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Dow Jones’ results for fourth quarter 2005 show that its electronic strategy, particularly last year’s acquisition of MarketWatch, is having a transformative impact. With the addition of MarketWatch, Electronic Publishing group revenues for the quarter reached $134.2 million, an increase of nearly 33% over the same period a year ago. Electronic Publishing revenues have grown to become more than half the size of the Print group’s revenues. This is more than just a story of top-line growth. Electronic Publishing operating income reached $29.5 million in the fourth quarter, and operating margins increased to around 22% from 16% in the same period a year earlier. Electronic Publishing accounted for nearly 60% of Dow Jones’ total income, although this accomplishment comes in the face of depressed earnings in the Print group due to a difficult advertising environment and start-up costs for the new weekend edition of The Wall Street Journal. MarketWatch appears to be a significant contributor to the Electronic Publishing group as other units turned in modest gains: terminal counts for newswire products were up just 2% and paid subscribers to The Wall Street Journal Online grew by around 8%. These results should begin to silence critics who said that Dow Jones overpaid for MarketWatch.
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