• by Michael Shields , July 15, 2004

Two more newspaper publishers -- Tribune Co. and Dow Jones & Co. - reported mixed advertising signals on Thursday. Tribune also disclosed a $35 million settlement with advertisers over circulation misstatements at Newsday and Hoy and revealed that an internal investigation has turned up additional circulation problems.

Despite solid overall second quarter revenue growth, Dow Jones reported lagging ad sales for flagship Wall Street Journal and forewarned investors of an uncertain second half of the year.

"We're encouraged once again by improvements in revenue and profit in each of our business segments during the quarter," stated chairman-CEO Peter Kahn, adding the cautionary note, "Nonetheless, we still see inconsistent trends in monthly Wall Street Journal advertising and ad levels, and results remain well below what we consider normal levels. We'll continue to control all we can to maximize financial results in any advertising environment."

During a conference call with analysts and investors, Executive Vice President-COO Richard Zannino summed things up: "We don't yet see all of our many cylinders firing together."

Total revenue for Dow Jones rose 11.2 percent in the second quarter to $437.8 million, while Wall Street Journal advertising linage increased 3.3 percent.

Echoing the New York Times Co.'s pronouncement earlier in the week, The Journal's ad revenue was dragged down considerably by weak activity from technology advertisers. Revenue from tech spenders was down 28 percent, and according to Zannino, "We expect that to remain weak."

On the other hand, spending in the financial services category was solid, up 5.3 percent, representing the third consecutive quarter of growth. Zannino also boasted that the Journal was outpacing competitors in B-to-B advertising, despite a slower recovery in that realm, and that the paper saw a 22 percent increase in color advertising.

But for the rest of the year, things may get tougher before they get easier, particularly give the traditionally slow summer season. "We expect third quarter to be much tougher than fourth quarter based on the RFPs that are out there," Zannino said.

While the Journal faces a still recovering national newspaper marketplace, its sister publication, Barron's, enjoyed a terrific quarter, as advertising pages increased 21.1 percent in the quarter.

Meanwhile, the Tribune Co., which publishes the Chicago Tribune and the Los Angeles Times, rounded out the week's newspaper earnings announcements with some dismal news. Circulation misdeeds have buried the company's second quarter, as the company reported a 58 percent drop earnings Thursday.

The company was hurt by a debt restructuring and the cost of an anticipated $35 million settlement with advertisers over circulation misstatements by Newsday and Hoy, both of which were both censured by the. Audit Bureau of Circulations earlier in the week.

More bad news may be around the corner, as an internal investigation turned up additional circulation misstatements at the two papers for the same period where earlier problems were found as well as additional misstatements in 2001 and 2002.

In a statement, Tribune Chairman-CEO Dennis FitzSimons said the company had swiftly reacted to its problems. "In the second quarter, we moved aggressively to address circulation misstatements at Newsday and Hoy, both of which were both censured by the Audit Bureau of Circulations earlier in the week.

More bad news may be around the corner, as an internal investigation turned up additional circulation misstatements at the two papers for the same period where earlier problems were found as well as additional misstatements in 2001 and 2002.

Tribune Chairman-CEO Dennis FitzSimons said the company reacted swiftly to its problems. "In the second quarter, we moved aggressively to address circulation misstatements at Newsday and Hoy in New York, where ethical lapses occurred that are unacceptable and wholly out of character with Tribune's history of business integrity."

The company's revenues for the quarter actually did increase 3 percent to $1.5 billion.