Media companies posted reports for the third quarter, blaming the glum outcomes on the economy and the effects of the Sept. 11 attacks. Dow Jones & Co. 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 the third quarter of 2000. For the first nine months, Dow Jones' revenue was $1.34 billion, compared with $1.64 billion in 2000 and net income was $66.1 million, down from $155.3 million in 2000. Advertising revenue dropped to $220.5 million in the quarter, led by a drop of 41.2% in advertising lineage at The Wall Street Journal, 46.8% in September alone. Dow Jones executives warned that lineage at the Journal is expected to be down 35% to 45% in the fourth quarter. E.W. Scripps Co. reported operating revenue of $342.1 million for the quarter, and net income of $22.63 million, drops of 16.5% and 36.2%, respectively, from the same period last year, due to weak advertising revenue at its newspapers and broadcast TV stations. A 15.6% increase in revenue at its cable networks, which include The Food Network and Home & Garden Television, was not enough to counter flat revenue for its newspaper operations and a 23.4% drop in revenue at its TV stations. General Electric Co., parent of the NBC network, reported revenue of $29.5 billion, up 7% over third quarter 2000, and earnings of $3.3 billion, up 3% in spite of $400 million in insurance losses related to the Sept. 11 attacks. NBC's revenue was down 45% for the quarter to $1.1 billion, but profits were down only 13% to $255 million.
Online sees continued decline in third quarter
Third-quarter results reported by three companies involved in online advertising showed a continued decline in the already-troubled sector. New York-based online ad solutions company DoubleClick reported revenue of $92.7 million, a decrease of 31% over the same period last year. Hardest hit was the company's global media unit, which saw revenue decline to $22.2 million, down 65% compared with the third quarter of 2000. The company had a net loss of $103.5 million as compared with a net loss of $10.7 million for the same period last year. However, the company is continuing to use the downturn to negotiate inexpensive acquisitions. Digitas, a Boston-based i-shop, also reported substantially lower revenue and announced major cost-cutting, laying off approximately 325 people or 20% of its staff. The company, which has been doing better than most of its competitors, missed estimates, posting a net loss for the quarter of $44.8 million, or 75 cents per share, compared with $4.9 million, or 9 cents per share, during the same period last year. The company had revenue for the quarter of $51 million, compared with $75.5 million for the third quarter of 2000. In addition, Yahoo! reported revenue declines both quarter-to-quarter and year-on-year (See story, P. 40).
Ziff Davis closes magazine, Primedia lays off staffers
On October 11, Ziff Davis Media shuttered its yearling Expedia Travels magazine. The move will affect about 20 employees. A spokeswoman, borrowing a phrase from Editor Gary Walther, blamed the shutdown on a "perfect storm" of negative market events: the collapse in the dot-com economy, the overall ad slowdown, and the fallout from the events of Sept. 11. The every-other-monthly Expedia Travels launched with a November-December 2000 issue. Earlier this week new Chairman-CEO Bob Callahan sold the company's half-interest in the parent company of MacWorld magazine, Mac Publishing LLC, to International Data Group, which owned the other half of that company. Separately, Primedia laid off about 20 staffers at four teen-related titles-Bop, Tiger Beat, Teen Beat and 16-and moved their operations from Manhattan to Los Angeles. The monthly titles among them will now become quarterlies and be handled by the edit staff of its recent acquisition, Teen.
Williams starts as CEO within Omnicom Group
Having thwarted a lawsuit by his former employer, Brian Williams formally started as CEO of a yet-to-be-named ad agency within Omnicom Group to handle the PepsiCo-owned Quaker Oats Co., Gatorade and Aquafina accounts. Interpublic Group of Cos. on Oct. 5 dropped its lawsuit against Mr. Williams, DDB Worldwide and Omnicom after a Cook County Circuit Court judge denied Interpublic's motion for a temporary restraining order against them. Last month, PepsiCo pulled an estimated $350 million of business out of Foote, Cone & Belding Worldwide, Chicago, because the agency's parent company, Interpublic, is closely affiliated with archrival Coca-Cola Co. Mr. Williams resigned as president of FCB, Chicago, after Quaker asked him to lead the new agency at Omnicom. Mr. Williams is still working out the details of the new agency and expects to have more information by the end of October. Mr. Williams confirmed that Martin Sherrod and John Fraser, FCB's top account leaders on Quaker and Gatorade, were joining his agency. The two resigned from FCB Sept. 27.
PIB numbers show no turnaround for ad slump
Though the ad fallout of Sept. 11 is not yet fully known, the latest ad page figures from the Publishers Information Bureau show that this year's ad downturn showed no signs of turnaround in September. For just the month of September, ad pages dropped 9.9% compared with 2000. For January-September 2001, ad pages dropped 9.2%. Technology, last year's largest ad category, was off 30.8% through September, and ad pages in this year's largest category, automotive, fell 9%.
Terrorism fears affect American Media, Vibe/Spin
The tragic anthrax contamination of American Media's Boca Raton offices took a bizarre turn last week, as panicked consumers, terrified they may contract the disease from the company's tabloids, flooded supermarkets with calls. Such concerns prompted David Pecker, American Media's CEO, to get the Centers for Disease Control to issue a statement assuring consumers such fears were groundless. In early October, an American Media photo editor died from the disease and two more employees tested positive for the spores last week. Separately, New York-based staffers for Vibe and Spin magazines, published by Vibe/Spin Ventures, were phoned at home on the evening of Oct. 10 and told not to come to work on Oct. 11, owing to concerns of possible terrorist actions in Manhattan on the one-month anniversary of the attacks on America.
Procter & Gamble Co. has agreed to sell its Jif and Crisco brands to J.M. Smucker Co. in a tax-free stock deal valued at around $1 billion. ... As expected, Publicis Groupe's Fallon Worldwide and its Duffy Design unit will open three creative offices in Singapore, Hong Kong and Sao Paulo, Brazil, by January 2002 to service its United Airlines and Timberland accounts, among others. ... The California Department of Consumer Affairs has awarded the state's $45 million energy conservation account to incumbent Grey Global Group's Grey Worldwide, Los Angeles. ... Nestle last week said it would shift its agency compensation structure in the U.S. from a system based on commissions of its total ad spending to one based on hours spent developing advertising and bonuses paid for campaigns that succeed in building market share and/or sales. Nestle spent $346 million on measured media in 2000, per Taylor Nelson & Sofres' CMR.