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NEW YORK (AFX) - Newspaper publishers Dow Jones & Co. and Journal Register Co. said Monday that they are both considering selling some of their newspaper properties, in response to a growing softness in the traditional media marketplace.
Dow Jones, publisher of The Wall Street Journal, Dow Jones Newswires, several major market indicators, the weekly Barron's and a group of community newspapers, is looking into purging some of its Ottaway community newspapers located in Danbury, Conn.; Oneonta, N.Y.; Plattsburg, N.Y.; Santa Cruz, Calif.; Sunbury, Pa. and Traverse City, Mich.
The move is being eyed to raise cash to repay debt, for investment in current businesses and as a means to use roughly $155 million of capital loss tax carry-forwards that expire on Dec. 31, the company said. It is also contemplating exchanging the papers for other community newspapers.
The Ottaway unit, which Dow Jones bought in 1970, currently owns 15 daily and 19 weekly newspapers and more than 18 other publications in nine states. Its papers have a total daily circulation of 431,057 and Sunday circulation of 473,167, according to the company's Web site.
While the division has been consistently profitable in the past, it was a point of weakness when Dow Jones posted its July advertising figures earlier this month. As July ad sales increased at the Wall Street Journal and Barron's, Ottaway ad revenue slipped in several categories including display and classified. Its one bright spot was online, which soared 62.4 percent during the month.
The company has not outright said it is shifting its focus to online, but in a July 20 earnings conference call Chief Executive Rich Zannino clearly emphasized that Dow Jones was in the hunt for new media profits. The company has plans to expand its online video with content and advertising as well as licensing and delivering content to cell phones and PDAs. Enhancements to its web sites, including live quotes and live news, are also in the pipeline, according to Zannino.
Dow Jones named Zannino its CEO in January, and began a reorganization earlier this year that divides the company into three business units.
JPMorgan analyst Frederick Searby welcomed Dow Jones' potential Ottaway sale, saying in a client note that "management is focused on reducing print ad exposure and expanding the reach of its financial content online."
Both Searby and Lauren Rich Fine, an analyst with Merrill Lynch, feel that Dow Jones wants to capitalize on the $155 million in tax benefits.
"The deal is motivated by the need to utilize tax shields, reduce debt and invest elsewhere," Rich Fine said in a client note.
Meanwhile, Journal Register may shed some of its New England properties, including The Herald News and Taunton Daily Gazette in Fall River and Taunton, Mass. respectively, and The Call, The Times and Kent County Daily Times in Woonsocket, Pawtucket and West Warwick, R.I., respectively, and its weekly group, the Southern Rhode Island Newspaper Group in Wakefield, R.I.
The company, parent of the New Haven Register and other newspapers, has conceded that the strength once seen in papers is wavering, as online efforts continue to flourish.
"We are evaluating a strategic divestiture of our New England Cluster and focusing our efforts on those operations, including our growing online operations, which generate a higher return on capital and produce a higher level of profitability and cash flow," said Chairman and Chief Executive Robert M. Jelenic in a statement.
The properties generated reported sales of about $39.9 million for the 12-month period ending June 25.
Much like Dow Jones, a look at the Journal Register's July ad results shows some newspaper softness and online growth. Its July advertising sales dropped on a decline in all segments. While national and classified advertising took a hit last month, online sales jumped 41 percent on a pro forma basis.
In a July 14 earnings conference call, Jelenic said that the company's online operations were boosted by its December 2005 acquisition of JobsInTheUS.
The company is continuing to focus on new media, eyeing JobsIntheUS as well as a new real estate vertical as second-half catalysts for online sales, Jelenic said in the conference call. Other plans include Web site redesigns, portal site expansions, audio and video streaming, e-commerce and other Web services.
Shares of Dow Jones added 39 cents to $35.29 in afternoon trading on the New York Stock Exchange. Journal Register gained 25 cents, or 3.7 percent, to $7 on the Big Board. The stock has traded between $6.54 and $19.45 for the past 52 weeks. Copyright 2006 Associated Press. All rights reserved. This material may not be
Copyright 2006 AFX News Limited. All Rights Reserved.
