Q2 confirms interactive, print trends

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Four prominent media companies have filed their second quarter 10-Qs in the past week, and the results show no slowdown in the b-to-b media industry’s major trend: increasing interactive revenue and soft print revenue.

This trend is clearly visible at Dow Jones & Co. "Our results continue to be adversely affected by declines in b-to-b advertising in our print publishing segment, a situation we see improving in the third quarter 2005," Peter R. Kann, the company’s chairman-CEO, said in a statement.

Both revenue and operating income in the print publishing segment declined in the second quarter at Dow Jones. Print publishing revenue of $235.5 million in the second quarter declined 7.2%, and operating income of $7.2 million was down 58.2% versus the same period a year ago due to a decline in advertising revenue. Advertising linage at the U.S. Wall Street Journal decreased 6.3%. Barron’s advertising pages slid 8.3% in the quarter.

On the other hand, Dow Jones’ electronic publishing unit is thriving. Electronic publishing revenue of $128.4 million in the second quarter increased 33.5% from the same period a year ago, a gain that was driven by the acquisition of MarketWatch. Operating income of $29.4 million in the second quarter increased 28.1% over last year. Paid subscribers to The Wall Street Journal Online grew to 744,000 as of June 30, up 8.8% from the prior-year period.

Overall, Dow Jones’ revenue was up 3.7% in the second quarter to $454.2 million, but its operating income declined to $38.9 million from $56.3 million.

The New York Times Co. last week posted similar results for its second quarter. The company’s news media group, which includes The New York Times and the Boston Globe, posted ad revenue of $795.9 million, up 1.9% from $786.3 million. But that increase was due in part to "growth in online revenues, partially offset by lower print volume," the company said.

Overall, the New York Times Co. reported net income in the second quarter of $60.8 million, down from $75.7 million in the same quarter last year. Total revenue for the quarter rose 2.6% to $845.1 million.

CNET Networks, which relies almost exclusively on interactive revenue, posted a very strong gain in revenue of 24% in the second quarter to $84.5 million from $68.1 million in the second quarter last year. The company said that its purely interactive revenue grew at an even faster rate, increasing 30% to $76.8 million.

Banking on continued interactive revenue growth, the company boosted its guidance for the rest of the year. For the full-year 2005, CNET management estimated total revenue will range from $347 million to $355 million, compared with $291.2 million in 2004.

"Our second-quarter results illustrate our ability to deliver consistent top-line growth and significantly expand our profit margins and free cash-flow generation, while continuing to aggressively build out our product offerings," Shelby Bonnie, CNET chairman-CEO, said in a statement. With its cash flow, CNET is expanding into new areas such as television commentary and automotive guides.

Finally, McGraw-Hill Cos. posted strong revenue growth of 16.9% in the second quarter to $1.5 billion. Its net income also increased 17.8% to $195 million. This growth, however, was driven by the company’s financial services and education groups, which do not rely on ad dollars.

Revenue for McGraw-Hill’s information and media services division grew 18.6% to $230.3 million, but J.D. Power & Associates, which was acquired on April 1, accounted for $33.6 million of the revenue increase in the second quarter. McGraw-Hill said that a decline in advertising contributed to a decline in the unit’s operating profit, which fell to $13.6 million from $24.8 million.

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