The move appears to signal a shift in Dow Jones' longtime focus on providing paid Web content. The Online Journal has more than 700,000 paid subscribers. MarketWatch operates MarketWatch.com and BigCharts.com, which are free, ad-supported sites attracting about 8 million unique visitors per month.
Dow Jones said the deal better positions it to take advantage of the growth of online advertising.
"With this acquisition, Dow Jones will continue and strengthen its `best of both worlds' approach, which includes both the subscription Wall Street Journal Online as well as Web sites that are free to users and supported by advertising," said L. Gordon Crovitz, president of Dow Jones' electronic publishing division.
In addition to its paid wsj.com site, the Journal has several free sites, such as OpinionJournal.com, RealEstateJournal.com and CareerJournal.com.
MarketWatch attracts about 8 million unique visitors per month, or about three times as many as Dow Jones' free sites. Only 11% of MarketWatch users are Online Journal subscribers.
This broader audience will be even more attractive to advertisers, Crovitz said, because of Dow Jones' ability to target users on the Web.
The deal will be funded with new debt of $375 million to $400 million, which will come from the company's revolving credit facility and a bond issue. Dow Jones said it will pay off the debt in three years.