Buyout Protest, Insider Trading Follow Dow Jones Q2 Report
July 19, 2007 at 4:30 PM (PT)
While DOW JONES awaits the BANCROFT family's decision on the proposed sale to RUPERT MURDOCH, dissension among its board members has started to show. DIETER VON HOLTZBRINCK, a DJ director since 2002 who abstained from the vote to sell the company to MURDOCH, has resigned in protest of the vote.
In his letter of resignation, he wrote that while "I'm convinced that News Corp. offer is very generous in financial terms, I'm very worried that DOW JONES' unique journalistic values will long-term strongly suffer after the proposed sale." He also voiced skepticism that a board committee on editorial independence would "finally prevent Mr. MURDOCH from doing what he wants to do, from acting his way."
Earlier in the day, DOW JONES reported that revenue rose 16% to $529.7 million in second quarter but net income fell 27% to $21 million (25 cents/share), including 20 cents per share in stock-compensation and reorganization charges. Revenues were aided by a 41% rise in international media revenue and a 26% increase at BARRON'S, plus a 42% jump for the index division offsetting a 6.8% decline in ad revenues at the company's flagship, THE WALL STREET JOURNAL, and an 8% drop at OTTAWAY NEWSPAPERS.
CEO RICH ZANNINO said, "These results provide strong evidence of the success of the transformation plan begun in early 2006. We are overcoming industry-wide softness in print advertising with many initiatives ... gains in both print and online circulation revenue and continued expense reductions. We continue to work on these innovations as well as new ones to further reduce our reliance on print advertising and fuel our short- and long-term growth."
Dow Director Faces SEC Insider Trading Allegations
In other company news, DOW JONES Director Dr. DAVID K.P. LI, Chairman/CEO of BANK OF EAST ASIA LTD., is facing SEC charges of insider trading. LI has acknoledged that he has been served with a WELLS notice, the final step before an SEC lawsuit and the last chance for the accused to convince the SEC not to file formal charges. LI says, "I have broken no laws and deny the apparent allegations being made by the staff of the Commission. If the Commission does commence proceedings against me, I will defend myself vigorously. In the meantime, I will continue to carry out all my business and public duties while defending my good name and reputation."