WSJ’s Ad Revenues Expected to Grow

The Wall Street Journal (WSJ) is seeing steady growth in its advertising revenues. The WSJ, which has U.S., Asian and European editions, is published by Dow Jones & Company, a division of News Corp (NASDAQ:NWS).  We expect WSJ’s advertising revenues to grow at a faster rate over our forecast period.

WSJ competes with other leading newspapers like New York Times (NYSE:NYT) and Washington Post (NYSE:WPO).  We currently have a Trefis price estimate of $20 for News Corp’s stock, about 32% above the current market price of $15.

WSJ advertising revenues has increased from $0.9 billion in 2004 to $1.2 billion in 2009 [1], with revenue growth being subdued during 2007-2008 as a result of the the challenging economic situation. We expect that ad revenue growth will remain nearly flat in 2009-10, but will pick up strongly after that. WSJ has a very strong brand recall, and with the improving economic environment, ad spend is expected to pick-up.  WSJ’s affluent audience is actively sought by advertisers.

The average of Trefis member forecasts for WSJ advertising revenues indicate a projected increase from $1.4 billion in 2010 to $2.6 billion by 2016, roughly in-line with the baseline Trefis estimate of an increase from $1.3 billion in 2010 to $2.5 billion by the end of the Trefis forecast period. The member estimates imply a small upside to the Trefis price estimate for News Corp’s stock.

You can drag the forecast trend-line above to express your own view, and see the sensitivity of News Corp’s stock to WSJ advertising revenues.

Our complete analysis for News Corp’s stock is here.

Notes:
1. Estimated based on Wall Street Journal advertising revenues from AdAge