Throughout its 17-year history, Investor’s Business Daily has always stood out from the crowd whether it’s the greatly enhanced (and much imitated) stock tables or a news package that includes folksy bits of feel-good financial advice.
Now, as other media companies warn of reduced earnings after the Sept. 11 terrorist attacks, the Los Angeles-based financial newspaper has begun running full-page ads suggesting ways to revive the U.S. economy and trumpeting its own expansion plans.
“In times like this, it is important to remember Rule #1 in Investor’s Business Daily “10 Secrets to Success”… “How you think is everything.” Always be positive. Think success…not fear,” reads an ad the paper recently ran in The New York Times.
IBD was set to debut this week a complete redesign, which will include the expensive addition of more color pages. It plans to soon add contract printing facilities in Des Moines, Seattle and possibly Denver.
All this comes despite the fact that Investor’s Business Daily has seen national advertising revenues fall 20 percent to 30 percent this year, according to founder and publisher William O’Neil. This summer, the paper laid off 3-4 percent of its staff, which now totals about 200 employees.
Total paid circulation was at 313,000 as of last March, only slightly above the 311,000 for the like period a year earlier, according to the Audit Bureau of Circulations.
But O’Neil, a 68-year-old investor and financial analyst, is a risk-taker. In 1984, he launched his own newspaper, then known as Investor’s Daily, to rival the Wall Street Journal, and based it thousands of miles away from the nation’s major financial markets. Since then, he has attracted a loyal following among pockets of the financial community in large part because of the proprietary method in which the paper’s market tables are presented.
Recovery predicted
Over the years, however, it’s been a consistent money-loser. In a 1994 interview, O’Neil said the paper needed to attract 235,000 paid subcribers to reach its “break-even” point. The paper reached that point a couple of years ago but turned a profit for only three or four months, O’Neil said last week. Without offering specifics, he said that the paper has a positive cash flow and “that’s the thing that’s important to us now.”
As usual, O’Neil is undaunted. (He spends over $5 million a year on promotion alone.) Confident that the market already has hit bottom, he predicts that ad revenues would begin recovering in November and that circulation would eventually follow suit.
“Everybody is scared to death talking about how bad things are going to be and we’re saying, ‘Hey, we think things are going to be better,'” he said.
More dependent on paid subscriptions than most newspapers, Investor’s Business Daily is probably less affected by the advertising downturn than the Wall Street Journal, said Daniel Peris, a senior analyst with Argus Research in New York.
Expanding in these economically uncertain times is a valid strategy, Peris said, but it’s too soon to tell whether it will work.
“They’re investing at the bottom of the cycle to try to gather some market share,” Peris said. “It’s probably something a private company can get away with more easily because they don’t have the public scrutiny of their earnings so they have a little bit more latitude with investment.”
Publicly held media companies have turned to layoffs and other cost-cutting measures in recent months. Tribune Co., which owns the Los Angeles Times, plans to reduce its staff by 6 percent. Knight Ridder Inc. had announced plans to cut some 2,000 jobs, even before warning of a significant drop in third-quarter earnings. Dow Jones & Co., publisher of the Wall Street Journal, offered a similarly grim outlook.
But O’Neil sees this as a good time to invest in his paper’s expansion. While adding contract printing plants represents an initial expense of a “few hundred thousand (dollars),” the move will eventually allow the paper to cut down on transportation costs and improve delivery, he said.
