quarter," says Morgan, who came to the Santa Clara, CA-based company in 1976 and became CEO a year later. "The market also appreciates Applied's aggressive investment in R&D and commitment to gaining market share, he adds. Of course, it helps that the semiconductor industry is booming.
Wall Streeters attribute the company's heady growth to Morgan's knack for seizing opportunity. "He made the critical decision in 1977 to go into Japan," says Mark Fitzgerald, senior analyst at Hambrecht & Quist. "The company has grown, because he planted those critical seeds." Today, 60 percent of Applied's revenues are from overseas; 27 percent from Japan.
That landmark decision -- part of Morgan's turnaround strategy -- came only a year after he joined Applied from venture-capital firm WestVen Management. "Applied had gotten into trouble," he recalls. "It was too diversified and didn't build on its technology basis properly." Moving aggressively, Morgan halved the company's revenues to $14 million, discarding everything but wafer processing, and set a goal many scoffed at: to be No. 1 in the world. For that, he says, it was essential to "get globally established before anybody else."
From there, he set non-financial goals based on the market potential of individual division. "we just had a mission, not specific revenue goals," he explains. "People, as well as organizations, should try to meet their potential." By Wall Street's measure, Applied's potential is enormous.
Related Article: THE BIRTH OF BANGLADESH: A REPORT FROM THE FRONT
A generation ago, East and West Pakistan were separated by 1,000 miles of northern India and a broad range of religious and political differences. In December 1970, East Pakistan's Awami League, headed by Sheikh Mujibur Rahman, sought full autonomy for the province and won an overwhelming majority in Pakistan's National Assembly. To forestall the autonomy bid, Pakistani President Agha Muhammad Yahya Khan nullified the election results, banned the Awami League, and imprisoned Sheik Mujib in West Pakistan on charges of treason. Riots broke out in the East, Pakistani troops attacked on Mar. 25, 1971; and a day later, East Pakistan declared its independence as Bangladesh. In the ensuing nine-month civil war, some 10 million refugees (mostly Hindus targeted by the Muslim Pakistani army) fled to India, and an estimated 1 million Bengalis were killed.
India-which had been at odds with Pakistan for decades over border demarcations -- supported Bangladesh and declared war on Pakistan on Dec. 3, 1971. For two weeks, Bengali Mukti freedom fighters fought next to Indian Punjabi soldiers against Pakistani Punjabis. On December 16, Pakistani troops in Bangladesh surrendered.
Writing just prior to the cessation of hostilities, from the Munshiganj Subdivision of Bangladesh, 22 miles south of Dacca (see graphic), 28-year-old Peter Kann pieced together a story of blood rivalries, economic devastation, and war atrocities. His series of articles from the front, published on page one of The Wall Street Journal, won him a 1972 Pulitzer Prize. Some excerpts follow.
As Indian forces intensify their pressure against East Pakistan, it appears certain that an independent Bengal Nation will emerge. Yesterday the battle for Dacca began, and some top civilian officials of the East Pakistani government resigned.
What would Bangla Desh, as the Bengalis call it, be like? It's impossible to tell for sure. But the Mukti Bahini, or liberation fighters, have taken control of much of rural East Pakistan as well as a lengthening list of larger towns. Thus, a recounting of a trip to one of these areas taken just before the general Indian-Pakistani war broke out may offer something of a microcosmic view of a future Bangla Desh, its army, its administrators and its people.
The area chosen was Munshiganj Subdivision, a village 22 miles south of Dacca. The trip was taken in what is called a "country boat" -- a 60-foot rivercraft of advanced age that chugs down one of the many broad and meandering branches of the Ganges. The boat trip takes about eight hours, for rivers don't flow 22 miles as the crow flies....
Within minutes after arrival, our small party is having tea in a Bengali house, surrounded by generally friendly and uniformly vocal Bangla Desh partisans. The rhetoric is dramatic; Bengalis are born operators. Speaking of the Punjabis, West Pakistan's dominant ethnic group, a 60-year-old member of the local Bangla Desh civil administration says: "The Punjabi brutes have tortured our people as no other people have been tortured. A burning fire is in our hearts. How can we tolerate the brutes? All ways are now closed to them."
A young Mukti says, "Last week we operated on (killed) 36 Punjabis." How many prisoners did the Muktis take? he is asked. "None," he replies. "That's remarkable," a visitor says. "Remarkable and gallant," the old man interjects. He pulls up his shirt to display a black band tucked in the waist of his sarong. "When I find a Punjabi, I put my black band over his eyes, and then I stab him."
Explains a young man with a Sten gun: "Before, we were soft-minded, but now we are cruel. We are making Bangla Desh a free nation on the map and Inshallah (God willing) we are succeeding ...."
On the second day of our trip, we get a better look at the Muktis. We are guided several miles downriver to another village and welcomed ashore with the fanfare of flags, cheers and even a Bangla Desh photographer in a natty woolen suit who stands on the riverbank to snap our pictures as we step ashore. A crowd of perhaps 500 villagers was assembled on "two hours" notice, an official explains. "With two days' notice," he adds, "we could have gotten two million...."
Lined up nearby are 60 or so Mukti Bahini. They are dressed in sarongs or loincloths and armed with a smorgasbord of weaponry: old Lee-Enfield .303 rifles, snub-barreled Sten guns, AK47 automatics, shotguns and grenades.
The guests are treated to a display of ambush tactics by the Muktis. The men crawl through some low underbrush, gripping their weapons, one man with a grenade between his teeth, while an officer with a brass whistle whistles directions.... The local unit commander was a sergeant in the regular army and tells his bitter story:
"In March the bastard Punjabi sepoys (soldiers) stopped saluting me.... Later, one of the bastard sepoys blowed me on the face with a gun .... The bastard sepoys struck my wife .... Later, I saw the bastard Punjabis forcibly rape young Bengali girls in the open field .... I escaped and determined to take my revenge at all costs and all circumstances.... Inshallah I have so far killed 40 Punjabi soldiers.... I take my revenge...."
"We are all shaeed," one youth says. "That means men who die for the sake of their country," a buddy explains. "He killed more than 10 Punjabis," they say, pointing to a third youth. I scribble the number "10" in my notebook. "No, more than 10," says the first youth, genuinely offended. Weapons are handled almost reverently by the Muktis. "This is my very life and good friend," says a pudgy young soldier in dark glasses, caressing his vintage Lee-Enfield rifle.
Related Article: KEEPER OF THE CANON
Without question, Bob Bartley & Co. wield enormous power: The best example of this is their role in the mid-1970s in discovering and popularizing supply-side economics.
Searching for an alternative to Keynesian economics, Journal editorial writer Jude Wanniski met Arthur Laffer, a University of Chicago maverick who had become chief economist for President Nixon's Office of Management and Budget. Through Laffer, Wanniski contacted Robert Mundell, a Canadian economist now teaching at Columbia University. In 1974, Mundell suggested the radical notion of combining tight money and tax cuts to halt the prevailing climate of inflation and recession. He proposed a $10 billion tax reduction.
Wanniski was converted to Mundell's ideas and impressed by the Laffer Curve, a graphic demonstration of them, which charted a new tax law of diminishing returns. The writer undertook to convert Bartley and Deputy Editor George Melloan, starting with an article on Mundell's proposal. The ensuing series of pieces drew the attention of Republican Congressman Jack Kemp, who teamed with Delaware Senator William Roth in 1976 to introduce a bill calling for a 30 percent across-the-board reduction in marginal income tax rates over a three-year period.
The tax-cut idea was presented to Ronald Reagan, who adopted a similar proposal in his presidential campaign. The Reagan revolution was underway. The rest, as they say, is history.
"To ask what else the Journal has done is like asking what else Einstein did besides the theory of relativity," author Eric Alterman told the American Journalism Review in 1993.
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|Title Annotation:||includes related articles; technological initiatives of Dow Jones CEO Peter Kann|
|Publication:||Chief Executive (U.S.)|
|Article Type:||Cover Story|
|Date:||May 1, 1995|
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