Revamped and Ready to Rumble

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If last year's most overhyped story was Y2K, this year's leading candidate is the tech explosion that prognosticators say will soon propel Europe's economy to Wall Street highs. Across the Continent, companies are jockeying to position themselves at the forefront of the anticipated boom, and they are all looking for the same thing: information. Global publications like the Wall Street Journal and the Financial Times (FT) are poised to profit most as Europe's appetite for international business news translates into a new and increasingly wealthy readership.

Last week, the Wall Street Journal Europe (WSJE) unveiled the results of a year-long redesign aimed at tapping this burgeoning market. On Monday morning readers were confronted with the unfamiliar spectacle of a blue masthead, Internet-inspired graphics and, perhaps most jarring, color photographs. Hallmark features like the "What's News" columns that run the entire length of the front page and the distinctive black and white portraits are still there, but they now share space with items clearly designed to appeal to readers accustomed to navigating the Web.

In Monday's edition, one of the stories highlighted on the colorful new banner below the masthead was a piece on Paris' red-light district headlined "Silicon vs. Sex." The story, which didn't quite live up to its titillating billing, ran inside in a new section called "Networking," devoted to "technology, marketing and management in the new economy." If nothing else, the cosmetic changes caught readers' attention. WSJE editor Frederick Kempe claims newsstand sales for Monday were up nearly 50%.

Whether the WSJE can sustain this kind of momentum may depend on how well its main rival, the FT, succeeds in its approach to capturing Europe's business readership. Just as the WSJE's new edition hit newsstands, the FT announced that its German-language version will finally be launched later this month. A joint venture of the U.K.-based Financial Times Group (part of the Pearson media group) and German publisher Gruner + Jahr (75% owned by Bertelsmann), FT Deutschland will share the familiar salmon pink paper of its English counterpart, but its editor, Andrew Gowers, takes pains to stress the dissimilarities. "We're aiming at a different market segment than the FT, with content specially tailored for Germany," he insists. "The people who read the FT read it for the world view. We will have much more German news."

Analysts single out the Düsseldorf-based German daily Handelsblatt, with a circulation of 171,000, as FT Deutschland's primary competitor. But there are circles within circles in European financial journalism. In addition to publishing Germany's leading business daily, as of last June the von Holtzbrinck Group, Handelsblatt's parent company, also owns 49% of the WSJE. The WSJE's parent, Dow Jones, in turn has a 22% stake in Handelsblatt.

It's an incestuous and ever more crowded field, but the WSJE's Kempe is confident that his paper's $60 million overhaul, which includes a bigger staff and wider distribution, will be rewarded. "The whole market is going to grow," he predicts. "My guess is that we will and so will the FT." Kempe's ambitious goal is to see his publication outpace the FT on the Continent, where it currently lags by 67,000 to 135,000. He hopes to at least double the WSJE's U.K. circulation of 16,000, but concedes that there is little chance of overtaking the 188,000 copies the FT sells daily on its home turf.

Even a relatively modest WSJE increase in U.K. circulation would be a satisfying rejoinder to the FT's success at tripling its U.S. figures over the past two years, but these skirmishes are more about territorial pride than the bottom line. The more significant battle between the two publications is for continental Europe. "Our strategy makes more sense," says Kempe. "Germany may be the most important business economy in Europe, but it's clear that English has become the most important business language."

He has a point. After all, the WSJE's circulation jumped 17% last year, even without a redesign. And while Dow Jones may be forming local alliances and fortifying its European print presence, according to Paine Webber publishing analyst Lee Westerfield, its long-term bets are placed squarely on its future as a global online information source. "The print journals represent the brand name foundation that can be opportunistically exploited in the electronic media," he says. With a paid subscriber base of 375,000 and revenues of $31 million, the online Journal is already reaping dividends. Although the FT's free site logs fewer visitors, it is gaining ground. But even as the Journal and the FT size up the cyberterrain, the landscape is shifting. Last Tuesday, the venerable British news agency Reuters announced a new Internet-centered strategy aimed at retail investors. At the rate events are unfolding, the next big business story of the new millennium seems certain to be the news providers themselves.

With reporting by Charles P. Wallace/Berlin