Net income for the third quarter dropped 85.6% to $2.4 million, including a $2.9 million charge related to litigation over Dow Jones' former Telerate subsidiary. Factoring out the charges, net income would have been down 69.5%. Revenue was down 11.4% to $352.4 million.
'Uncontrollable and awful'
Dow Jones is maneuvering in an "uncontrollable and awful business environment," said CEO Peter Kann. Economic and stock market weakness has actually grown in recent months, and economists have begun discussing a possible "double dip" into recession, he said.
In a conference call
Continued troubles at 'WSJ'
The weak spot for the quarter was the Journal, which suffered from continued weakness in business-to-business, financial and technology advertising. The Journal's advertising volume was down 12% for the quarter and 4% in September, in spite of easy comparisons to the year-ago period, which included the aftermath of the Sept. 11 attacks. Adjusting for the Sept. 11 cancellations, lineage was down 18.5% for the quarter, Mr. Zaninno said. Barron's posted a 3.3% increase in advertising, while the Ottaway newspaper chain was down 1.7%.
Mr. Zaninno said the company is trying to reduce the Journal's reliance on business-to-business, financial and technology advertising, and has seen an increase in consumer and lifestyle ads since the introduction of the "Personal Journal" section. Consumer advertising rose 10.5% for the quarter, but it was not enough to offset the weakness in the core categories.
The Journal's lineage will be down in the mid- to high-teen percentage rate for the fourth quarter, Mr. Zannino said.
"Attempting to forecast our advertising volume has turned out to be humbling experience and it has certainly tested our credibility," said Mr. Zaninno. "Most companies have spent in fits and starts and with very quick trigger fingers, both to reserve and too often to cancel. ... This wreacks havoc with our ability to forecast."