Dow Jones seeks new owner

25 August 2009

NEW YORK: Some 113 years after it was launched by Charles Dow, the world's most famous stock index, the Dow Jones Industrial Average, looks set for a new owner and even a name change.

Purchased by Rupert Murdoch's News Corporation in 2007 for $5.7 billion (£3.45bn; €3.97bn), the current owner was recently forced to write down $2.8 billion of the purchase price after Dow's publishing operations – which include the Wall Street Journal - were hit by the advertising revenue slump.

The Dow marked the first attempt to give nineteenth century speculators a snapshot of overall market activity at a time when investment in new businesses, particularly the railroad companies, was riding high.

Initially, it contained 12 stocks, but this was raised to 30 in 1928. General Electric has been listed since day one, but is now flanked by other blue-chip names such as IBM, Wal-Mart and ExxonMobil.

The DJI has subsequently spawned many offshoots including specialist indexes devoted to transport, real estate and technology.

While a name change would be controversial, there is no shortage of potential bidders for the business, including MSCI Inc, a former unit of Morgan Stanley specializing in building market indexes. Based in New York, MSCI calculates tens of thousands of stock and real estate investment indexes every day.

Other likely candidates are said to include Bloomberg, Thomson Reuters and McGraw-Hill.
Dow Jones is only in the early stages of exploring a sale of its stock market index business, however, and a sales prospectus has not yet gone out. Negotiations with interested parties could result in a joint venture rather than an outright sale.

Dow Jones Indexes has more than 700 licensees and a supporting staff of more than 160. It has offices in New York, Boston, Los Angeles, Princeton, London, Paris, Stockholm, Zurich, Madrid, Frankfurt, Hong Kong and Beijing.

Goldman Sachs has been hired to explore options for the business.

Data sourced from Wall Street Journal; additional content by WARC staff