Dow Jones is in the News

Murdoch addresses Journal staff

Related story: Murdoch lets loose on strike, recession

Christmas came early for News Corp. chairman and CEO Rupert Murdoch.

The mogul clinched one of the sector's biggest deals of the year Thursday as his media conglomerate completed the $5 billion acquisition of Dow Jones & Co., including its flagship Wall Street Journal.

The takeover will give News Corp. control of a powerful news brand but is seen as a mixed bag financially. After all, it will expose News Corp. more to the sluggish and challenged newspaper business, though it also opens up opportunities to use Dow Jones' financial news to feed the Murdoch empire's global businesses, including major growth markets like Asia.

Analysts said it could take a few years for the $60-per-share deal to pay off financially for News Corp.

For 2006, Dow Jones had reported revenue of $1.78 billion, up 6.6%, with operating income up 8.8% to $104.6 million. That growth was well below the increases recorded by News Corp. for its latest fiscal year ended June 30. The conglomerate posted a 15% improvement in operating income to a record $4.45 billion as revenue rose 13% to $28.7 billion.

News Corp.'s newspaper unit also brought in higher gains in its latest full fiscal year than did Dow Jones, boosting revenue 9.5% to $4.49 billion and operating income 26.3% to $653 million.

For the first three quarters of 2007, Dow Jones revenue was up 1.8% when adjusted for recent acquisitions to $1.53 billion. Operating income on that basis excluding special items was up 58.3% at the same $104.6 million reported for all of 2006.

So, with the addition of Dow Jones and the still-planned sales of nine Fox TV stations and its Eastern European billboard business, News Corp. will see an uptick in the revenue and operating income contribution from newspaper operations of 15.7% and 14.7%, respectively, in the latest full fiscal year.

Thursday's Dow Jones shareholder vote to approve the deal was a brief formality of less than 30 minutes after news late Wednesday that a majority had approved the transaction.

Dow Jones on Thursday said that 60.3% of voting shares had been cast in favor of the sale.

In a visit to the Journal newsroom Thursday to introduce new Dow Jones CEO Les Hinton and Journal publisher Robert Thomson, Murdoch emphasized his commitment to journalistic excellence.

"We do know and understand the tremendous values of Dow Jones and particularly of course of the Wall Street Journal and the very high bar you have set yourselves," he said, according to a copy of his remarks. "If anything, you will find us trying to set a higher bar."

Murdoch said it was a "very exciting" day for him.

"Maybe it's more a day of nervousness for a lot of you, but I hope it's also a day of excitement because it is a new day in the history of this company," he told the newsroom. "We've come here to expand it, to develop it, and, where possible, to improve its product."

Chad Newman in New York contributed to this report.