Will Rogers once said "All I know is what i read in the newspapers." While many have heard that phrase, few know that the back half was "and of course I’m the most ignorant man alive!" It was his joke that newspapers often obscured important bits of information.
Dow Jones (see chart here) just announced earnings. But, be careful what you read. The headline boasted "a 63% drop in quarterly profit due to a year-earlier gain." (Obtain full article here.) Pretty clear Defend & Extend language telling investors to ignore the decline because the past and current aren’t really comparable. Further on we real lots of D&E obfuscation as we learn revenue is up, but then again they bought half of Factiva not previously included in revenues. And tax benefits positively affected resuls – which is code for "real tax payments and GAAP reported payments don’t match so we manipulate a bit year-to-year in GAAP to suit our needs." These financial machinations are common in D&E management trying to sustain an old Success Formula nd make it look better than it is.
So you wold conclude that I think Dow Jones, like I’ve previously blogged on Tribune Company, is in dire straits. Not so!
Read on in the article and we learn that Dow Jones is not just The Wall Street Journal and Barron’s. It is also MarketWatch (a great website from which I get substantial business news), WSJ on-line and Barron’s on-line. WSJ on-line paid subscriptions rose 20% last quarter, and ad revenue at the on-line Journal and Marketwatch climbed 30%! And, in the on-line business units of the 8 daily and 15 weekly local newspapers owned by Dow Jones revenue jumped 66%! Meanwhile the Index business grew 5.2% even after honestly comparing the business pre-Factiva and post-Factiva acquisition.
Yes, ad revenues at the print WSJ dropped 1.8% on a 3.1% volume decline. And the local papers saw revenue fall 3.5% on a 4.6% volume decline. But Dow Jones management should quit apologizing for this, such as stating that a small decline "is not really bad in this environment." Dow Jones’ future is not about print products, it’s about the on-line world. The world Tribune and other media companies has not effectively addressed. Dow Jones is clearly in the market with their products and doing some good things growing readers and advertisers.
Get beyond the headlines. Look if there is White Space inside the company. No matter what management leads with, the winners will be those who play the game for the long-term market. Dow Jones is clearly one of the old-media companies that at least has its eye on the market and some effective White Spce producing positive results that the company appears to be migrating towards.
