Downsizing hits America’s most prestigious business media properties.

bwsjThis past week, the business media world was buzzing about the inadvertent release of information concerning pending layoffs at Barron’s magazine, thanks to editor-in-chief Ed Finn mistakenly hitting “reply all” on a message intended for just one person.

But the more interesting news is what’s happening right now with two of America’s most important national print publishing properties: Barron’s and The Wall Street Journal.

Up until now, it was thought that a select handful of America’s largest and most pervasive publications with national reach and reputation would be the ones least susceptible to problems befalling the industry regarding declining advertising revenues and changing news consumption habits.

At or near the top of the list of those rarefied properties were these two publications for sure.

But now we know a different reality — or at least a more complicated one. WSJ editor-in-chief Gerard Baker announced last week that the publication is seeking a “substantial number” of employee buyouts to limit the extent of involuntary layoffs that will need to happen otherwise.

The WSJ buyout offer been extended to all news employees worldwide – managerial and non-managerial – and includes a lucrative voluntary severance benefit that’s 1.5 times larger than the company’s standard buyout package.

WSJ employees will need to make up their minds quickly, as the buyout offer is good only until the end of October.

wsjbAs for Barron’s, its situation became public only after the Ed Finn memo was received in the New York City newsroom of The Wall Street Journal in error.  The Finn memo, which had been intended for Dow Jones Media Group publisher Almar Latour, speculates on how The Wall Street Journal’s announcement might affect an upcoming round of layoffs at Barron’s.

That bit was “new news” to pretty much everyone.

Aside from the “drama” of news scoops happening because of unintentional actions, the bigger question is this: What do these layoffs and buyouts portend?  Is it the end of the adjustments – or just the beginning?

Clues to that answer come in Gerard Baker’s memo, where he reveals that The Wall Street Journal has “begun an extensive review of operations as part of a broader transformation program.”

Let’s see what kind of “silver bullet” business strategy they end up devising – and whether it will have its intended effect.

Google businesses: One big star and a bunch of perpetual understudies?

Alphabet or no Alphabet, when it comes to anything beyond its core search and display advertising business, Google’s performance is pretty ‘meh.’

canHere’s an interesting news byte: Morgan Stanley estimates that Google has lost between $8 billion and $9 billion on its so-called “side projects.”

So reported the Barron’s blog this past week.

It’s the strongest signal yet that Google’s vaunted business model is spectacularly successful for its core business … but that it’s as ineffective as most other companies when it comes to building the next silver-bullet product or service.

Even Google’s YouTube business unit is likely only a break-even proposition, despite years of concentrated attention, enhancements and tweaking. According to Morgan Stanley’s Brian Nowak:

“We estimate YouTube runs at a 0% profit margin … YouTube’s profitability could [actually] be lower than we estimate, but since it likely varies significantly from quarter to quarter, and until we have more visibility into the business, we believe break-even is a safe assumption.”

umbrellaIt’s likely we wouldn’t have even these clues were it not for the recently announced creation of Alphabet, a new umbrella structure for Google’s various business segments:  search, which is an estimated 96%+ of its business volume, and then everything else.

This development is providing more “transparency” that enables investment houses like Morgan Stanley to come up with back-of-the-napkin rough figures like this:

Google Revenue and operating profit Morgan Stanley

As time goes on, it will be interesting to see if Alphabet can demonstrate that the corporation is more than a one-trick pony.

Regardless of that outcome, the way that Google has cornered a ginormous $60 billion+ chunk of the advertising business is amazing – and laudable. Fair dues on that.