A Leading Economic Indicator

By Stephen Smith

The nation's biggest daily launches a second front

The Wall Street Journal had an unusual problem for a newspaper: too many people wanted to read it. Circulation rose 154,588 last year, which is about as many copies as the San Francisco Examiner sells every day. When circulation spurted another 136,604 in the first three months of this year--surpassing the New York News, then the nation's largest daily--the Journal (circ. 1.8 million) eased up on radio and television promotion and raised its newsstand price from 30-c- to 35-c-. Warren H. Phillips, 54, chairman of the parent Dow Jones & Co.,* said the paper simply could not satisfy the demand: "If we let it go on at that rate, we'd eat up our newsprint supply long before the end of the year."

The Journal had another unusual problem: too many ads. It simply could not accommodate all the advertisers who wanted an opportunity (at $43,000 a full page) to reach the paper's elite readers, who have an average household income of about $70,000 and a net worth of $650,000. Last week the Journal solved this dilemma by splitting the paper into two parts, thus raising the maximum number of pages it can print from 48 to 56 a day. The move is the paper's most radical format change in four decades. Reassuring longtime readers, Phillips promises: "There is no thought of fundamentally changing the paper."

There is no reason to. In these uncertain economic tunes, the Journal is clearly the paper of the moment, at least for businessmen. Opinion polls have ranked it as the most trusted and authoritative newspaper in the U.S. It is unsurpassed among daily newspapers (a possible exception: London's Financial Times) in business and financial reporting. With four bureaus in Canada, seven overseas (a Paris bureau is scheduled to open next month) and 14 in the U.S., the Journal is capable of superior, if selective, coverage of general news as well.

The paper remains essentially specialized, and does not convey a full sense of the nation or the world. The Journal's foreign coverage is surprisingly skimpy for all those foreign bureaus. Some journalists say that it lumbers after news, instead of sprinting. "Considering the size of the staff," says Barren's Managing Editor Alan Abelson, "they should have more scoops, discover more stories." The paper also sometimes runs lightly edited corporate press releases on its inside pages. Some close readers detect a drop-off in the quality of its trademark front-page features. "They're letting some writing get into the paper that doesn't sparkle," says Michael G. Gartner, a Journal Page One editor in the early 1970s and now president and editor of the Des Moines Register and Tribune. Still, Warren Brookes, economics columnist for the Boston Herald American, expresses the widespread judgment in the trade when he says: "It's the best-written and most intelligent newspaper in America today."

With the second section, it should be even better. For one thing, news space increases 10%. For another, the first page of the new section provides a home for medium-length news features, a type of story that did not fit comfortably into the paper before. The "second front," as some Journal hands call it, has a more contemporary design than Page One, with bolder and wider headlines and more graphics--or what passes for graphics at the determinedly unvisual Journal. It introduces weekly columns on small business, regional trends, real estate, marketing and science and technology, subjects the paper tended to neglect in the past. The lower left-hand corner is reserved for short, sprightly yarns; one last week cheekily examined the rich man's version of the box radios so popular with street people. The new page even has a rather tepid corporate gossip column called "Shop Talk" (who is on the fast track at General Motors and similar tidbits). Despite a year's preparation, the first week of the second front did not give readers a clear idea of what kinds of stories to expect.

As a business enterprise, the Journal has an edge over other newspapers: it is the nation's only truly national daily, and it has a ready-made constituency of information-hungry businessmen. The five-day-a-week paper remains, however, basically a financial publication, competing for stories and advertising dollars with the rest of the business press: Barron's, Business Week, Forbes, FORTUNE, Journal of Commerce.

This month the New York Times, with a beefed-up business section of its own, is scheduled to launch a national edition. The Times will find its Manhattan rival dug in and ready to slug it out. The Journal has twelve regional printing plants, seven of which can send or receive ready-to-print pages by satellite. About 95% of subscribers get same-day delivery. The fourfold rise in U.S. postal rates during the 1970s convinced the Journal that it should begin delivering its own papers; this faster service reached 16% of subscribers last year and is expected to cover 35% by 1983.

Founded in 1889 by Charles H. Dow and Edward D. Jones, two young reporters who had launched their now famous news service seven years earlier, the Journal limped along with a circulation of around 30,000 through the Depression. In 1941 a visionary managing editor, Bernard Kilgore, set the paper on a bold new course. "Barney had the idea that business and economic news didn't have to be dull, and that it didn't have to happen today to still be news," recalls William F. Kerby, 71, who succeeded Kilgore as managing editor, executive editor and later chairman of Dow Jones. "He also recognized that the businessman in Portland, Me., and the businessman in Portland, Ore., needed the same news."

Kilgore's formula remains pretty much intact today. The day's top business and world news is succinctly summarized for skimmers in two columns of short paragraphs on Page One. In the left-and right-hand columns are long articles called leders: well-researched feature stories or comprehensive roundups on new trends in both the business and civilian world. In the center of the page is a buoyantly written, sometimes zany piece called an Ahed (named for the A formed by its hairline border and decorative stars). Inside the paper is a numbing expanse of corporate and political news, between six and eight pages of market tables, and regular columns on the stock, bond and commodity markets.

Until 1979, the Journal did not have a single staff artist. Now it has four and is tinkering, just a tiny bit, with its tombstone-grim appearance. "We want graphics that add information to a story, not just decorate," says Page One Editor Glynn Mapes. "And that pretty much boils down to charts and graphs." The Journal uses line drawings instead of photographs on Page One. Every once in a while the paper may run a photo inside, as it did to illustrate an editorial last fall on Senator Edward Kennedy's accident at Chappaquiddick. Says Executive Editor Frederick Taylor, 52: "The paper speaks in a calm voice no matter how bad, how great or how exciting the news is."

The Journal likes to hire reporters when they are young, malleable and ambitious--typically with a liberal arts background and two or three years' experience on a daily newspaper. Although senior reporters at the Journal are well paid (more than $50,000 a year in some cases), young reporters start at $16,000 and early in their careers often earn less than counterparts at other large papers. What is more, the Journal's tightly edited format prevents most reporters from getting on Page One more than once a month or so, and even when they do, bylines are small and gray. In the past, these drawbacks caused frequent defections to other publications. Says N.R. Kleinfield, who left for the New York Times: "The old joke was that the Times could offer you two things the Journal couldn't --fame and money. There's a lot of truth in that still."

A Journal reporter's first responsibility is putting breaking business stories on the Dow Jones news wire. His second obligation, especially if he has a beat (tobacco, steel, banking and the like) is writing news stories for the inside of the paper. In his "spare" time, a Journal hand is expected to knock out stories for the second front and produce regular A-heds and leders. These front-page projects can take a month or more, and the paper is lavish in its support. Says Jim Drinkhall, an investigative reporter in the San Francisco bureau: "You can spend 40 bucks a day on food and spend six weeks in six or seven cities for one story."

The results are heavily edited and often rewritten. Even the most impenetrable subjects are usually discussed in clear, conversational prose, and every specialized term from a margin call to a baseball batting average is explained for the uninitiated. Says Lewis H. Young, editor in chief of Business Week: "Their method is to have a good editor working with a good reporter asking fundamental questions: 'What does this story mean?' 'How does it fit in?' That's why they get the emphasis, the importance, the significance right."

Through the 1950s and 1960s, many of the Journal's front-page stories focused on social change. But as economic and energy problems grew, and as other newspapers stepped up their coverage of business news, the Journal began concentrating more on its original franchise. "It's a much more topical, competitive newspaper than it used to be," says Peter R. Kann, a Pulitzer-prizewinning reporter, who became associate publisher last year. "We want to be first and best on the stories that matter to our readers."

The Journal's looks at corporate America can send a company's stock tumbling and its executives packing. Reporter John Koten's series this year on executive jockeying at Coca-Cola was especially noteworthy, and not just for the trove of confidential and embarrassing information it turned up. Coke Chairman J. Paul Austin, who was probably more red-faced than anyone, also happens to be a director of Dow Jones. Appearing often on Page One too, are offbeat profiles (an industrial spy, an Alaskan fur trapper), social problems (inflation's ravages, the trials of the elderly) and exotica from all over (crime in Hong Kong's Walled City, exiles working to restore the monarchy to Russia).

Among out-of-town papers with Washington bureaus, the Journal's contingent is second largest, behind the New York Times. In the capital, notes TIME Correspondent Simmons Fentress, it is regarded as one of the top three, along with the Times and the Los Angeles Times. Specialists, such as James M. Perry and Albert R. Hunt (politics), Dennis Farney (Congress), Richard J. Levine (economics), Kenneth H. Bacon (defense) and Karen Elliott House (foreign affairs), are pre-eminent in their fields.

The Journal's editorial page is possibly the most influential conservative voice in the U.S. Journal editorialists believe in free enterprise and free markets and become apoplectic about such matters as the antinuclear movement and the windfall tax on oil-company profits. On the other hand, it tangled with General Motors when the automaker endorsed wage-and-price guidelines last year, and it was dead set against Chrysler's request for federal loan guarantees.

Editorial Page Editor Robert L. Bartley, 42, who this year won a Pulitzer Prize for editorial writing, encourages his five writers to develop their own sources and even break news on occasion. For example, the agreement under which the deposed Shah of Iran left Texas' Lackland Air Force Base for Panama last year was first disclosed in a Journal editorial.

The Journal line is a hit with many businessmen. As Du Pont Chairman Irving Shapiro told TIME'S Elizabeth Rudulph: "They ring the bell with their readers. People are seeing in print what they believe themselves." But even Shapiro admits that Journal editorials tend to be "somewhat strident." That stridency is at least partly redeemed by the Journal's op-ed page, a melange of opinion (not always conservative), letters to the editor and coverage of the arts. The page now appears twice weekly but will become a daily feature in January.

With prices rising, productivity falling, and concern over the economy generally threatening to replace baseball as the national pastime, demand for the Journal's special brand of journalism should rise like margin calls in a bear market. All newspapers like to think they are in touch with the needs and feelings of their readers. The Wall Street Journal can go one step further. Says Kerby: "We're always touching the pocketbook nerve, which is the most sensitive nerve of all."

--By Stephen Smith

* The firm also publishes Barron's, the Asian Wall Street Journal, Book Digest and the 20 community newspapers of the Ottaway group.

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