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EXHIBIT 99.2
Remarks of Peter R. Kann,
Chairman and CEO,
Dow Jones & Company
at Investment Community Conferences,
December 6, 2000
I am pleased to be here, along with my colleagues, Gordon Crovitz,
head of Electronic Publishing for Dow Jones; Paul Ingrassia, President
of Dow Jones Newswires; and Jerry Bailey, our Chief Financial Officer.
I spoke with many of you only last month, at our company's Fall
analyst meeting, so my prepared remarks today will be brief. And I
know that Gordon, who spoke at that same meeting, will be brief as
well. Then Paul will make a more detailed presentation on Dow Jones
Newswires, after which all of us, of course with Jerry, will be pleased
to take questions.
I want now to turn directly to some straight talk about the current
advertising environment, and what it means for our near-term results.
As we've all been hearing in recent days and weeks, there is some
definite slowing in the economy as a whole, and a much higher degree of
nervousness, and we're seeing that, along with everyone else.
In our own case, it translates this way: we're announcing today that
November advertising linage, or volume, at The Wall Street Journal was
down 12% on a per-issue basis. Moreover, we expect December linage to
be down about 20% on a per-issue basis, but with two fewer issues and
so, in all, down about 30%. For the fourth quarter as a whole, then,
we would expect linage down in a high single digit range on a per issue
basis, and up in the mid-teens range for the full year 2000.
Now let me hasten to put that in some context for you:
First, November 2000 was the second best November The Wall Street
Journal has ever had. Last year, November ad linage rose 30.5% on a
per issue basis.
Second, the same general point regarding exceptional comparables
applies to December. Linage rose 52.3% last December, including one
32-page ad from IBM that was the largest single advertisement in the
history of American newspaper publishing. Excluding sharp declines in
tombstone advertising and the one-time effect of that single IBM
advertisement, December linage, on a per-issue basis, will be down less
than 10%.
Two other thoughts on what is, and isn't, contributing to these
numbers. What is: the sharp fall-off in activity in the IPO market.
Financial advertising volume was up 65% last November and 98% last
December. Again, the challenge of the current environment is magnified
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by very strong performance a year ago. What isn't contributing too
much: the disappearance of B-to-C dot com advertisements.
What does this mean for earnings? We had been saying for some
months that we expected a 40% EPS gain for this year before special
items, which would have translated into 92 cents in the fourth quarter.
We now expect, as a result of the advertising softening that I've
described, to post between 83 and 86 cents in the fourth quarter.
That means our EPS gain for this year will be more like 36%-- on top
of more than 27% last year.
Let me now take a minute to talk about 2001 and beyond-about what we
foresee, and what we don't foresee.
We foresee slower growth. We don't currently foresee, or expect, a
recession.
We're planning for flat advertising volume, with some declines in
the first half of the year-reflecting continuing tough comparisons-
offset by growth in the second half. We would envision some revenue
gains at the Journal, stemming from a somewhat larger price increase
than in recent years.
We expect that our results will continue to benefit from our share
buy-back program, and see meaningful improvement in the equity line as
well, a result of momentum in our investments and joint ventures.
We remain very optimistic about the growth of The Wall Street
Journal franchise, of our electronic publishing products, and, as our
expanded page and color capacity comes on line, about the longer-term
growth of the U.S. print Journal itself.
We still expect to grow earnings and revenues, although, with our
budget process not yet complete, we won't go into detail today on what
that will mean with any precision. We'll plan to do that with you no
later than the release of fourth quarter earnings next month.
In the meantime, I want to take another couple of minutes this
morning to step back from November and December and place the year just
past in context.
A year ago at this time, while announcing those robust gains for
November linage, we projected that our EPS gain in 2000 would be 15%.
When December 1999 came in much stronger, we raised the bar by sticking
with 15% growth over that higher baseline, even as we said that year-
over-year linage declines toward the end of this year were likely.
Again, EPS growth this year hasn't been 15%; it's going to be
something like 36%.
A few more points: A year ago, WSJ.com paid subscriptions were
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330,000. Today they're more than 500,000. A year ago we had a plan to
expand and promote a new Wall Street Journal Europe. Today, we have a
new product-and circulation has risen more than 15%. Last year, we said
we would bring our Electronic Publishing businesses to a double-digit
revenue growth rate. This year, revenue is up 13%-- with expanded
margins. I could go on.
I recite these figures not to dwell on the past-I know you're not
interested in that, and neither are we. In fact, I want to assure you
that my colleagues and I remain very much "focused forward," committed
to building on the successes of recent years and continuing to produce
more value for more customers, and thus building value for our
shareholders.
Our formula for doing so remains consistent and vigorous.
Our company is defined by, and exceptional in, its focus on quality
business content. We have great brands, The Wall Street Journal and Dow
Jones itself preeminent among them. And our people are masters of what
we call the "chemistry of publishing"-the process of converting this
content, and these brands, into value.
Our products and services today are, by many measures, unequaled in
reach. This is particularly true of The Wall Street Journal, which has
global expression in print in the U.S. Journal, The Wall Street Journal
Europe, The Asian Wall Street Journal, and The Wall Street Journal
Americas. In the United States, The Wall Street Journal Sunday and
Weekend Journal continue the extension of this franchise to new readers
and new advertisers. And, as Gordon will develop in just a moment,
WSJ.com is a unique success in online newspaper publishing.
We believe that significant growth-- and significant value creation-
- lies ahead. Many of our most exciting opportunities are in electronic
publishing. In aggregate, including our 50% share of Factiva, these
electronic businesses now contribute approximately 20% of total
revenues, and are growing at double-digit rates we believe we can
sustain.
Perhaps no business illustrates the leverage of our resources and
brands, for the creation of value, as well as Dow Jones Newswires -
which, with Paul here, is our featured business this morning. In
contrast to its primary competitors, our Newswires business is
exclusively in the content business -- the sweet spot of the value
chain -- and is not in the distribution or data business. Its branded
content enjoys preeminent recognition and reputation, which is re-
earned and defended every single day. A vibrant profit center in its
own right, growing and innovating, Dow Jones Newswires also supports
and draws support from every one of our major businesses, supplying
content to The Wall Street Journal worldwide, for example, and in turn
drawing on the timely reporting of the Journal's staff as well as its
own.
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Dow Jones Newswires is but one excellent example of our dynamic
electronic publishing businesses headed up by Gordon Crovitz, and it is
now my pleasure to introduce Gordon.
INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS
These remarks contain 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, global business, economic and stock market conditions, and
the negative impact of economic downturns on advertising sales, in
particular, and on sales of the company's products and services; 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; the company's ability to achieve its revenues and
earnings targets for distribution of its newswires, taking into account
the rate of addition of new subscribers outside the U.S. and
cancellations of Telerate-related 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 company's ability to leverage its brands
and develop new and enhanced "vertical" Internet sites and to generate
advertising and other revenues from these sites; the amount of user
traffic on the company's Internet sites and the pricing of advertising
on Internet sites generally; 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 the past year; the company's
ability to limit expenses; 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.
