NEW YORK -(Dow Jones)- Dow Jones & Co. (DJ) said Friday it agreed to sell six of its community newspapers to Community Newspaper Holdings Inc. for $282.5 million in cash, subject to a working capital adjustment.
Dow Jones, publisher of this newswire and The Wall Street Journal, said it expects proceeds of about $268 million, which it will use to fund its recently disclosed agreement to acquire full control of Factiva. Dow Jones splits ownership of the information-database company with Reuters Group PLC (RTRSY).
Dow Jones put the newspapers on the auction block in late August as it sought to take advantage of a one-time tax break before it expires at the end of the year.
In a statement Friday, Dow Jones said the Factiva deal and the sale of the community papers will help ease its dependence on print ad dollars, which have shriveled as marketers' choices expand online.
"This sale and the pending acquisition of Factiva are the latest examples of our commitment to transform Dow Jones from a company heavily dependent on print publishing revenue to a more diversified company," Rich Zannino, chief executive officer of Dow Jones, said in the statement.
The company said it will revise third-quarter results to record a special gain of $1.07 a share on the value of capital loss carryforwards utilized in the sale. Dow Jones last week reported third-quarter earnings of $16 million, or 19 cents a share.
For the fourth quarter, the company expects a special gain of $1.50 a share on the sale of the properties. Dow Jones also said it anticipates the deal will be dilutive by a penny a share in the fourth quarter, and 3 cents a share in 2007.
The newspapers being acquiring from Dow Jones' Ottaway division are in Danbury, Conn.; Oneonta and Plattsburg, N.Y.; Santa Cruz, Calif.; Sunbury, Pa.; and Traverse City, Mich.
The company said sale price amounts to more than 11 times the newspapers' earnings before interest, taxes, depreciation and amortization.
Dow Jones said it expects the transaction to close in the fourth quarter. After the sale, Ottaway will publish eight daily and 15 weekly newspapers in seven states.
In addition to this newswire, Dow Jones publishes The Wall Street Journal and its international and online editions, Barron's and the Far Eastern Economic Review, Dow Jones Indexes, MarketWatch and the Ottaway group of community newspapers. Dow Jones is co-owner with Reuters Group of Factiva and with Hearst of SmartMoney. Dow Jones also provides news content to CNBC and radio stations in the U.S.
Community Newspaper Holdings couldn't be reached late Friday for comment.
-By Geoffrey Rogow; 201-938-5400; AskNewswires@dowjones.com
-By Shira Ovide, Dow Jones Newswires; 201-938-5287; shira.ovide@dowjones.com
