UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 14, 2005
(January 20, 2005)
DOW JONES & COMPANY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-7564 13-5034940
(State or other (Commission File (I.R.S. Employer
jurisdiction Number) Identification No.)
of incorporation)
200 Liberty Street, New York, New York 10281
(Address of principal executive offices) (ZIP CODE)
Registrant's telephone number, including area code: (212) 416-2000
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
This Current Report on Form 8-K/A amends and supplements the Current Report
on Form 8-K filed by Dow Jones & Company, Inc. ("Dow Jones" or the
"Company") on January 26, 2005 in connection with the Company's acquisition
of MarketWatch, Inc. ("MarketWatch"), which was completed on January 21,
2005. Pursuant to an Agreement and Plan of Merger, dated as of November 14,
2004, entered into by and among MarketWatch, Dow Jones and Golden
Acquisition Corp. ("Merger Sub"), Merger Sub merged with and into
MarketWatch with MarketWatch as the surviving corporation (the "Merger").
The Company's Current Report on Form 8-K dated January 26, 2005 is being
amended to include (1) supplemental information under Item 7.01, (2) the
audited and unaudited financial statements of MarketWatch required by Item
9.01 (a), and (3) the pro forma financial information required by Item 9.01
(b).
ITEM 7.01. REGULATION FD DISCLOSURE
Dow Jones is providing the following supplemental information, which was
contained in offering material used in connection with a financing
transaction:
1. a discussion of certain risks and uncertainties relating to Dow
Jones' business and the Merger under the heading "Forward-Looking
Statements" below;
2. a description of Dow Jones under the heading "Dow Jones &
Company, Inc." below; and
3. a summary description of the Merger and MarketWatch under the
heading "The MarketWatch Acquisition" below.
The information contained in this Current Report on Form 8-K/A is neither
an offer to sell nor a solicitation of an offer to buy any of the Company's
securities.
In accordance with General Instruction B.2 of Form 8-K, the information set
forth in this Item 7.01 shall not be deemed to be "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or otherwise subject to the liabilities of that section,
nor shall such information be deemed incorporated by reference in any
filing under the Securities Act of 1933, as amended (the "Securities Act"),
or the Exchange Act, except as shall be expressly set forth by specific
reference in such a filing. The information set forth in this Item 7.01
shall not be deemed an admission as to the materiality of any information
in this report on Form 8-K/A that is required to be disclosed solely to
satisfy the requirements of Regulation FD.
As used in the supplemental information provided herein, all references to
"Dow Jones," "the Company," "we," and "our" and all similar references are
to Dow Jones & Company, Inc., unless otherwise expressly stated or the
context otherwise requires.
SUPPLEMENTAL INFORMATION
1. Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a safe harbor
for forward-looking statements made by or on behalf of us. We and our
representatives may, from time to time, make written or verbal
forward-looking statements, including statements contained herein
(including information incorporated by reference herein). Generally, the
inclusion of the words "believe," "expect," "intend," "estimate,"
"anticipate," "will," and similar expressions, herein (including
information incorporated herein by reference), in future filings with the
SEC, in our press releases and in oral statements made by our
representatives, identify statements that constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act and that are intended to come within the
safe harbor protection provided by those sections. The forward-looking
statements are and will be based upon management's then-current views and
assumptions regarding future events and operating performance, and are
applicable only as of the dates of such statements. We undertake no
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events, or otherwise.
By their nature, forward-looking statements involve risk and uncertainties
that could cause actual results to differ materially from anticipated
results. Such risks and uncertainties include, but are not limited to:
Risks Relating to Our Business
Advertising Revenues
We derive a majority of our revenue from advertising, primarily in
connection with our print publications and our online network of web sites.
Our overall performance in print publishing is largely dependent on the
operating performance of the global Wall Street Journal (including its
extended online and television brand and content), which, to a significant
extent, is dependent upon business-to-business ("B2B") advertising
generated by the distinctive demographic profile of The Wall Street
Journal's audience.
Our advertising revenues are negatively impacted by economic downturns in
any of our advertising markets, but particularly by downturns in our core
market, B2B advertising. We have recently experienced depressed levels of
advertising in the B2B market, and B2B advertising buyers continue to make
spending decisions increasingly closer to publication dates, generally on a
month-to-month basis. Our B2B advertising levels, particularly in
technology and finance, which have typically represented approximately 40%
of The Wall Street Journal's advertising linage, may or may not return to
historical levels. We have experienced decreases in technology advertising,
particularly computer software and communications advertising, which we
believe may be a result of reduced corporate information technology
spending and generally reduced levels of technology company profits and
share prices. We have also experienced decreases in financial advertising,
including weakness in retail financial advertising, which we believe may be
due to retail financial institutions focusing on reaching more mass
consumer audiences through advertisements in media that target these
audiences, and a decline in tombstone ads, which we believe may be a result
of reduced deal activity and changing advertising practices.
Although we have taken initiatives (including the 2002 introduction of our
Personal Journal section of The Wall Street Journal and our new Weekend
Edition, which will be a weekend publication of The Wall Street Journal
beginning in September 2005) to attract more consumer advertising and other
diversified advertising, we may or may not be able to further penetrate
these new consumer advertising segments. In particular, The Wall Street
Journal's broad national circulation limits our ability to provide certain
local advertising to consumers, which advertising is featured in the
regional publications of some of our competitors. Furthermore, our new
Weekend Edition may fail to generate anticipated advertising revenues,
resulting in greater losses than are currently expected in its first two
years of operation. In addition, the new Weekend Edition may draw
advertising away from our other consumer advertising sections, such as the
Weekend Journal section of The Wall Street Journal (introduced in 1998) and
Personal Journal, for consumer advertising revenues.
Our community newspapers rely on advertising revenue from local
advertisers. These revenues may be negatively impacted by the condition of
the economy in the areas where our community newspapers are circulated and
by the advertising habits of large regional advertisers who may change
their spending patterns or go out of business.
Circulation Revenues
Circulation revenues from our publications, in particular The Wall Street
Journal, are another significant source of revenue for us. Our circulation
revenue may be impacted by competition from other publications and other
forms of media. In addition, the nature of The Wall Street Journal's
circulation base, especially its distinctive demographics (in particular,
its influential and affluent audience that makes significant B2B spending
decisions and spends heavily on personal consumption items), is an
important factor in generating circulation and advertising revenues. If we
are unable to maintain our core demographic audience, our overall
profitability could decline.
Our circulation revenues at The Wall Street Journal and community
newspapers may be negatively impacted by the preferences of many younger
consumers for news in new media formats and from untraditional sources
rather than from newspapers. If these younger consumers maintain these
preferences as they age, this development could, in turn, adversely affect
the willingness of advertisers to place ads with us and/or the rates they
are willing to pay.
Although we seek to cost-effectively maintain our circulation base and its
distinctive demographics (including by implementing content, organization
and design changes to The Wall Street Journal), we may not be successful in
doing so. In addition, we may incur additional costs to do so and we cannot
assure you that we will be able to recover these costs through increased
circulation and advertising revenues.
Subscriptions
Certain of our electronic publishing businesses, including Dow Jones
Newswires, are subscriber-based and are vulnerable to losses in the number
of subscribers. For example, Dow Jones Newswires could lose subscriptions,
measured by the number of terminals carrying Dow Jones Newswires, as a
result of business consolidations and layoffs in the financial services
industry. Similarly, WSJ.com, which currently is the largest paid
subscription news site on the Internet, may not be able to continue to
increase revenues through growing the number of subscribers. Unlike
WSJ.com, our competitors do not, for the most part, utilize a full online
paid subscription model, and most remain free web sites.
Seasonality
Our results of operations are subject to seasonal fluctuations, which
typically cause revenues in the third quarter (which includes the months of
July and August) to be lower than revenues in the remainder of the year.
Cost Structure
We have engaged in cost-cutting over the last several years, but we may not
be able to continue limiting our expense growth. Factors that may impact
our ability to control expense growth in the future include our prior cost
cutting, the tightening of the labor market and the resulting risk of loss
of key employees, and our planned growth initiatives, such as our
acquisition of MarketWatch, Inc. ("MarketWatch") and our new Weekend
Edition. If we are unable to continue to control expense growth in the
future, there may be an adverse effect on our overall profitability.
Competition
All of our products and services face intense competition from other
newspapers, national business magazines, television, trade publications,
newsletters, research reports and services, free and paid Internet sites,
and other new media. We compete for advertising revenues, subscriptions and
consumers, which include readers, online users and television viewers.
Metropolitan general interest newspapers and many small city or suburban
papers carry business and financial content, as do many Internet-based
services as well as television and radio. In addition, specialized
magazines in the business and financial field, as well as general news
magazines, publish substantial amounts of business-related material. The
Wall Street Journal also competes for advertising with non-business
publications offering audiences of high demographic quality, such as
technology and lifestyle magazines. Circulation revenues at our community
newspapers may be negatively impacted by local competition, including free
publications. Nearly all of these other publications and services seek
audiences and seek to sell advertising, making them competitive with our
publications and services.
Our efforts to expand in Europe have been limited by substantial
competition from local language publications, other international
publications, and local and international television networks, as well as
the limited nature of the foreign language market which we serve. In Asia,
our presence with our Pan-Asia publications may be threatened by
developments within the region such that readers may prefer local language
or local market publications. As the economies of the various individual
Asian nations develop over time, we may encounter further difficulties in
continuing to appeal to a broader Pan-Asian audience.
Our Dow Jones Newswires business and financial news products are
distributed through a limited number of vendors, which distribute our news
over their platforms into financial services companies, that receive our
content by way of subscriptions with these vendors. Newswires has entered
into a bundling arrangement to deliver a selection of our news on all
Moneyline Telerate terminals worldwide; this arrangement is important to
Newswires' international revenues and may be adversely affected by the
impending acquisition by Reuters of the Moneyline Telerate business.
Moreover, sales of our Dow Jones Newswire products may continue to be
negatively impacted by technological changes and changes in the brokerage
industry, which have resulted in a diminishing reliance on real time news
as business and financial news has become increasingly available via
Internet-based publications and services. In addition, as we strive to
increase our international revenues from the Dow Jones Newswires business,
we may not succeed given the competition from and subscribers' desire for,
local language news services.
There can be no assurance that we will be able to increase or to maintain
the advertising, readership, circulation or subscriptions market share that
we currently enjoy. In addition, changes in the regulatory and
technological environment are bringing about a global consolidation of
media and telecommunications companies and convergence among various forms
of media. As a result, our operations could face increased competition from
larger media entities.
Intellectual Property
We rely on a combination of trademarks, trade names, copyrights, and other
proprietary rights, as well as contractual arrangements, including
licenses, to establish and protect our intellectual property and brand
names. We believe our proprietary trademarks and other intellectual
property rights are important to our continued success and our competitive
position.
Dow Jones Indexes licenses, sometimes exclusively, our proprietary indexes
and trademarks to exchanges and financial institutions for use as the basis
of financial products. For example, Dow Jones has licensed the Dow Jones
Industrial Average index and related trademarks to the American Stock
Exchange as the basis of the DIAMONDS exchange-traded fund. Two lawsuits
relevant to the index licensing industry are pending in the U.S. District
Court for the Southern District of New York. Each of these suits is testing
an index provider's ability to enforce its intellectual property rights
with respect to certain licensing activities. Although we are not a party
to either lawsuit, if the index provider's intellectual property rights are
successfully challenged, our ability to license our own index-related
property for certain uses may be impaired and our revenues related to such
licensing activities could be negatively impacted.
Acquisitions
From time to time, we seek out strategic and financially attractive
acquisition opportunities. Such acquisitions may affect our costs,
revenues, profitability and financial position. Acquisitions, including our
recent acquisition of MarketWatch, involve risks and uncertainties,
including difficulties in integrating acquired operations, diversions of
management resources and loss of key employees, challenges with respect to
operating new businesses, debt incurred in financing such acquisitions
(including the related possible reduction in our credit ratings and
increase in our cost of borrowing) and unanticipated problems and
liabilities.
New Business Opportunities and Strategic Alliances
There are substantial uncertainties associated with our efforts to leverage
our brands to develop new business opportunities and to generate
advertising and other revenues from these products. Initial timetables for
the introduction and development of new products or services may not be
achieved and price and profitability targets may not prove feasible. For
example, we may be unable to successfully control expenses relating to the
launch of our new Weekend Edition and may not achieve the gains from
advertising revenues that we hope to achieve. We also face challenges in
our attempts to achieve new strategic alliances and to improve the growth
and profitability of existing strategic alliances. For example, we
occasionally make non-controlling minority investments in public and
private entities. We may have limited voting rights and, therefore, an
inability to influence the direction of such entities. Therefore, the
success of these ventures may be dependent upon the efforts of our
partners, fellow investors and licensees. In addition, external factors,
such as the development of competitive alternatives and market response,
may negatively impact the success of these new opportunities and alliances.
MDC/Cantor Fitzgerald Legal Proceeding
We are currently party to a legal proceeding with Market Data Corp. ("MDC")
and Cantor Fitzgerald Securities with respect to our obligations, if any,
under a guarantee issued to MDC and Cantor Fitzgerald Securities. The
guarantee relates to certain annual "minimum payments" owed through October
2006 by Telerate under certain conditions for data acquired by Telerate
from Cantor Fitzgerald Securities and MDC under contracts entered into by
Telerate when Telerate was a subsidiary of ours. We have established a
reserve ($259.2 million as of September 30, 2004) to cover payments we may
need to make if we are required to perform under the guarantee to Cantor
Fitzgerald Securities and MDC. However, if we are required to make payments
under this guarantee, whether pursuant to a judgment in the litigation or a
settlement agreement, those payments would negatively impact our cash flow.
Labor Relations
Approximately 28% of our full-time employees is unionized. As a result, we
are required to negotiate the wages, salaries, benefits, staffing levels
and other terms with many of our employees collectively. Our results could
be adversely affected if labor negotiations caused work interruptions or if
we are unable to negotiate agreements on reasonable terms. In addition, in
light of our efforts to manage expenses, we may face difficulties in
attracting and retaining qualified personnel, particularly as the labor
market tightens and more opportunities are available elsewhere with higher
wages.
Newsprint Prices
Newsprint is our single most important raw material and represented
approximately 7.5% of our total operating expenses in each of 2003 and
2004. The price of newsprint has historically been volatile. Consolidation
in the North American newsprint industry has reduced the number of
suppliers. This has led to paper mill closures and conversions to other
grades of paper, which, in turn, have decreased overall newsprint capacity
and increased the likelihood of price increases in the future. Our
operating results could be adversely affected if newsprint prices increase
significantly.
World Events
Our results of operations may be affected in various ways by events beyond
our control, such as wars, political unrest, natural disasters and acts of
terrorism. The September 11th terrorist attacks in the United States and
the war in Iraq each contributed to a downturn in the U.S. domestic economy
that, in turn, resulted in a temporary decline in advertising. Similar
events may occur in the future and could have a material adverse effect on
our operating results.
Risks Relating to Marketwatch
In addition to the acquisition-related risks described under "--Risks
Relating to Our Business - Acquisitions" above, in connection with our
acquisition of MarketWatch, we face the risk that the market for online
advertising will not grow as rapidly as we expect or that we will
ultimately be unable to capitalize on any such growth. Like our other
online products and services, the MarketWatch business is vulnerable to the
following risks and uncertainties, among others: competition for readers
and advertising revenues; changes in demand for its products and services,
including its licensing business; fluctuations in traffic levels on its web
sites; and potential increased regulation, including with respect to
privacy laws.
---------------
The foregoing discussion of risks and uncertainties is not exhaustive, and
we have disclosed other risks and uncertainties in our reports filed with
the SEC. Additional risks and uncertainties not presently known to us or
that we currently believe to be immaterial also may adversely affect us. If
any of these risks and uncertainties develops into actual events, these
developments could have material adverse effects on our business,
properties, results of operations or financial position. For these reasons,
we caution you not to place undue reliance on our forward-looking
statements.
2. Dow Jones & Company, Inc.
We are a provider of global business and financial news and information
through newspapers, newswires, magazines, the Internet, indexes, television
and radio. In addition to The Wall Street Journal and our international and
online editions, we publish Barron's, Dow Jones Newswires and Dow Jones
Indexes. We also provide news and information of general interest to local
communities through our Ottaway group of community newspapers throughout
the U.S. We are co-owner with Reuters Group of Factiva, with Hearst of
SmartMoney and with NBC Universal of the CNBC television operations
throughout Asia and Europe. We also provide news content to CNBC and radio
stations in the U.S.
We have determined the following three reportable segments based on the
manner in which we manage our business: print publishing, electronic
publishing, and general-interest community newspapers. Over the three years
ended 2004, approximately 60% of our revenues has been derived from the
print publishing segment, with the remaining 40% divided almost equally
between our general-interest community newspapers and our electronic
publishing segments.
PRINT PUBLISHING
Print publishing, which is largely comprised of the global print editions
of The Wall Street Journal, publishes business and financial news and
information in the U.S., Europe, Asia and Latin America and on CNBC
television. The Wall Street Journal utilizes a global management structure
with shared news flows and workforce and a global advertising customer base
and pricing. Through a licensing agreement with NBC Universal, The Wall
Street Journal provides branding, news content and on-air expertise to
CNBC, as a further extension of The Wall Street Journal brand and the
content it produces. Print publishing also includes our Barron's weekly
magazine.
Our overall performance in print publishing is largely dependent on the
operating performance of the global Wall Street Journal (including its
extended U.S. television brand and content), which, in turn, is largely
dependent on B2B advertising revenue, particularly from the financial and
technology sectors.
U.S. Publications
The Wall Street Journal, our flagship publication, is one of the country's
largest daily newspapers with average print circulation of 1,810,000 in
2004. The Wall Street Journal's three major national editions are printed
at 17 printing plants located throughout the U.S. The Wall Street Journal
also sells regional advertising in 18 regional editions.
The Wall Street Journal has an overall daily print capacity of 96 pages,
including 24 pages of color. In addition to its business coverage, The Wall
Street Journal also covers the "business of life" with its Personal Journal
section, which launched in 2002 and runs every Tuesday, Wednesday and
Thursday, and Weekend Journal section, which debuted in 1998 and runs every
Friday and includes pages devoted to travel, wine, sports, shopping,
residential real estate and the arts. The Wall Street Journal also
publishes special reports at various times of the year on topics such as
technology, personal finance and executive compensation, e-commerce, and
health and medicine as well as demographically targeted sections devoted to
subjects of retirement and small business.
In September 2004, we announced the September 2005 launch of the Weekend
Edition of The Wall Street Journal, which is a key element of our 2005 to
2007 strategic plan. We expect the launch of the Weekend Edition will build
off the success of our Weekend and Personal Journal sections in attracting
more consumer-oriented advertisers and reducing our reliance over time on
B2B financial and technology advertising. The Weekend Edition will be
delivered to readers at home on the weekend, which we believe will enable
us to attract more consumer advertising.
The Wall Street Journal production process employs electronic pagination
and satellite transmission of page images to outlying printing plants to
enable early delivery of fresher content to the majority of our readers.
The Wall Street Journal is delivered principally in three ways. Each
business day, approximately 124,000 copies of The Wall Street Journal are
sold at newsstands. Most home and office subscription deliveries are
handled through our National Delivery Service, Inc. subsidiary which in
2004 provided early morning delivery to about 1.4 million, or 77%, of The
Wall Street Journal's subscribers each publishing day. The balance of The
Wall Street Journal's home and office deliveries is made by second class
postal service.
Barron's, the Dow Jones Business and Financial Weekly, is a weekly magazine
with average circulation in 2004 of 299,000 that caters to financial
professionals, individual investors and others interested in financial
markets. Barron's is printed in twelve of The Wall Street Journal's 17
printing plants. It is delivered by second-class postal service and through
National Delivery Service with about 65,000 newsstand copies are sold each
week.
The Wall Street Journal Classroom Edition is published nine times during
the school year and is read by an estimated 750,000 students every month
during the academic year in more than 5,300 middle-school and high-school
classrooms throughout the U.S. Individuals, organizations and corporations
sponsor more than one-third of all subscriptions and schools sponsor the
remainder. The Wall Street Journal Campus Edition is included in college
newspapers throughout the U.S. and includes the week's top business news
and feature stories.
International Publications
The Wall Street Journal Europe, which had an average circulation in 2004 of
87,000, is headquartered in Brussels, Belgium and printed in Belgium,
Germany, Switzerland, Italy, Spain, the United Kingdom and Israel. It is
available on the day of publication in continental Europe, the United
Kingdom, and parts of the Middle East and North Africa. Starting in 2003,
the content of the international editions of The Wall Street Journal added
news and opinion articles from the Washington Post.
The Asian Wall Street Journal, which had an average circulation of 80,000
in 2004, is headquartered in Hong Kong and printed in Hong Kong, Singapore,
Japan, Thailand, Malaysia, Taiwan, the Philippines, Korea and Indonesia. It
has the largest advertising market share of any pan-regional business
newspaper in Asia.
We also publish The Wall Street Journal Special Editions, which are a
collection of Journal pages in local languages distributed as part of 36
newspapers in 34 countries. The Wall Street Journal Americas, serving
Central and South America, is the centerpiece of the Special Editions
published in Spanish and Portuguese in 18 leading Latin America newspapers.
In the fourth quarter of 2004, we announced that The Far Eastern Economic
Review, a Hong Kong based newsweekly magazine, would change its format to a
monthly periodical of issues and ideas-largely written by Asian opinion
leaders from the fields of politics, business and academics. The first
issue of the The Far Eastern Economic Review in its new format was
published in December 2004. This repositioning resulted in a workforce
reduction of approximately 80 employees and reduced costs by approximately
$3 million.
ELECTRONIC PUBLISHING
Electronic publishing includes the operations of Dow Jones Newswires,
Consumer Electronic Publishing and Dow Jones Indexes/Ventures. Consumer
Electronic Publishing includes the results of WSJ.com, its related vertical
sites, our consumer electronic licensing and radio businesses and since its
acquisition in January 2005, MarketWatch, which includes internet,
licensing, radio and newswires operations. Revenues in the electronic
publishing segment are mainly subscription based and comprise about 20% of
our revenues.
Dow Jones Newswires
Dow Jones Newswires is the premier provider of real-time, comprehensive
business news and information for financial professionals around the world.
Its news is displayed on approximately 298,000 English-language terminals
worldwide providing users with real-time information on equity, fixed
income, foreign exchange, commodities and energy markets. Dow Jones
Newswires has a dedicated staff of more than 900 journalists in addition to
drawing on the global resources of The Wall Street Journal and the
Associated Press ("AP"). Newswires also distributes selected portions of
its content to the retail customers of on-line brokers.
Dow Jones News Service is North America's leading source of business and
financial news on U.S. and Canadian companies and markets for brokerage
firms, banks, investment companies and other businesses. Capital Markets
Report covers global debt and money markets. Corporate Filings Alert
provides real-time news covering SEC filings, bankruptcy courts and
government agencies.
Dow Jones Newswires also publishes, on its own or with local partners, in
Chinese, Japanese, Spanish, French, Portuguese, Dutch, Italian, German and
Russian. In April 2004, we acquired the remaining interest in the news
operations of Vereinigte Wirtschaftsdieste GmbH ("VWD"), a German local
language news service, for $12 million. Previously, we were a minority
shareholder in VWD.
On March 19, 2004, we acquired Alternative Investor Group for $85 million,
a company serving the private equity and venture capital markets with
newsletters, conferences and databases. Alternative Investor was integrated
with Dow Jones Newswires, its newsletters division and Technologic Partners
business, which we acquired in late 2003, to form Dow Jones Financial
Information Services.
In 2004, Dow Jones Newswires won many accolades, including Technology
Journalist of the Year, Excellence in Wire Service Reporting and a Codie
award from the Software and Information Industry Association. Also, for the
second year in a row, Dow Jones Newswires was named Inside Market Data's
News Provider of the Year.
Consumer Electronic Publishing
The Wall Street Journal Online ("WSJ.com"), introduced in 1996, is a paid
online subscription site that offers continuously updated coverage of
business news both in the U.S. and abroad. WSJ.com content comprises the
global resources of The Wall Street Journal and Dow Jones Newswires as well
as its own dedicated journalists. In addition to continuously updated
exclusive real-time news and scoops, subscribers have access to the full
text of each day's global editions of The Wall Street Journal, more than
30,000 in-depth company background reports, an archive of The Wall Street
Journal and Dow Jones news articles, and personalized news and stock
portfolios. WSJ.com had 712,000 subscribers at the end of 2004 and was the
largest paid subscription news site on the Internet.
Other consumer web sites in the Wall Street Journal Network include
OpinionJournal.com, which provides commentary on global issues from The
Wall Street Journal editorial page; CareerJournal.com, which gives career
guidance and job-search services for executives; StartupJournal.com, the
premier web site for entrepreneurs seeking guidance on starting or buying a
business or franchise; CollegeJournal.com, which provides guidance and
job-search services for future business leaders; and RealEstateJournal.com,
a comprehensive guide to commercial and residential property. In addition,
with our recent acquisition of MarketWatch, our online network also
includes MarketWatch.com, which provides timely market news and information
free of charge, and BigCharts.com, an investment charting and research web
site. See "The MarketWatch Acquisition."
Consumer Electronic Publishing also includes our radio/audio business and
our consumer electronic licensing division, which offers electronic rights
to use Dow Jones' content. The Wall Street Journal Radio Network produces
and distributes late-breaking business reports during the week to more than
229 radio stations across the country, covering 92% of the population.
Dow Jones Indexes/Ventures
In 1997, we began licensing the Dow Jones Industrial Averages as well as
other indexes as the basis for trading options, futures, unit trusts,
annuities, exchange traded funds, mutual funds, derivatives and specialized
structured products. Dow Jones Indexes also maintains a variety of
specialty indexes, such as the Dow Jones-AIG Commodity Index, the Dow Jones
Select Dividend Index and the Dow Jones Islamic Market Indexes. Dow Jones
Indexes now offers more than 4,000 indexes. During 2004, Dow Jones Indexes
launched a new family of hedge fund indexes and also partnered with
Wilshire Associates to provide the Dow Jones Wilshire index family, which
features the Dow Jones Wilshire 5000 and is expanding to include a complete
global family of country, region, sector, cap-range and style indexes.
Dow Jones Ventures include our reprints/permissions. The
reprints/permissions business sells print or electronic reprints of The
Wall Street Journal and Barron's stories.
COMMUNITY NEWSPAPERS
Community newspapers consists of our wholly-owned Ottaway Newspapers, Inc.
Revenues in this segment are largely dependent on local consumer-based
advertising revenue and comprise about 20% of our revenues.
Our Ottaway community newspapers segment serves relatively small,
self-contained communities, outside the heavy competitive pressures of
large metropolitan papers and other media. In 2002, we divested five
low-growth, non-strategically-located papers, which provided after-tax
proceeds of $235 million and utilized $190 million of capital loss
carryforwards. In 2003, we acquired the faster growing, more strategically
located The Record of Stockton, California.
Ottaway publications now include 15 general-interest dailies, published in
nine states: California, Connecticut, Maine, Massachusetts, Michigan, New
Hampshire, New York, Oregon and Pennsylvania. Average 2004 circulation of
the dailies was approximately 436,000; Sunday circulation for our
newspapers was 483,000. Ottaway also publishes more than 30 weekly
newspapers and "shoppers." The primary delivery method for the newspapers
is by carrier delivery.
3. The MarketWatch Acquisition
On January 21, 2005, we completed the acquisition of MarketWatch for a
purchase price of approximately $533 million, excluding transaction costs,
financed in part by $438.7 million of commercial paper borrowings. The
acquisition was consummated in accordance with the Agreement and Plan of
Merger, dated as of November 14, 2004, among Dow Jones, Golden Acquisition
Corp. (our wholly-owned subsidiary formed in connection with the
acquisition) and MarketWatch, pursuant to which Golden Acquisition Corp.
merged with and into MarketWatch, with MarketWatch remaining as the
surviving corporation and a wholly-owned subsidiary of Dow Jones.
MarketWatch is a leading provider of business news, financial information
and analytical tools and operates two award-winning web sites:
MarketWatch.com and BigCharts.com. These free, advertising-supported web
sites serve approximately seven million unique visitors per month with
timely market news and information. MarketWatch also operates the
MarketWatch Information Services group, which is a leading licensor of
market news, data, investment analysis tools and other online applications
to financial services firms, media companies and corporations.
MarketWatch produces a syndicated television program and provides updates
every 30 minutes on the MarketWatch.com Radio Network. MarketWatch also
offers subscription products for individual investors, including the
Hulbert Financial Digest suite of products, Retirement Weekly and ETF
Trader.
We believe that the MarketWatch acquisition will complement The Wall Street
Journal Online network, which provides premium business news to about three
million unique visitors per month. By combining the traffic of the Wall
Street Journal network of web sites and MarketWatch, our web sites are
expected to have close to nine million unduplicated unique visitors per
month. We also expect that the licensing businesses of MarketWatch will
provide additional assets, such as online charting and other tools, which
will extend the reach of our business-to-business licensing operations.
We intend to integrate MarketWatch into our Consumer Electronic Publishing
business, which comprises The Wall Street Journal Online at WSJ.com, other
free advertising-supported vertical web sites, licensing of content to web
sites, and The Wall Street Journal Radio Network.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired.
The historical consolidated financial statements of MarketWatch required by
Item 9.01 (a) are attached hereto as Exhibits 99.3 and 99.4 and are hereby
incorporated by reference herein as follows:
o MarketWatch's consolidated balance sheets at December 31, 2003
and 2002, respectively, and consolidated statements of
operations, stockholders' equity and cash flows for the years
ended December 31, 2003 and 2002, respectively, are attached
hereto as Exhibit 99.3 and are hereby incorporated by reference
herein;
o MarketWatch's unaudited condensed consolidated balance sheet at
September 30, 2004 and unaudited condensed consolidated
statements of operations and cash flows for the nine months ended
September 30, 2004 and 2003, respectively, are attached hereto as
Exhibit 99.4 and are hereby incorporated by reference herein.
(b) Pro forma financial information.
The unaudited pro forma condensed combined financial information required
by Item 9.01 (b) is included as Exhibit 99.5 hereto, which exhibit is
hereby incorporated by reference herein.
(c) Exhibits
23.1 Consent of PricewaterhouseCoopers LLP.
99.1* Joint Press Release of MarketWatch, Inc. and Dow Jones &
Company, Inc., dated January 24, 2005, announcing the completion
of the acquisition of MarketWatch by Dow Jones.
99.2* $260,000,000 60-Day Credit Agreement, Dated As Of January 20,
2005, Among Dow Jones & Company, Inc., As Borrower, The Several
Lenders From Time To Time Parties Hereto, And JPMorgan Chase
Bank, As Administrative Agent.
99.3 Audited consolidated financial statements of MarketWatch, Inc.
as of December 31, 2003 and 2002 and for the years ended
December 31, 2003 and 2002.
99.4 Unaudited consolidated financial statements of MarketWatch, Inc.
as of September 30, 2004 and for the nine months ended September
30, 2004 and 2003.
99.5 Unaudited Pro Forma Condensed Combined Financial Information at
September 30, 2004, for the nine months ended September 30, 2004
and for the year ended December 31, 2003.
* Previously filed.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DOW JONES & COMPANY, INC.
Dated: February 14, 2005 By: /s/ Robert Perrine
----------------------------
Robert Perrine
Chief Accounting
Officer and Controller
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
23.1 Consent of PricewaterhouseCoopers LLP.
99.1* Joint Press Release of MarketWatch, Inc. and Dow Jones &
Company, Inc., dated January 24, 2005, announcing the completion
of the acquisition of MarketWatch by Dow Jones.
99.2* $260,000,000 60-Day Credit Agreement, Dated As Of January 20,
2005, Among Dow Jones & Company, Inc., As Borrower, The Several
Lenders From Time To Time Parties Hereto, And JPMorgan Chase
Bank, As Administrative Agent.
99.3 Audited consolidated financial statements of MarketWatch, Inc.
as of December 31, 2003 and 2002 and for the years ended
December 31, 2003 and 2002.
99.4 Unaudited consolidated financial statements of MarketWatch, Inc.
as of September 30, 2004 and for the nine months ended September
30, 2004 and 2003.
99.5 Unaudited Pro Forma Condensed Combined Financial Information at
September 30, 2004, for the nine months ended September 30, 2004
and for the year ended December 31, 2003.
* Previously filed