OLD Media Moves

The allure of Dow Jones as an investment

March 31, 2006

Motley Fool contributing writer Warren Gump, who owns shares in Dow Jones, likes the company because of its positioning in the field of business journalism.

Gump writes, “Dow Jones is an interesting case in that its operations seem to be on a different cycle from most other papers. The company’s print publications actually had an operating loss last year because of the tremendous decline in technology and business advertising since the stock market bubble burst in 2000. With continued economic strength, the company could see a cyclical upturn in demand in the next few years (the company’s recent ad lineage volume indicates that a bottom may have been hit).

“The company has also invested substantial resources to expand the coverage into ‘The Business of Life,’ adding sections on personal finance and launching a Saturday edition. Targeting affluent baby boomers, these sections should attract more general consumer advertising to the Journal’s online and print properties, opening up substantial new revenue opportunities. Meanwhile, the company’s institutional and online businesses are posting impressive results.

“On the other hand, local newspaper companies don’t interest me right now despite their seemingly attractive valuations. I simply can’t envision these companies’ strategic moves offsetting the likely continued declines in circulation and advertising revenues. Unless that happens, my investment dollars will stay on the sidelines.”

Read his comments here.

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