NEW YORK (Reuters) - Dow Jones & Co Inc has been talking to potential buyers about the sale of its stock market index business, which includes the Dow Jones industrial average <.DJI>, the company's Wall Street Journal newspaper reported on Friday.
Goldman Sachs
The process could result in a sale, joint venture or some other type of arrangement, according to the online report by The Wall Street Journal. The report cited people familiar with the matter.
Representatives for News Corp and Dow Jones declined to comment.
Anchored by the Dow Jones industrial average, the best-known measurement of U.S. stocks, the company's indexes business creates and licenses trading indexes.
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.
Charles Dow, Edward Jones and Charles Bergstresser introduced the index in 1884, and today it contains such corporate blue-chips as General Electric Co
The indexes business itself has stood out from other divisions within Dow Jones because, unlike newspapers, it is not reliant on advertising, which has suffered a sharp downturn in the past year.
Still, the entire Dow Jones division has been hard hit and investors have criticized News Corp for paying such a hefty price for the company. News Corp, in fact, wrote down $2.8 billion in the value of Dow Jones earlier this year.
ETF IMPACT
While the structure of any deal is still unclear, change in ownership could have an impact on the growing business of exchange-traded funds (ETFs) -- investment products that mimic and include many major indexes' components.
"Just as they're one of the three or four biggest index providers, they're one of the three or four biggest index providers in the ETF universe," said Matthew Hougan, director of ETF analysis at IndexUniverse.com. "It's conceivable that whoever buys them could streamline or alter the index mix, and people would have to shift their portfolios. You could also see changes in methodology."
Investors can hold ETFs based on indexes from Standard & Poor's, Nasdaq, Russell and Dow.
The Dow Diamonds ETF (DIA) was the 17th largest ETF in terms of assets as of July 30, 2009, according to the National Stock Exchange, which tracks ETF data, with $7.29 billion in assets.
Other large ETFs created through the licensing of Dow products include the iShares Dow Jones US Select Dividend ETF, with $3.26 billion in assets, and the ProShares Ultra DJ Financials, with $2.34 billion.
(Reporting by Paul Thomasch and David Gaffen; Editing by Matthew Lewis, Gary Hill)
