UPDATED: Pursuing a "best of both worlds" online content strategy,
media giant Dow Jones & Company said it will buy financial
news site operator MarketWatch for approximately $519
million in cash.
The purchase price figures to $18 per share, a 7 percent premium over
MarketWatch's closing price Friday, and a 47 percent jump from its 60-day
trading average. Since MarketWatch has $56 million cash in the bank, Dow
Jones' net cost will be $463 million.
The deal should close in the first quarter, provided regulators and
MarketWatch shareholders sign off. Dow Jones outbid Viacom,
The New York Times Co. and Yahoo.
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"[The purchase] expands our online presence and constitutes a major move
into the individual investor market," Peter R. Kann, CEO of Dow Jones,
said in a conference call with analysts and reporters.
The combination of sites will create the third-largest audience for online
financial news (behind only Yahoo Finance and Microsoft Money) and put Dow
Jones in a position to profit from growing online ad spending, Kann added.
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Dow Jones publishes The Wall Street Journal, Barron's and the Ottaway
group of community newspapers. It is co-owner of the CNBC television
operations in Asia and Europe.
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The integration will be a study of two online content models. The Wall
Street Journal Online and its related sites have 701,000 subscribers who
pay a monthly fee.
Last week, Dow Jones experimented with opening Journal Online site for free,
a model that could lead to higher traffic numbers and presumably greater
revenue.
On today's call, executives declared themselves "delighted" with the
results, but said it had no plans to abandon the paid model for the
journal. It will be at least another two weeks to determine how many
visitors who came to the site last week subscribed, Dow Jones said.
"We've never argued that the paid subscription model is the only model; it's
the right one for the online journal, but others are successful," Kann said.
L. Gordon Crovitz, senior vice president of Dow Jones and president of its
electronic publishing division, referred to the hybrid model as "the best of
both worlds."
While it does offer some premium services, the bulk of MarketWatch's
content -- posted on CBS.MarketWatch.com and BigCharts.com -- is free. The
company, based in San Francisco and founded in 1997, claims eight million
visitors monthly. MarketWatch also has a deal to provide news streams to
Thomson Financial, which will remain in effect.
While saying they expect MarketWatch and Journal Online to maintain
separate sites, there will be content sharing where appropriate, Dow Jones
executives said.
They declined to speculate on whether there would be job cuts as a result of
the merger, as did a MarketWatch spokesman. Dow Jones did say it hoped
MarketWatch CEO Larry Kramer would stay on after the acquisition.
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Dow Jones Snaps Up MarketWatch