Dow Jones cuts forecast on WSJ ad revenue

NEW YORK (Reuters) - Dow Jones & Co. Inc. on Monday cut its third quarter earnings forecast due to disappointing advertising revenue at the Wall Street Journal in September.

The lowered outlook, which was below analysts' estimates, came as the publisher marked the first anniversary of the Journal's Weekend Edition, a Saturday paper designed to appeal to more consumer- and lifestyle-focused advertisers.

Dow Jones said it forecast third-quarter earnings, excluding a tax benefit and severance charge, of 8 cents to 11 cents a share, compared to its July estimate of per-share earnings in the low teens.

The new estimate fell short of the average analyst of 14 cents per share, according to Reuters Estimates.

An analyst said the lowered forecast was indicative of advertising trends across the newspaper industry, with new media such as the Internet winning increasing readership and ad dollars.

"The Journal is a big part of the company, and if it sinks, the company sinks," said consultant John Morton, president of Morton Research Inc.

Print advertising at the Journal rose 6.3 percent for the first two months of the quarter, which was in line with the company's expectations, Chief Executive Rich Zannino said in a statement.

"However, September advertising revenue at the Journal is running below our expectations and prior year," he said.

Current bookings show that advertising revenue at the Journal should rise in October and the fourth quarter, Zannino said.

A spokesman declined to comment on why advertising revenue was below expectations in September.

In a bid to boost advertising revenue, the Journal started this month to sell ad space on its front page, some of the most coveted real estate in the U.S. newspaper industry.

The company also marked the one-year anniversary of its Weekend Edition last weekend. Dow Jones in July said the edition could break even by the fourth quarter because of higher advertising spending during the holiday season.

Those steps come as Dow Jones tries to reduce its reliance on print-based revenue. Zannino at a media conference in June said the company's goal was to reduce print revenue to less than half its total revenue, but did not provide a timeframe.

Including the tax benefit of 7 cents and a severance charge of 1 cent, Dow Jones said it increased its third quarter outlook for reported earnings per share to a range of 14 cents to 17 cents.

The company had previously said it expected third quarter earnings including special items to be in the low teens per share range.

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