Wall Street Journal | AP Photo/Mark Lennihan, File Wall Street Journal feels the pain Big cuts and big change loom for a paper that seemed, not long ago, almost immune

In recent weeks, The Wall Street Journal has been as close to tumult as it has since the days of Rupert Murdoch’s Napoleonic takeover nearly 10 years ago.

Back then, as Murdoch pried the newspaper from the Bancroft family’s hands for a jaw-dropping $60 a share, a wave of anxiety about the Journal’s future swept through the newsroom and the media world at large.

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Would the marauding News Corp. boss turn the Journal into a supine shill for his conservatism? Would the downmarket sensibility of Murdoch’s British and Australian tabloids rub off on the venerable business broadsheet? Was this the end of The Wall Street Journal as we knew it?

A completely different set of questions is now ricocheting around the newspaper’s headquarters at 1211 Avenue of the Americas, where the latest internal memos have included phrases like “challenging times”; “not immune to the market forces that are significantly impacting traditional print advertising”; and a “series of cost management initiatives.”

The new anxiety is something more like this: How much blood will News Corp. have to spill at the Journal to achieve numbers that will keep the place afloat and satisfy shareholders?

Serious belt-tightening is underway, apparently triggered by a recent decline in print advertising that was more dramatic than anticipated — a familiar theme this year at newspapers in the U.S. and Great Britain. A source briefed on company financials said the Journal has recently been about 30 percent off budget.

Will Lewis, CEO of the Journal's parent entity, Dow Jones, told employees last week that advertising “was still our dominant source of income” until last year. It now contributes about a third of company revenue, down from 50 percent less than 10 years ago.

“The accelerated decline in advertising undeniably impacts our business,” said Lewis.

Domestic advertising revenue was down 12 percent during the latest quarter, and things are expected to look even uglier when News Corp. reports its fiscal first-quarter earnings next week.

“I think it’s probably going to be worse than down 12 percent,” said Craig Huber, a Wall Street analyst who monitors News Corp., referring to advertising. Company insiders pointed out that July through September, the Journal’s first quarter, tends to be the weakest quarter for newspapers.

No surprise then that the newsroom is on edge after receiving notice of a “restructuring.” It will involve a “revised version of the print Journal” that editor in chief Gerry Baker — in a memo to journalists already beaten down by a relentless push for shorter stories — said will be “sharper and more concise” while necessitating “some consolidation of sections of the paper and the teams that produce it.”

Among employees, there’s widespread chatter that Greater New York, a metro section established with great fanfare in 2010, which was designed to place the Journal on a more clearly competitive footing with its broadsheet competitor, The New York Times, “will be the first to go,” and that Personal Journal could follow. (A Journal source with knowledge of the plans said the coverage found in those sections would not be eliminated.) Rumors that Baker himself could be on the way out — joining Murdoch at Fox News perhaps? — can’t be helping matters. (A source close to Baker said the rumors are bunk.)

Further dampening morale is the fact that hundreds of union members have been working without a contract for the past month, as talks between the Independent Association of Publishers Employees and Dow Jones management remain deadlocked over pay raises and health care costs. A few dozen newsroom staffers met recently to consider sending a message to management through collective actions like a picket or a mass walkout.

At the same time, sources said open positions aren’t being filled. In one recent example, according to two sources with knowledge of the situation, a job applicant verbally accepted an offer to cover real estate for the Journal and gave two weeks’ notice at his existing job, only to have the offer rescinded after it was kicked upstairs for approval.

Most ominously of all, buyouts were offered to all 1,500 employees in the combined news department of the Journal and Dow Jones Newswires. Management said it would need a “substantial number of employees to elect this benefit” to avoid layoffs, as Baker made clear in a memo announcing the cuts on Friday, Oct. 21. Monday was the deadline to apply.

“For employees on the news side, this is certainly the worst hit they’ll have taken in recent memory,” said IAPE Executive Director Timothy Martell. He said there haven’t been major newsroom cuts since the early 2000s and that the union has received calls and emails from “dozens” of worried employees at the Journal and Dow Jones. Additionally, Journal reporters have created a channel dedicated to layoff talk on the messaging platform Slack.

Last week, shortly after Baker’s buyouts memo landed, a “chorus of gasps” rang out around the newsroom, as one insider put it, when the editor of the Dow Jones weekly financial magazine, Barron’s, mistakenly hit reply-all on a seemingly disgruntled email that let the cat out of the bag on a round of otherwise unannounced Barron’s layoffs. The email went viral, quickly bouncing into the inboxes of media reporters. (About half a dozen sources forwarded it to POLITICO within minutes.)

Before long, other emails were circulating in the newsroom as well, these inviting colleagues to happy hour outings “to blow off steam.” Some gathered at Rudy’s, a popular Hell’s Kitchen dive; others drowned their sorrows at Langan’s, News Corp’s unofficial watering hole.

The Journal declined to comment or to make anyone available for interviews. But plenty of employees and alums, who either weren’t authorized to speak publicly or preferred not to, had plenty to say.

“People feel like it’s more dire than it has been in a long time,” said a knowledgeable veteran of the Journal.

“What’s happening throughout the newspaper industry,” a current Journal reporter lamented, “it didn’t used to happen to us. Now it does.”

“People are not used to it,” a former Journal executive chimed in. “They didn’t expect this.”

One could argue that there hasn't been so much angst and uncertainty in the Journal's newsroom since the Murdoch coup. But to many at the Journal — indeed, to most who remain there now — the News Corp. era has proven to be largely beneficent.

It ushered in some major changes, of course — leaner stories and more coverage of general interest news resonating beyond the financial cognoscenti; a leadership turnover that filled the Dow Jones C-suite with a cabal of Murdoch loyalists from the United Kingdom and Oz; a migration from the Journal’s longtime home in the Financial District to News Corp’s Midtown Manhattan command center.

Pulitzer Prizes became fewer and farther between, but overall, the Journal continued to be what it always had been: One of the world’s great newspapers.

In fact, it became an even bigger newspaper, adding sections like the aforementioned Greater New York; Off Duty (lifestyle); Arena (arts & culture); Mansion (luxury real estate); and WSJ. (a glossy style supplement). Along the way, as the industry grappled with the rise of digital media and a daunting set of resultant obstacles for print, the Journal remained largely impervious to the type of bloodshed suffered by others in the industry.

Indeed, over the past decade, The Wall Street Journal seemed a special case, weathering the rapidly changing fundamentals of the business with considerably less wear than many of its competitors. Huber, the financial analyst who tracks News Corp., said other major newspaper companies, including The New York Times, have reduced costs by about 40 percent compared with 2007 levels prior to the economic downturn. The Journal, he said, has been more conservative in its trimming. He estimates the Journal has cut costs by about 20 percent compared with 2007 levels.

“They’ve got a ways to go, in my mind, to catch up with their peers,” he said.

Another source put it this way: “If Murdoch cut [the Journal] back, he might be cutting it back to where it was when he acquired it.”

To be sure, the Journal has occasionally downsized in recent years, but the cuts have tended to be more modest that the widespread cullings other newspapers have seen, from the Times, to the former Tribune Company papers, to The Washington Post.

One explanation: Before Murdoch’s TV and film assets were spun off into a separate company, 21st Century Fox, in 2012, News Corp’s papers enjoyed the cushion that comes with being part of the same corporation as, say, the studio behind a blockbuster like “Avatar,” or a cable ratings titan like Fox News. Now the print titles are more exposed, and with things getting tougher for the newspaper industry as a whole, the Journal is finally feeling the pinch.

Dow Jones, for its part, appears to be working on a strategy beyond slashing costs. Two weeks ago, Lewis unveiled a so-called WSJ2020 review that will function as the Journal’s “action plan for the next three years” as Lewis put it in a memo announcing the move.

Initiatives include “fueling significant mobile growth,” becoming more innovative in the kinds of advertising it offers, and increasing the number of people paying to read the Journal digitally — there are now more than a million digital-only subscribers, and the Journal has a goal of reaching 3 million total subscribers by the end of 2017.

In a separate email to employees on Monday, Lewis talked up the Journal’s “success” in developing sponsorable conferences like last week’s newsmaking WSJD Live summit — “a reminder that there are new, exciting opportunities for growth.”

Still, “cost management” is a big part of the plan.

“Many of these changes will be difficult. All of them are necessary,” Lewis wrote in the 2020 announcement. “To preserve our ability to produce such quality journalism in the future, the case for change is undeniable.”