Dow Jones Profits Fall, Revenue Rises

Published 12:00 am Monday, December 26, 2005

NEW YORK – Dow Jones & Co., which is considering a bid to be bought by Rupert Murdoch’s News Corp., reported lower second-quarter profits Thursday due to an accounting charge, but revenues and operating income rose.

The company, which publishes The Wall Street Journal, Barron’s, Dow Jones Newswires and a group of stock market indicators, earned $21 million or 25 cents per share on a net basis in the three months ending in June, down from $28.8 million or 34 cents per share, in the same period a year ago.

Excluding one-time charges and other non-operating effects in both periods, operating income rose 28.2 percent to $66.3 million from $51.7 million in the same period a year ago, driven partly by the acquisition of the other half of Factiva, a news database business, that it didn’t already own.

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The company said it recorded a charge in the second quarter of 13 cents related to additional stock-based compensation costs due to the sharp increase in the value of its shares since News Corp.’s offer to acquire the company at $60 per share became public in early May. The shares had been trading in the mid-$30s range prior to that. Dow Jones also recorded a restructuring charge of 7 cents per share.

The earnings worked out to 45 cents per share excluding the one-time items, a penny ahead of the estimate of analysts surveyed by Thomson Financial and up from 39 cents per share in the same three-month period in 2006.

Dow Jones’ fell 9 cents to $55.56 at the open of trading Thursday. They are still below the $60 per share price that Murdoch has offered, reflecting some risk that the deal may not go through.

Revenues rose 16.2 percent to $529.7 million from $456 million, which the company attributed to the consolidation of Factiva as well as growth at its indexes business and in international media, including the acquisition of eFinancialNews, a U.K.-based business news provider.

Excluding the effect of acquisitions, revenues would have risen 0.9 percent in the quarter, and operating income without special items rose 23.9 percent.

The growth in the quarter was offset partly by a 6.8 percent decline in print advertising revenue in the U.S. edition of The Wall Street Journal, Dow Jones’ flagship property, and a decline of 8 percent in advertising revenues at its community newspaper group.

At the Journal, weak advertising in the technology, financial and classified categories outweighed gains in consumer advertising. The Journal has been trying to lessen its heavy dependence on financial and technology advertising by introducing more lifestyle and personal finance coverage, including a Saturday edition that includes a separate section on leisure pursuits.

Dow Jones’ business media group, which includes Dow Jones Newswires, Factiva and a stock index business, reported an 81.4 percent jump in revenues to $178.2 million, driven by the Factiva acquisition as well as a 41.7 percent increase in its indexes business.

A service of the Associated Press(AP)