Earnings: DJ Execs Explain Factiva Move; MKTW Ad Revs Growing Faster Than WSJ.com

The Dow Jones 3Q06 earnings release and call, initially scheduled for Thursday, were pushed up a day to coincide with the announcement of a deal with Reuters to acquire its share of the Factiva JV for $160 million. The resulting call covered a lot of ground. (I ran into audio trouble so appreciate the transcript from SeekingAlpha as a gap filler.) Some highlights:
Factiva: A lot of questions as you can imagine … Why now and why DJ as the sole owner? CEO Rich Zannino: “The reason for the end of the partnership, if you will, I think all partnerships come to an end, and we’ve had a great run with Reuters on this. It was time … for there to be one owner of Factiva, so that it could grow the way it needs to grow going forward without any encumbrances by either parent in terms of where Factiva could go with their products and services and content. I think the bottom line is Factiva is much more strategic to Dow Jones than it is to Reuters.”
— Zannino: DJ is “more focused on the rate of growth we can drive in profits than the rate of growth we can drive in revenue. So given that it is mid-single digit top line, and that it is very, very robust bottom line growth, and that it is overall a 20% plus after tax return on investment and it’s highly strategic, I guess I would say show us more of those deals, because I think that would certainly be driving our stock price.” Clare Hart, president of the Enterprise Media Group that will absorb Factiva, said the company believes it can get $15 million in cost savings in 2007 and $19 million by 2008.
— Merrill Lynch analyst Lauren Fine suggested DJ would end up facing some of the “secular” issues with Factiva in terms of competition that are now driving the push to rely less on print. Zannino answered back that Factiva has managed to grow mid single-digits even with the existence of Google and the free web and other competition because of the suite of services it offers and because of its target customer.
Online revenues: Online contributed about 14 percent of the Consumer Media Group’s Q3 revenues. CFO Bill Plummer asked analysts to keep in mind that licensing and archive revenues go to the enterprise media group. CMG president Gordon Crovitz said page views were up 7 percent across DJ sites but over monthly uniques was down slightly, reflecting the slower summer season in part. The increase in use of Ajax may have a negative impact on page views per user. Crovitz: “We have ways, over time, we are going to use this technology to drive more usage, but that was an issue for us.”
Marketwatch: Even though DJ doesn’t break advertising out across properties, Plummer said Marketwatch ad revenues actually grew faster than the Online Journal in the first quarter. We expect they will again in the fourth quarter.” Crovitz: “We have got a big project going on on search engine optimization especially around MarketWatch.”
Financial sector advertising: