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Journalists No More?

For the first time since 1933, the head honcho of Dow Jones (NYSE: DJ  ) , best known as the publisher of The Wall Street Journal, isn't going to be a journalist. Instead, it's going to be a finance guy.

Yesterday the Journal reported that Richard F. Zannino, the former CFO who joined the firm in 2001, will become CEO in February, succeeding Peter Kann, a former Pulitzer-Prize-winning reporter who has held the top post since 1991.

I applaud the move, as have other investors, bidding up shares of Dow Jones by 10% before yesterday's close. Zannino has an M.B.A. and extensive operations and financial management experience that includes executive posts with Liz Claiborne (NYSE: LIZ  ) and Saks, among others. That could prove key, with nationwide newspaper circulation dropping like a boulder in the ocean. Ad dollars, too, are increasingly going online, thanks in no small part to the success of Google's (Nasdaq: GOOG  ) targeted offerings.

Meanwhile, Dow Jones' stock is anything but a bargain. According to Yahoo! Finance, the firm trades for 59 times trailing earnings and more than 32 times expected income. Zannino faces a big challenge in trying to re-ignite the kind of growth that such multiples demand. If not, expect the stock to fall back to the more reasonable valuations assigned to rivals such as Gannett (NYSE: GCI  ) , at 12 times forward earnings, and New York Times Co. (NYSE: NYT  ) , at 17 times forward earnings.

Sadly, great reporting no longer appears to have much to do with profits. Because if it did, many, many papers would be doing just fine. Indeed, both the Timesand the Journal are perennial winners of the coveted Pulitzer, yet both have delivered unspectacular, if not outright poor, results over the last three years. All of this probably means more creative, business-savvy executive talent is going to be needed if the newspaper industry has any chance of recovering from its lengthy slump. Dow Jones has taken an important first step in the promotion of Zannino. Don't be surprised if others follow.

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Fool contributor Tim Beyers still reads the newspaper while drinking coffee each morning. He even wears the occasional sweater vest, like today. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what's in his portfolio by checking Tim's Fool profile. The Motley Fool has an ironclad disclosure policy.

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