The Biz: 'WSJ' biding time for ad boomerang

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Any story about the beginnings of an ad recovery creaking into action at The Wall Street Journal cannot come without a decent dose of caveats.

So here are a few. Despite some serious jumps in ad linage in September and October, analysts still expect Dow Jones' flagship to post a linage loss for full-year '03, which would mark the third consecutive year. Furthermore, the losses involved are of a sufficient magnitude that parity results to boom-time glory days-or even pre-boom glory days-remain far off.

Merrill Lynch analyst Lauren Fine projects ad revenues for the company's U.S. publishing sector-which includes Barron's-will be $567.3 million this year. That's down 3.2% from last year's $585.9 million-and almost exactly half of what that division raked in for 2000.

`coming off the mat'

"They're coming off the mat," says Ed Atorino, Blaylock & Partners analyst. But he warned that getting back to the peaks previously glimpsed were "three years away at a minimum."

Perhaps this is why the Journal's Scott Schulman, its senior VP-global sales and marketing since March, takes care to strike notes of caution even while repeating the business daily's strong third-quarter results. "Like everyone, we are looking to see how the signs of an economic recovery are translating into an ad recovery," he says. "It's too early to tell."

Despite a raft of late-breaking good macroeconomic news, signs of a full-fledged recovery have proved elusive at both newspapers and magazines as 2003 draws to a close; all eyes, as always, look beseechingly toward the uncertain prospect of a strong holiday season to provide true liftoff. Revised government figures for the third quarter showed an 8.2% growth in gross domestic product, the best three-month performance since 1984. The third quarter, too, was good to the Journal, with a 7.1% ad-linage uptick and a 13% increase for October, the first month of the fourth quarter.

But tougher comparison, says Fine, means significantly smaller gains, if any, will come for the last two months of the year. She pointed out that October of 2002 saw a 12% linage drop at the Journal, vs. a 0.3% linage gain for last November. (The tough environment the Journal contended with in the early part of the year is borne out by company comments, which focus much more on third-quarter and October results than year-to-date numbers.)

Like key business magazines-Forbes, Fortune and Business Week-the Journal made moves to monetize its high-demo male readership by beefing up lifestyle coverage, although its launches of "Weekend Journal" (in 1998), and "Personal Journal" (last year) meant it went into these waters more aggressively than most.

The launch of "Weekend Journal," which couples coverage of leisure-time pursuits with a heavy real-estate ad presence and cultural commentary still tightly tethered to the Journal's traditional gray-flannel-suit roots, is rightly seen as a transformative event for the paper. While the year-old service-heavy "Personal Journal" has yet to scale its heights, Mr. Schulman said its launch was "similar to or better than" that of "Weekend Journal," which took some time to find its footing.

Prototypes for a Saturday Journal continue to be kicked around internally, say insiders, but some indicators point to no launch on this front until at least 2005. A spokeswoman declined comment. The company may be loathe to invest in an environment that's still somewhat uncertain, but its last big bet is conceded to be paying off-its $225 million investment in a plant that gave the title color capacity, and color pages are up 27% for the first three quarters of the year.

"They invested when times were tough," says Atorino of a management that's taken some hits in recent months, most notably from a lengthy New Yorker piece. "You've got to give [management] a little slack here." Now if only the economy would-or, more precisely, would continue to.

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