EXHIBIT 99.2
Mid-Year Media Review
Slide 1 - RZ Title
Thank you Peter and good morning all. It's a pleasure to be here this
morning. I'll try to add a bit of color commentary to Peter's remarks.
Slide 2 - Cost Reduction Slide
First, I'll describe our cost reduction initiatives. This will
demonstrate our commitment to doing all that we can to optimize our
profitability in this very uncertain environment.
In early-March of this year, we targeted $75 million of annualized
fixed cost reductions across the Company. These cuts were designed to
generate $60 million in 2001 cost savings; enough to offset an
anticipated 35 to 40 cent per share first quarter profit shortfall
versus consensus estimates (and our own expectations). By offsetting
the first quarter shortfall, these cuts would get us back on track to
hit our expectations for the year - assuming a near-term recovery in
advertising revenues.
As it became clear that there was not likely to be any such near-term
recovery, we increased our cost reduction target.
The good news is that we have exceeded our original $75 million target
by more than 50%; generating nearly $120 million in annualized fixed
cost reductions. This represents 8% of our budgeted fixed cost base as
we aggressively cut virtually all non-income producing spending and
reduced our budgeted headcount by nearly 550 FTEs, or 6%. Ninety
million dollars of these reductions will hit the bottom-line in 2001.
For the balance of the year, our 2001 fixed expenses will be well below
our 2000 fixed expenses. And all of this is before factoring in what
now appears to be declining newsprint prices.
It is important to note that while we aggressively cut costs, we did
not cut corners. We did not cut essential staff, we did not cut
important capital programs, nor did we cut spending on productivity
programs or profit-generating initiatives and we preserved adequate
spending for growth activities such as WSJ.com and international
expansion. At least 75% of the cut is sustainable into 2002 and
beyond, accelerating our profitability when the economy improves.
The bad news, if you will, is that advertising has not picked up - at
all - in the second quarter, nor do we yet see it picking up in the
balance of the year. While we will execute additional cost reductions,
we cannot prudently cut enough costs to fully offset revenue declines.
Nonetheless, by reducing fixed costs to improve our operating leverage,
and pursuing the four-tiered growth strategy just outlined by Peter, we
will enhance our growth and profitability when the economy improves.
Slide 3 - Strategic Imperatives
Moving on to our strategy. To repeat, our aim is to publish the
world's most vital business and financial news and information. We
will do this by further enhancing the quality and indispensable appeal
of our brands, by realizing the full potential of these brands, and by
leveraging and extending our core competencies over new brands. All
the while fostering the Dow Jones core values of quality, integrity and
reliability.
Slide 3A - Four-Tiered Strategy
More specifically, we will put our strong cash flow and balance sheet
to work to simultaneously pursue four strategic thrusts: organic
growth; new business development; strategic alliances, including
acquisitions; and share repurchase.
Slide 4 - Organic Growth Title Slide
First, organic growth. It goes without saying that the biggest driver
of organic growth will be an improving economy.
Slide 4A - Leading Market Share (Print)
With the strength of our brands, we are especially leveraged to this
upside. For example, we enjoy #1 or #2 market share in all of our
market segments - from the domestic edition of The Wall Street Journal
to its global extensions in Europe, Asia and Latin America.
Slide 5 - Leading Market Share (Electronic)
We also enjoy leading share positions in all of our electronic
publishing businesses.
This overall market strength positions us to capitalize on an improving
economy.
Slide 6 - WSJ Market Share
This is especially true at The Wall Street Journal, where, year after
year, we command the leading market share in national ad revenues - by
a factor of 2 times over the nearest competitor.
Slide 7 - WSJ Linage Pie Chart
We are also highly leveraged to economic upside in our advertising
exposure. While cyclically tough right now, we are keen on the long-
term fundamentals of the technology and financial segments, which
together represent 50% of our ad linage at the Journal.
Slide 8 - Technology Trends
We enjoy leading market share in technology advertising. We happen to
agree with Alan Greenspan: technology investment has driven
productivity gains, and corporate America (and the world) will again
increase tech spending to get at these gains, making tech spending an
ever larger share of total GDP, as the top chart here shows. In the
bottom chart, you see a similar story as it relates to the consumer
side of tech spending, with the explosive growth of cell phones, PDAs,
internet access and related devices. All of this bodes well for the
long term growth of tech companies - and their national ad spending.
Slide 9 - Financial Trends
We also enjoy leading market share in financial advertising. Like
technology, fundamentals here also favor long term growth. Driving
this growth will be corporate America's insatiable need for investment
capital, and the growth in retail stock ownership as depicted in this
chart. This helps us in two ways: first, as retail stock ownership
grows, more and more people need to read what we have to say and
second, both wholesale and retail trends bode well for the future
growth of the financial sector - and its national ad spending.
Slide 10 - Color Print Expansion (5 Phases)
But we are not sitting idly by waiting for the economy to improve to
drive our organic growth. The biggest example of this is our $232
million project to expand color page capacity at the domestic Wall
Street Journal. This is huge - financially and strategically.
We began this project in May 1998. We are in the final stages of
installing the color towers and related equipment in our 17 plants
across the country. We will test the equipment in the balance of the
year. The project is on-budget and on-schedule to go live in the first
quarter of 2002.
Slide 11 - Color Print Expansion (Capacity)
As a result, effective early next year, the Journal's total daily page
capacity will increase 20%, from 80 pages to 96 pages. All 16 of these
incremental pages may be run in color, tripling our color capacity from
8 pages today to 24 pages. Of these 16 new color pages, 12 will
essentially be dedicated to advertising, with 4 reserved for news.
Slide 12 - Color Print Expansion (Economics)
Again, this is huge. To begin with, the economics are compelling. A
full page of color advertising sells at about a 25% premium to black-
and-white advertising. A single incremental color page over a year is
worth about $32 million in additional revenue. A single black and
white page converted to color is approximately $7 million of
incremental annual revenue.
The principal cost attached to this is the non-cash depreciation on the
capital of approximately $22 million, annually. In addition, we
estimate another $12 million in incremental operating expenses - things
such as plant overhead, fixed labor and color ink -- and another $3
million for incremental news staff to fill these new pages. To cover
this total annual $37 million expense, we need only to sell a little
more than one incremental color pages over the course of a year.
Slide 13 - Color Print Expansion - Editorial Franchise
Which brings us to perhaps an even more compelling benefit. Color adds
another editorial dimension. Greater use of editorial color can enhance
our ability to explain and display the news. It is a natural for
charts and graphs, and for added emphasis to selected stories. It will
assist reader navigation through our pages.
Greater page capacity opens possibilities for Paul Steiger and his team
at the Journal to further extend our editorial franchise and, over
time, further expand our readership and advertising linage. This will
add diversification to our reliance on tech and financial ad revenues,
and reduce our ad volatility. While no decisions have been made, we
are taking a hard and careful look at these possibilities.
Slide 13A - Other Organic Growth Initiatives
And we have other significant organic growth initiatives - from
continued international expansion, at both the Journal and Dow Jones
Newswires, to continued growth at the Friday Weekend Journal, to
further development of our Indexes business.
Slide 14 - New Business Development (title slide)
The second tier of our growth strategy includes developing new business
opportunities that leverage our brands and core competencies.
Slide 15 - WSJ.com Strength Slide
The Online Journal at WSJ.com is a classic example of this. The Online
Journal leverages the Wall Street Journal brand and our company-wide
strength in publishing high-quality business news and information. It
is constantly updated with real-time information from Dow Jones
Newswires. The result is that WSJ.com significantly extends our
customer reach by delivering this information to a new and emerging
breed of readers looking for real-time, web-based, customizable news
and information. As evidence of our success here, we ended the first
quarter with 574,000 paid subscribers, at least half of whom are new
customers as they are not among our 1.8 million Journal print
subscribers. In addition to opening a new avenue of growth, the Online
Journal provides a serious hedge against any potential
disintermediation of our print business to the web.
We have established what we believe to be a sensible, durable business
model for the Online Journal. It stems from our belief that content
that is valued and paid for by subscribers in one channel, print,
should be valued and paid for in other channels, in this case online.
Slide 16 - WSJ.com Subscriber Growth
As we all know, online advertising has hardly been immune from the
current downturn in ad spending. Nor have we at WSJ.com, as evidenced
by our first quarter [21%] revenue decline. Nonetheless, today we feel
very good about the online Journal. Subscriber growth remains strong.
The fact that we have two revenue streams, and that subscriptions
continue to grow, in what we believe is a flight to quality in
difficult times, has mitigated our downside and further validates our
business model.
Slide 17 - WSJ.com Redesign
Our confidence in our content and business model is evident in our
continued investment in the Online Journal. We are nearing completion
of a $25 million redesign of the WSJ.com site. This redesign will give
us a more flexible and reliable technology platform, an updated look
for the site, and improvements to navigation and personalization
features. Site redesign will be completed later this year.
Slide 18 - Other New Business Development
WSJ.com is the largest example of the way we leverage our brands and
core competencies to develop new business opportunities. Smaller ones
include our highly successful Sunday Journal, our overseas editions,
our licensing activities, our radio and reference services businesses
and our Indexes business.
Slide 19 - Strategic Alliance Title Slide
The third tier of our strategy is to leverage our brands and
competencies through strategic alliances or acquisitions.
Slide 19A - Strategic Alliance Brands
We can do this with our existing brands as well as create or add new
brands. While we have been active here as you can see on this slide, we
certainly can do more.
Peter already spent some time on Factiva, so I won't. Rather, I'll
highlight our strategic alliance with NBC in television business news
with CNBC.
Slide 20 - CNBC Map
Our alliance with NBC spans the globe. In the U.S., NBC owns 100% of
CNBC and pays us a license fee and share of advertising revenue for
exclusive access to our content and on-air Dow Jones and Wall Street
Journal branded news and commentary. Overseas, we are 50/50 partners
with NBC in both CNBC Europe and CNBC Asia.
Slide 21 - CNBC TV Shot
This global partnership uses the Dow Jones and Wall Street Journal
brands to support CNBC as the leading provider of televised business
news and information. It leverages our strengths in global news
gathering, analysis and reporting. This, combined with NBC's branding
and television programming know-how, has clearly established CNBC as
the leading business television network around the world. Today, CNBC
reaches over 160 million people in over 100 countries.
Slide 22 - TV Profits
Taken together, our TV operations turned profitable in 2000, earning
pretax income of $21 million. This combines profits from U.S. TV with
losses from international operations. Our alliance with NBC began in
late 1997. In 2001, we expect CNBC Europe and CNBC Asia to generate
$65 million in revenues and an operating loss, not unusual at all for a
start-up TV operation. In fact, both in the U.S. and abroad, CNBC is
exceeding our original business plan. As CNBC Europe and Asia ramp out
of their investment phase, we expect this growth to continue, with
international profitability visible in early 2003, less than 6 years
since inception.
In addition to this growth potential, CNBC provides an invaluable
global branding platform for us. First, CNBC is branded as a "service
of NBC and Dow Jones." And second, we get worldwide exposure for our
content, people and brands.
We are actively pursuing additional growth opportunities, in the U.S.
and abroad, with NBC to further expand CNBC.
Slide 23 - Pebble in a Pond
The CNBC relationship exemplifies how we maximize the value of the
content that we create. Using the visual of a "pebble in a pond" you
can see how we re-package and re-use our content, increasing its value
as we get paid in multiple ways and extend the reach of our brands to
new customers in many different distribution channels. For example, a
major story broken by Dow Jones Newswires is moved real time to the
Online Journal, shared with and reported by CNBC around the world,
appears with greater depth and analysis the next morning in the print
Journal, and, finally, ends up in Factiva's archives.
Slide 24 - Other Partnerships
And we have other successful partnerships, including our 50/50 venture
with Hearst in SmartMoney magazine and our 22% ownership stake in
Handlesblatt, the leading business newspaper in Germany.
Slide 25 - Equity Losses
Most of our partnerships are recorded as equity investments. Taken
together, these equity investments are poised to significantly
contribute to our profit growth in coming years. From a loss of $28
million in 1999 when we were investing heavily in international TV,
SmartMoney.com and Factiva, we expect our equity investments to
approach breakeven in 2001 as Factiva is now profitable and our
international TV losses have moderated. These trends should continue
in 2002, pushing our existing equity investments solidly into the
black.
In our view, our equity investments are a significant hidden asset and
a very large component of our true shareholder value, that is often
overlooked by the markets. This is because, under GAAP, the financial
results of our equity investments are not included in revenues or
EBITDA and, while they are included in earnings, the impact there is
deminimis relative to their true underlying potential. Consequently,
if you use traditional valuation measures based on multiples of
consolidated revenues, EBITDA or earnings, you will value our equity
investments at approximately zero. Whatever you may estimate they are
worth, we presume you agree that they are worth considerably more than
zero.
Slide 26 - Acquisition Criteria
In addition to partnerships, acquisitions are likely to play a more
meaningful role in our future. While, as Peter said, there is nothing
imminent, we are ramping up our efforts to identify and pursue
appropriate acquisition opportunities.
By appropriate, we mean those opportunities that are strategically
right, financially attractive and have manageable execution risk.
By strategically right, we first and foremost mean businesses that bear
very close relationship to our core business of publishing. Target
candidates will either help realize the full potential of our existing
brands or add new brands that are close to our core. We'll also
require that these businesses have products and values consistent with
the premium quality of our brands and values.
By financially attractive, we mean that any deal must increase
shareholder value; meaning that it must have a positive net present
value when its cash flows are discounted at our weighted average cost
of capital, and that it must be accretive to EPS in the near term,
using conservative financial assumptions and realistic synergies. We
must also be able to maintain strong pro-forma credit ratings after any
debt incurred in an acquisition.
Manageable execution risk means that we would only consider businesses
we know well - again, close to our core - preferably with solid
management teams. We would also mitigate risk by using transaction
structures designed to share downside risk with the seller.
Slide 27 - Share Repurchase
Consistent share repurchase is the fourth tier of our value creation
strategy. Over the past three years, we have returned over $920
million in cash to our shareholders: $267 million in dividends and $655
million in share repurchases, comprising about 13% of our outstanding
shares. Our current authorizations provide room for over $500 million
of additional buyback. And our historically strong free cash flow and
ample debt capacity enable us to continue repurchasing shares at these
historical levels, further
Slide 28 - Capital Spending History
And our cash flow and balance sheet should get stronger in the future.
This is the final year of an intense period of capital investment for
our company. Color print expansion, pagination, and the Online Journal
redesign all come to the end of their investment phase this year.
Accordingly, our capital expenditure needs will drop from $155 million
this year to about $100 million in 2002. Add to this our expense
reductions, falling newsprint prices and more aggressive working
capital management and our free cash flow should climb nicely.
Our only constraints, then, are, first, our desire to maintain our
strong credit ratings and, second, that the return on investment in our
own shares must exceed our cost of capital and exceed the ROI on
alternative uses of our capital -- as it does today. In fact, by the
end of the 2nd quarter, we likely will have repurchased about $90
million, or 1.6 million, of our shares so far in 2001.
Slide 29 - Outlook
In closing, as Peter noted, business is tough right now, for us and our
peers. The June advertising linage trend at the Journal is no better
than it was in May, in spite of a considerable and long-awaited easing
of comparisons. We will probably be slightly below the bottom end of
the guidance for Journal linage that we gave in April - which was to be
down 30% to 35% in the second quarter. Nonetheless, our cost
reductions will reduce second quarter expenses well below year ago
levels, and we are hopeful of achieving the current $0.50 per share
consensus estimate for the quarter. Our actual June linage will be the
final determinant of whether we make it.
On top of this, we do not yet have any visibility to an improvement in
ad revenues. This makes giving guidance for the balance of the year
extraordinarily difficult - so we will, again, not issue such guidance.
What we can say is that in response to this continued tough
environment, we are once again taking a hard look at our expenses to
identify opportunities to reduce costs even further. We will update
you on these efforts in our second quarter call.
Slide 30 - Summary
We can also say that, in our view, we are doing all the right things to
weather this downturn and to position ourselves to maximize our
profitability when the situation improves. We are creating a strong
platform for value creation at Dow Jones.
- - We have great brands, products and content.
- - We command leading market share in all segments served.
- - We dominate national ad categories with excellent secular growth
prospects.
- - We will have reduced our costs virtually to the bone, but not further
than that, and we will sustain the majority of these cuts into 2002 and
beyond.
- - We will have added significantly to our growth potential with the
$232 million investment in 20% more print capacity (all in color) at
The Wall Street Journal.
- - We are investing and improving profitability at WSJ.com for long-term
competitive advantage.
- - We have an improving profit trend at our highly-valued equity
investments.
- - We have powerful cash flow and a pristine balance sheet that we
project to get even stronger.
- - We are determined to use this cash flow and leverage our balance
sheet to execute a four-tiered strategy designed to propel our future
growth.
- - And we are embarked on a new Long Range Planning process designed to
develop a roadmap to tap the full potential of our brands, products,
content and people to significantly increase our shareholder value.
Our entire management team is committed to this effort.
And with that, Peter, Gordon Crovitz and I will be pleased to attempt
to answer any questions that you may have.
SLIDES FROM PRESENTATION
(Slide 1)
Mid-Year Media Review
Dow Jones
Rich Zannino
Executive Vice President & Chief Financial Officer
Dow Jones
(Slide 2)
Aggressive Cost Reduction (Graph)
Exceeded cost reduction target by 50%
$millions
Target Achieved
2001 $60 2001 $75
Annual $90 Annual $120
Dow Jones
(Slide 3)
Strategic Imperatives
- - Enhance quality and indispensable appeal of brands and content
- - Realize full potential of brands and content
- - Leverage and extend core competencies over new brands
- - Foster core values of quality, integrity and reliability
Dow Jones
(Slide 3A)
Four Tiered Growth Strategy
Simultaneously pursue four strategic thrusts
- - Organic growth
- - New business development
- - Strategic alliances and acquisitions
- - Share repurchases
Dow Jones
(Slide 4)
Organic Growth
Dow Jones
(Slide 4A)
Leading Market Share in Print Publishing
Product/Service Product Geography Market Rank*
The Wall Street
Journal Business Daily U.S. #1
The Wall Street
Journal Europe Business Daily Europe #2
The Asian Wall
Street Journal Business Daily Asia #1
WSJ Special Editions Business Daily Latin America #1
Barron's Financial Weekly U.S. #1
SmartMoney 1 Personal Finance
Magazine U.S. #2
Far Eastern Economic Regional Business
Review Magazine Asia #1
* By Revenue
1 Equity Investment
Dow Jones
(Slide 5)
Leading Market Share In Electonic Publishing
Product/Service Product Geography Market Rank*
Dow Jones Newswires Business Newswires U.S. #1
News to profit by. Europe/Asia #2
WSJ.com Business Web Service Worldwide #1
Factiva 1 Business Desktop
Services Worldwide #1
Dow Jones Indexes Market Indices
The markets' measure Business U.S. #2
Stoxx Market Indices Europe #1
* By Revenue
1 Equity investments
Dow Jones
(Slide 6)
The Wall Street Journal - Leading Share (Graph)
Market Share of Business Publishing Advertising Expenditures to 2000
1996 1997 1998 1999 2000 Publication
27.3% 28.8% 28.8% 29.1% 30.7% Wall Street Journal
15.4% 14.6% 15.4% 14.9% 14.0% USA Today
12.4% 13.4% 13.5% 13.5% 11.4% Time
8.9% 8.7% 9.1% 9.4% 10.5% Business Week
5.9% 5.8% 6.4% 6.8% 8.6% Fortune
Competitive Media Reporting. Market share reflects overall ad spending
at the following publications: The Wall Street Journal, Business Week,
Forbes, Fortune, Inc., Money, Newsweek, Time, U.S. News & World Report,
USA Today
Dow Jones
(Slide 7)
The Wall Street Journal Advertising Linage
2000 Ad Linage by Category (Pie Chart)
Financial 25%
Technology 25%
Other General 38%
Classified 12%
Dow Jones
(Slide 8)
Favorable Long-term Trends: Technology
(Graph)
Technology Spending as a % of Nominal GDP
Quarter % Quarter % Quarter % Quarter %
1Q1991 3.0 2Q1991 3.0 3q1991 3.0 4q1991 3.1
1Q1992 3.0 2Q1992 3.1 3q1992 3.2 4q1992 3.1
1Q1993 3.2 2Q1993 3.2 3q1993 3.3 4q1993 3.3
1Q1994 3.3 2Q1994 3.3 3q1994 3.3 4q1994 3.4
1Q1995 3.4 2Q1995 3.6 3q1995 3.5 4q1995 3.6
1Q1996 3.7 2Q1996 3.6 3q1996 3.7 4q1996 3.7
1Q1997 3.8 2Q1997 3.9 3q1997 4.0 4q1997 4.0
1Q1998 4.1 2Q1998 4.2 3q1998 4.2 4q1998 4.3
1Q1999 4.4 2Q1999 4.6 3q1999 4.8 4q1999 4.8
1Q2000 5.1 2Q2000 5.3 3q2000 5.5 4q2000 5.5
1Q2001 5.3
(Graph)
Global Information Appliance Processor Market (Millions)
Year PDAs TV-Based Ias Internet Terminals
1999 2.5 2.0 0.2
2000 4.0 3.5 1.5
2001E 6.0 5.0 4.0
2002E 8.5 7.0 8.0
2003E 11.0 9.0 12.2
2004E 14.0 11.0 15.6
Dow Jones
(Slide 9)
Favorable Long-term Trends: Financial Sector
Graph: Growth of Retail Stock Ownership
Year Shareowners (MMs) Percent of U.S. Households
1980 30 -
1985 47 -
1989 52 33
1992 61 36
1995 69 41
1999 79 48
Source: Securities Industry Association
Dow Jones
(Slide 10)
Color Print Expansion (Time Line)
Press/Motor Control Upgrade - May 1998 to January 2000
Architecture, Engineering, Construction - May 1998 to January 2001
Common Pressline Configuration - June 1999 to June 2001
Install Color Towers - January 2000 to January 2002
Testing - June 2001 to March 2002
Dow Jones
(Slide 11)
Color Print Expansion
20% expansion in page capacity (all color)
Graph: Total Pages*
Current 80
2002 96
Graph: Color Pages*
Current 8
2002 24
* Tues - Fri
Dow Jones
(Slide 12)
Color Print Expansion
Economics
- - Single incremental color page per year: $32 million
- - Single black-and-white page to color revenue per year: $7 million
- - Annual depreciation: $22 million
- - Annual incremental plant operating expenses: $12 million
- - Annual incremental news expense: $3 million
Dow Jones
(Slide 13)
Color Print Expansion
Expanded editorial franchise
- - Enhanced explanation and display of news
- - Easier reader navigation
- - Editorial extensions
- - Expanded readership
- - Expanded advertising
- - Diversifies advertising revenues
Dow Jones
(Slide 13A)
Other Organic Growth Initiatives
The Wall Street Journal Europe
Dow Jones Newswires - News to profit by.
Weekend Journal
The Asia Wall Street Journal
Dow Jones
(Slide 14)
New Business Development
Dow Jones
(Slide 15)
Online Journal at WSJ.com
- - Highly recognized, trusted and credible brand
- - Leverages company-wide content
- - Extends customer reach
- - Logical and viable interest business model
- - Commitment to profitability
- - $25 million site redesign
Dow Jones
(Slide 16)
WSJ.com Subscriber Growth (Graph)
Number of Subscribers(000's)
Quarter Subscribers
4Q1996 50
1Q1997 87
2Q1997 113
3Q1997 138
4Q1997 172
1Q1998 201
2Q1998 227
3Q1998 256
4Q1998 266
1Q1999 285
2Q1999 307
3Q1999 330
4Q1999 375
1Q2000 435
2Q2000 461
3Q2000 506
4Q2000 535
1Q2001 574
Dow Jones
(Slide 17)
WSJ.com Redesign
$25 million capital project
- - More flexible and reliable technology platform
- - Updated look and feel
- - Improved navigation
- - Increased personalization
- - Enhanced advertising options
Dow Jones
(Slide 18)
Other New Business Development
Dow Jones Indexes
The Wall Street Journal Radio Network - The Broadcast Extension of The
Wall Street Journal.
The Wall Street Journal Sunday
Dow Jones
(Slide 19)
Strategic Alliances and Acquisitions
Dow Jones
(Slide 19A)
Strategic Alliances
CNBC Europe - A Service of NBC and Dow Jones
Factiva
CNBC Asia - A Service of NBC and Dow Jones
STOXX
SmartMoney - The Wall Street Journal Magazine of Personal Business
Handelsblatt
Vedomosti - The Wall Street Journal & FINANCIAL TIMES
Dow Jones
(Slide 20)
CNBC - "A Service of NBC and Dow Jones"
Global leader in televised business news
(Map of the world with company logos)
Dow Jones
(Slide 21)
CNBC - "A Service of NBC and Dow Jones"
Leveraging our news and our brands
(Picture of reporter on television screen)
Dow Jones
(Slide 22)
Global Television
Accelerating Profitability (Graph)
$ millions
1997 -48
1998 -20
1999 -4
2000 21
Dow Jones
(Slide 23)
"Pebble in a Pond"
Dow Jones Newswires
WSJ.com
CNBC
The Wall Street Journal
Factiva
Dow Jones
(Slide 24)
Other Partnerships
SmartMoney - The Wall Street Journal Magazine of Personal Business
Handelsblatt
STOXX
Vedomosti - The Wall Street Journal & FINANCIAL TIMES
Dow Jones
(Slide 25)
Equity Investments (Graph)
Equity losses
($ Millions)
1998 ($16)
1999 ($28)
2000 ($20)
2001 ($2)
Dow Jones
(Slide 26)
Acquisition Criteria
- - Strategically right
on strategy
close to our core
Consistent with our quality
- - Financially attractive
increase shareholder value
near-term accretive to EPS
- - Manageable execution risk
businesses we know well
solid management teams
transaction structure
Dow Jones
(Slide 27)
Total Cash Returned To Shareholders (Graph)
$ Millions
Year Dividends Share Repurchases Total
1998 91.7 291.2 382.9
1999 87.2 142.3 229.5
2000 88.1 221.2 309.3
Dow Jones
(Slide 28)
Capital Spending
(CAPTION>
($ Millions) 1998 1999 2000 2001
Print Publishing 97 84 95 60
Electronic Publishing 39 21 22 21
Community Newspapers 11 8 7 9
Subtotal Before Print Expansion 147 113 124 90
Color Print Publishing 24 78 63 65
Total Capital Expenditures $171 $191 $187 $155
Excludes discontinued operations
Dow Jones
(Slide 29)
Outlook
- - June advertising trend not improving
- - Second quarter expenses below last year
- - Estimating EPS in line with consensus
- - Lack of reliable visibility for balance of year
- - Not issuing guidance for balance of year
- - Further cost reductions
Dow Jones
(Slide 30)
A Strong Platform For Value Creation
- - Great brands, products and content
- - Leading market share in all businesses
- - Dominant franchises in attractive national ad categories
- - Leaner cost structure increases future operating leverage
- - Additional 20% print capacity (all in color)
- - Investing to improve profitability at WSJ.com
Dow Jones
(Slide 30A)
A Strong Platform For Value Creation
- - Highly-valued equity investments turning profitable
- - Powerful cash flow and under-leveraged balance sheet
- - Clear strategic direction to propel future growth
- - Long Range Plan to define specific actions
- - Strong management commitment to increasing shareholder value
Dow Jones
(Slide 31)
Dow Jones
Mid-Year Media Review
Questions and Answers
Information Relating To Forward-Looking Statements
This transcript contains forward-looking statements that involve risks
and uncertainties that could cause actual results to differ materially
from those anticipated. Such risks and uncertainties include, but are
not limited to, business, economic and stock market conditions that are
impacting the volume of advertising (in particular IPO, dot-com,
technology and financial advertising) sales and sales of the company's
products and services; the company's ability to reduce costs without
harming long term growth prospects; business conditions (growth or
consolidation) in the financial services industry, and the tendency of
consolidation to negatively impact the market for the company's
products and services and advertising; the difficult comparisons the
company will face in 2001 in light of the high level of advertising
sales revenue achieved at The Wall Street Journal in 2000; the extent
to which the company is called upon to perform under the guarantee to
Cantor Fitzgerald Securities and Market Data Corporation, and the
extent to which Bridge would perform under its agreement to indemnify
the company in that event; with respect to Dow Jones Newswires, the
extent and impact of delays and difficulties that would be encountered
in a migration process if Bridge was unable to serve its customers; the
intense competition the company's products and services face in the
markets for financial news and information and advertising revenues
from newspapers, specialized magazines, free and paid Internet
publications and services, financial television programming and other
new media; the company's ability to increase its circulation and
advertising revenues from its international print publications, given
competition from local publications and from other international
publications; with respect to Newswires, the rate of addition of new
subscribers, particularly, outside the U.S., and cancellations of
Telerate and Bridge terminals; the company's ability to achieve and
maintain a diversified advertising base for its print publications;
increased competition in the market for electronic business information
and research services and Factiva's ability to increase its market
share and revenues in the face of competition from local providers with
more local content and from other international providers; WSJ.com's
ability to increase its revenues in light of its paid subscription
model; the amount of user traffic on the company's Internet sites and
the pricing of advertising on Internet sites generally; adverse
developments relating to the company's commitments, contingencies and
equity investments; potential delays in expanding the company's
newspaper page and color printing capacity; potential increased
regulation of on-line businesses; the cost of newsprint; and such other
risk factors as may have been or may be included from time to time in
the company's reports filed with the Securities and Exchange
Commission.