Dow Jones posted $9.7 million in net income, up from $6.9 million in the same quarter in 2002, despite an 8.8% decline in revenue to $358.2 million. Continued cost controls helped results, although the war anxiety "interrupted what appeared to be a slowly recovering market," Dow Jones Chairman-CEO Peter Kann said.
Declining ad revenue
Dow Jones experienced a 13% drop in advertising revenue; the company's flagship daily, The Wall Street Journal, saw advertising lineage drop 11% during the quarter.
The key financial and technology advertising categories -- 16% and 17% of the Journal's lineage, respectively -- remained weak during the quarter and advertising worsened with each month, said Rich Zannino, chief operating officer. He noted lineage was down 1.2% in January, but dropped 9.4% in February and 20% in March, as companies postponed and canceled ads during the U.S. buildup to the Iraq invasion.
Increases in classified and general advertising lineage -- led by automotive, retail, professional services and insurance advertising -- could not offset the weakness in the two key categories, Mr. Zannino said.
Weak second quarter
Dow Jones executives warned that the second quarter would remain weak, in spite of this week's news of the fall of Baghdad. Second-quarter lineage at the Journal is expected to be down in the mid-teen percentages below last year, and company revenue will be down in the high single digits or low teens, Mr. Zannino said.
"There's lots of factors out there affecting business confidence. ... The war has been an added factor there, an added anxiety," Mr. Kann said. An end to the Iraq war will help, but he warned that even "that particular anxiety won't lift in a week."
The Journal's lineage for April looks like that of March, Mr. Kann said. He added that he expects improvement as the quarter goes on, "but I don't expect a sudden shootout."