Index of Dow Jones After the talks of purchas by Rupert Murdoch

Dow Jones & Co., in talks to be purchased by Rupert Murdoch's News Corp., said second-quarter profit fell 27 percent because of costs tied to stock-based compensation and a reorganization.

Net income declined to $21 million, or 25 cents a share, from $28.8 million, or 34 cents a share, a year earlier, the New York-based company said today in a statement. Excluding some items, profit of 45 cents a share matched the average of 10 analyst estimates compiled by Bloomberg. Sales rose 16 percent to $529.7 million, helped by a purchase of the Factiva news archive.

Dow Jones's controlling shareholder, the Bancroft family, plans to meet July 23 to consider Murdoch's $5 billion takeover offer for the publisher of the Wall Street Journal. The board backed the $60-a-share bid this week. Chief Executive Officer Richard Zannino is increasing online and digital sales while reducing Dow Jones's reliance on print.

``Dow Jones is one of the few newspaper companies that will show positive revenue growth because they get so much more revenue as a percentage from online sources,'' said Jim Peters, an equity analyst at Standard & Poor's in New York, who rates the shares ``hold'' and doesn't own any. ``But investors are really focused on whether the merger goes through regardless of the current fundamentals.''

Net income included 13 cents a share in costs for stock- based compensation stemming from News Corp.'s proposal to acquire the company. Dow Jones also had costs of 7 cents a share tied to a reorganization of its consumer media group that includes the Journal, Barron's and MarketWatch.

Going Online

Dow Jones shares have lost 5.8 percent of their value since July 6 as some investors speculate the Bancrofts may oppose the sale. They fell 80 cents, or 1.4 percent, to $55.65 yesterday in New York Stock Exchange composite trading.

Dow Jones, also owner of Dow Jones Newswires, paid Reuters Group Plc about $160 million in cash and stock in December for the 50 percent of Factiva that it didn't already own.

The acquisition was expected to increase second-quarter sales in the company's enterprise media unit, which includes Dow Jones Newswires, by 80 percent to about $177 million, said UBS AG analyst Brian Shipman.

Advertising revenue at the Wall Street Journal fell 3.4 percent in May after a 12 percent decline in April.

Analysts on average anticipated sales of $536.8 million, according to seven estimates compiled by Bloomberg. Revenue totaled $481.2 million a year earlier.

Newspaper Sale

Last year's net income included 5 cents a share in costs related to the merger of the online and print units. In June, Dow Jones raised the cover price of the Wall Street Journal 50 percent to $1.50.

In October, Dow Jones sold six newspapers in its Ottaway chain to Community Newspaper Holdings Inc. for $282.5 million in cash. Dow Jones began publishing a narrower Wall Street Journal that reduced the newspaper's width by one column and will cut newsprint costs by about $18 million this year.

The Wall Street Journal began selling a single advertisement on its front page in September, a move Zannino said would generate ``double-digit millions'' of dollars annually.

Bloomberg LP, the parent of Bloomberg News, competes with Dow Jones in selling financial news and information.