"The economic and advertising environments are, in a word, abysmal," said Rich Zaninno, Dow Jones' chief financial officer.
Analysts had projected a lineage drop around 40% due to lost technology and financial advertising and the expense of relocating offices damaged in the World Trade Center attack. Dow Jones also charged $1.7 million in expenses related to the events, including the cost of relocating The Wall Street Journal's editorial office, which were across from the Twin Towers.
Chairman-CEO Peter Kann said aggressive cost-cutting and new initiatives such as additional color pages will help improve Dow Jones' results next year. He also defended a hike in ad rates for 2002 at the Journal and Barron's.
When analysts questioned whether the 3% increase was smaller than in past years, Mr. Kann said that while Dow Jones is not under pricing pressure from competitors, "this is not the kind of environment where you would want to appear greedy."
Dow Jones posted $397.6 million in revenue for the quarter ended Sept. 30, 20.5% below the same period last year, and earnings of 20 cents per share, 63.6% below the 55 cents in third quarter of 2000.
Advertising revenues dropped to $220.5 million in the quarter, from $319.3 million in 2000, led by a drop of 41.2% in advertising lineage at the Journal, 46.8% in September alone.
Dow Jones executives said they expect October's results to continue along the same trend and warned that lineage at the Journal is expected to be down 35% to 45% in the fourth quarter.