Last week, several newspapers released second-quarter reports that lacked much good news. Dow Jones
Second-quarter earnings came in at $29 million, or $0.34 per share (compared to a mere $861,000, or a penny a share of profit in the same quarter one year ago). Sales increased 5.9% to $481 million, but it's worthwhile to note that revenues missed analysts' expectations by a hair. On a positive note, Dow Jones' The Wall Street Journal increased ad revenues by 17% in June -- however, its Barron's unit reported a 7% decrease in ad revenues.
The second quarter represents overall good news for Dow Jones, which operates in a challenged industry. Last week, I covered New York Times'
Of course, newspaper companies do see a bright spot despite their troubles: the increasing appetite for digital content even as print readership declines. Many of these companies seem to recognize that there is plenty of opportunity for them if they can evolve with the times.
I've often thought that Dow Jones might be a good bet to weather the storm in its industry. As I said above, it has competitive advantages and a portfolio of fine brands that have excelled online. Let's not forget, The Wall Street Journal was one of the only online publications to successfully charge readers when the Web was still in its relative infancy. I've had my WSJ.com subscription for years and years, and I don't quite know what I'd do without it.
On the other hand, Dow Jones' work is far from over; that point is made by all the strategizing the company has been doing lately. The landscape remains competitive, with newspapers not only vying with one another but also facing tons of risk from Internet companies for readership and ad revenues. And in the short term, there has been a lot of economic uncertainty that can make things difficult as advertisers grow more cautious. Compared to many of its industry peers, Dow Jones' P/E ratio of 26 looks downright high (with the exception of Tribune -- what the heck's that all about?), although perhaps understandable in Dow Jones' case, given the idea that it's well differentiated and probably better positioned for growth. While considering a stake in Dow Jones isn't exactly an illogical idea, investors may want to wait for a better deal.
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Alyce Lomax does not own shares of any of the companies mentioned.