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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended September 30, 2004



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from  to



Commission file number 1-7564



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DOW JONES & COMPANY, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|DELAWARE                                                       |  | 13-5034940                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                         |  |           
|---------------------------------------- |  | ----------
|200 LIBERTY STREET, NEW YORK, NEW YORK   |  | 10281     
|(Address of principal executive offices) |  | (Zip Code)



(212) 416-2000

(Registrants telephone number, including area code)



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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  x    No ̈



The number of shares outstanding of each of the issuers classes of common stock on September 30, 2004: 61,314,772 shares of Common
Stock and 20,627,540 shares of Class B Common Stock.



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##### Table of Contents

DOW JONES & COMPANY, INC.



INDEX



|                              |  |                                                                                                                  |  |     
|----------------------------- |  | ---------------------------------------------------------------------------------------------------------------- |  | ----
|                              |  |                                                                                                                  |  | PAGE
|                              | 
|PART I.
Financial Information |  |                                                                                                                 
|                              |  |                                                                                                                 
|Item 1.                       |  | Financial Statements (unaudited)                                                                                 |  |     
|                              |  |                                                                                                                 
|                              |  | Condensed Consolidated Statements of Income  For the quarters and nine months ended September 30, 2004 and 2003 |  | 3   
|                              |  |                                                                                                                 
|                              |  | Condensed Consolidated Statements of Cash Flows - For the nine months ended September 30, 2004 and 2003          |  | 4   
|                              |  |                                                                                                                 
|                              |  | Condensed Consolidated Balance Sheets - September 30, 2004 and December 31, 2003                                 |  | 5   
|                              |  |                                                                                                                 
|                              |  | Notes to Condensed Consolidated Financial Statements                                                             |  | 6   
|                              |  |                                                                                                                 
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                            |  | 14  
|                              |  |                                                                                                                 
|Item 3.                       |  | Quantitative and Qualitative Disclosures about Market Risk                                                       |  | 32  
|                              |  |                                                                                                                 
|Item 4.                       |  | Controls & Procedures                                                                                            |  | 32  
|                              | 
|PART II.
Other Information    |  |                                                                                                                 
|                              |  |                                                                                                                 
|Item 1.                       |  | Legal Proceedings                                                                                                |  | 32  
|                              |  |                                                                                                                 
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                      |  | 33  
|                              |  |                                                                                                                 
|Item 6.                       |  | Exhibits                                                                                                         |  | 33  



2



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##### Table of Contents

I. FINANCIAL INFORMATION



Item 1: Financial Statements



CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Dow Jones and Company, Inc.

For the quarters and nine months ended September 30, 2004 and 2003

(unaudited)



|                                                          |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|--------------------------------------------------------- |  | --------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                                          |  | Quarters Ended September 30 |         |   | Nine Months Ended September 30 |  
|(in thousands, except per share amounts)                  |  | 2004                        |         |   | 2003                           |   |         | 2004 |  |   | 2003      |  
|Revenues:                                                 |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Advertising                                               |  | $                           | 212,148 |   |                                | $ | 208,897 |      |  | $ | 694,683   |   |  | $ | 622,733   |  
|Information services                                      |  |                             | 84,906  |   |                                |   | 71,278  |      |  |   | 242,251   |   |  |   | 214,194   |  
|Circulation and other                                     |  |                             | 97,838  |   |                                |   | 95,771  |      |  |   | 297,369   |   |  |   | 290,835   |  
|                                                          |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Total revenues                                            |  |                             | 394,892 |   |                                |   | 375,946 |      |  |   | 1,234,303 |   |  |   | 1,127,762 |  
|                                                          |  |                             |         |  
|Expenses:                                                 |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|News, production and technology                           |  |                             | 134,056 |   |                                |   | 122,487 |      |  |   | 386,665   |   |  |   | 357,862   |  
|Selling, administrative and general                       |  |                             | 140,012 |   |                                |   | 137,143 |      |  |   | 434,026   |   |  |   | 400,938   |  
|Newsprint                                                 |  |                             | 28,382  |   |                                |   | 26,438  |      |  |   | 84,960    |   |  |   | 76,971    |  
|Print delivery costs                                      |  |                             | 46,416  |   |                                |   | 46,904  |      |  |   | 141,285   |   |  |   | 141,529   |  
|Depreciation and amortization                             |  |                             | 25,598  |   |                                |   | 26,158  |      |  |   | 79,651    |   |  |   | 81,251    |  
|Restructuring charges and September 11 related items, net |  |                             |         |   |                                |   |         |      |  |   | (2,761    | ) |  |   | (18,408   | )
|                                                          |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Operating expenses                                        |  |                             | 374,464 |   |                                |   | 359,130 |      |  |   | 1,123,826 |   |  |   | 1,040,143 |  
|                                                          |  |                             |         |  
|Operating income                                          |  |                             | 20,428  |   |                                |   | 16,816  |      |  |   | 110,477   |   |  |   | 87,619    |  
|                                                          |  |                             |         |  
|Other income (deductions):                                |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Investment income                                         |  |                             | 76      |   |                                |   | 7,258   |      |  |   | 332       |   |  |   | 7,511     |  
|Interest expense                                          |  |                             | (964    | ) |                                |   | (664    | )    |  |   | (2,412    | ) |  |   | (1,862    | )
|Equity in (losses) earnings of associated companies       |  |                             | (13     | ) |                                |   | (16     | )    |  |   | 1,386     |   |  |   | 306       |  
|Gain on disposition of investment                         |  |                             |         |   |                                |   |         |      |  |   | 3,260     |   |  |   |           |  
|Gain on resolution of Telerate sale loss contingencies    |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   | 59,821    |  
|Contract guarantee                                        |  |                             | (1,651  | ) |                                |   | (2,306  | )    |  |   | (5,455    | ) |  |   | (7,375    | )
|Other, net                                                |  |                             | 759     |   |                                |   | 1,258   |      |  |   | (506      | ) |  |   | 1,909     |  
|                                                          |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Income before income taxes and minority interests         |  |                             | 18,635  |   |                                |   | 22,346  |      |  |   | 107,082   |   |  |   | 147,929   |  
|Income taxes                                              |  |                             | 7,209   |   |                                |   | (5,779  | )    |  |   | 44,694    |   |  |   | 22,841    |  
|                                                          |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Income before minority interests                          |  |                             | 11,426  |   |                                |   | 28,125  |      |  |   | 62,388    |   |  |   | 125,088   |  
|Minority interests in losses of subsidiaries              |  |                             | 641     |   |                                |   | 452     |      |  |   | 1,536     |   |  |   | 1,259     |  
|                                                          |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Net income                                                |  | $                           | 12,067  |   |                                | $ | 28,577  |      |  | $ | 63,924    |   |  | $ | 126,347   |  
|                                                          |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Per Share:                                                |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Net income per share:                                     |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|- Basic                                                   |  | $                           | .15     |   |                                | $ | .35     |      |  | $ | .78       |   |  | $ | 1.55      |  
|- Diluted                                                 |  |                             | .15     |   |                                |   | .35     |      |  |   | .78       |   |  |   | 1.54      |  
|Cash dividends declared                                   |  |                             | .25     |   |                                |   |         |      |  |   | 1.00      |   |  |   | .75       |  
|                                                          |  |                             |         |  
|Weighted-average shares outstanding:                      |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|- Basic                                                   |  |                             | 81,918  |   |                                |   | 81,507  |      |  |   | 81,825    |   |  |   | 81,568    |  
|- Diluted                                                 |  |                             | 82,295  |   |                                |   | 81,865  |      |  |   | 82,239    |   |  |   | 81,864    |  
|                                                          |  |                             |         |  
|Comprehensive income                                      |  | $                           | 11,871  |   |                                | $ | 28,903  |      |  | $ | 63,154    |   |  | $ | 130,102   |  
|                                                          |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  



The accompanying notes are an integral
part of the financial statements.



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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Dow Jones & Company, Inc.

For the nine months ended September 30, 2004 and 2003

(unaudited)



|                                                                                  |  |                                |          |   |      |   |          |  
|--------------------------------------------------------------------------------- |  | ------------------------------ | -------- | - | ---- | - | -------- | -
|                                                                                  |  | Nine Months Ended September 30 |         
|(in thousands)                                                                    |  | 2004                           |          |   | 2003 |  
|Operating Activities:                                                             |  |                                |          |   |      |   |          |  
|Net income                                                                        |  | $                              | 63,924   |   |      | $ | 126,347  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                |          |   |      |   |          |  
|Depreciation                                                                      |  |                                | 76,126   |   |      |   | 79,975   |  
|Amortization of intangibles                                                       |  |                                | 3,525    |   |      |   | 1,276    |  
|Equity in earnings of associated companies, net of distributions                  |  |                                | 8,015    |   |      |   | 7,897    |  
|Minority interests in losses of subsidiaries                                      |  |                                | (1,536   | ) |      |   | (1,259   | )
|Gain on resolution of Telerate sale loss contingencies                            |  |                                |          |   |      |   | (59,821  | )
|Contract guarantee                                                                |  |                                | 5,455    |   |      |   | 7,375    |  
|Gain on sale of investment                                                        |  |                                | (3,260   | ) |      |   |          |  
|Changes in assets and liabilities:                                                |  |                                |          |   |      |   |          |  
|Accounts receivable - trade                                                       |  |                                | (1,541   | ) |      |   | (1,576   | )
|Other assets                                                                      |  |                                | (12,435  | ) |      |   | (2,111   | )
|Accounts payable and accrued liabilities                                          |  |                                | (15,859  | ) |      |   | (9,852   | )
|Income taxes                                                                      |  |                                | 23,322   |   |      |   | (6,952   | )
|Deferred taxes                                                                    |  |                                | (2,919   | ) |      |   | 5,877    |  
|Unearned revenue                                                                  |  |                                | (6,238   | ) |      |   | (4,315   | )
|Deferred compensation and other noncurrent liabilities                            |  |                                | 10,290   |   |      |   | 3,638    |  
|Other, net                                                                        |  |                                | 28       |   |      |   | (1,860   | )
|                                                                                  |  |                                |          |   |      |   |          |  
|Net cash provided by operating activities                                         |  |                                | 146,897  |   |      |   | 144,639  |  
|                                                                                  |  |                               
|Investing Activities:                                                             |  |                                |          |   |      |   |          |  
|Additions to property, plant and equipment                                        |  |                                | (45,250  | ) |      |   | (37,181  | )
|Funding of equity investees                                                       |  |                                | (20,770  | ) |      |   | (15,521  | )
|Advances from equity investees                                                    |  |                                | 10,570   |   |      |   | 1,687    |  
|Proceeds from disposition of investment                                           |  |                                | 6,514    |   |      |   |          |  
|Proceeds from property damage insurance claim                                     |  |                                |          |   |      |   | 1,271    |  
|Businesses acquired, net of cash received                                         |  |                                | (93,200  | ) |      |   | (149,135 | )
|Other, net                                                                        |  |                                | 3,762    |   |      |   | 5,630    |  
|                                                                                  |  |                                |          |   |      |   |          |  
|Net cash used in investing activities                                             |  |                                | (138,374 | ) |      |   | (193,249 | )
|                                                                                  |  |                               
|Financing Activities:                                                             |  |                                |          |   |      |   |          |  
|Cash dividends                                                                    |  |                                | (61,347  | ) |      |   | (61,181  | )
|Borrowings under long-term debt                                                   |  |                                | 105,313  |   |      |   | 117,317  |  
|Repayments of long-term debt                                                      |  |                                | (61,870  | ) |      |   | (16,690  | )
|Purchases of treasury stock                                                       |  |                                |          |   |      |   | (21,135  | )
|Change in book overdraft                                                          |  |                                | (1,437   | ) |      |   |          |  
|Proceeds from sales under stock compensation plans                                |  |                                | 8,310    |   |      |   | 7,016    |  
|Contribution from minority partner                                                |  |                                |          |   |      |   | 6,114    |  
|                                                                                  |  |                                |          |   |      |   |          |  
|Net cash (used in) provided by financing activities                               |  |                                | (11,031  | ) |      |   | 31,441   |  
|                                                                                  |  |                               
|Decrease in cash and cash equivalents                                             |  |                                | (2,508   | ) |      |   | (17,169  | )
|Cash and cash equivalents at beginning of year                                    |  |                                | 23,514   |   |      |   | 39,346   |  
|                                                                                  |  |                                |          |   |      |   |          |  
|Cash and cash equivalents at September 30                                         |  | $                              | 21,006   |   |      | $ | 22,177   |  
|                                                                                  |  |                                |          |   |      |   |          |  



The accompanying notes are an integral
part of the financial statements.



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CONSOLIDATED BALANCE SHEETS

Dow Jones & Company, Inc.

(unaudited)



|                                                                     |  |                  |           |                 |   |          
|-------------------------------------------------------------------- |  | ---------------- | --------- | --------------- | - | ---------
|(dollars in thousands)                                               |  | September 302004 |           | December 312003
|Assets:                                                              |  |                  |           |                 |   |          
|Current Assets:                                                      |  |                  |           |                 |   |          
|Cash and cash equivalents                                            |  | $                | 21,006    |                 | $ | 23,514   
|Accounts receivable  trade, net                                     |  |                  | 160,596   |                 |   | 157,750  
|Accounts receivable  other                                          |  |                  | 27,569    |                 |   | 17,522   
|Newsprint inventory                                                  |  |                  | 12,047    |                 |   | 12,315   
|Prepaid expenses                                                     |  |                  | 18,117    |                 |   | 20,055   
|Deferred income taxes                                                |  |                  | 14,290    |                 |   | 14,723   
|                                                                     |  |                  |           |                 |   |          
|Total current assets                                                 |  |                  | 253,625   |                 |   | 245,879  
|                                                                     |  |                 
|Investments in associated companies, at equity                       |  |                  | 83,786    |                 |   | 89,230   
|                                                                     |  |                 
|Other investments                                                    |  |                  | 13,969    |                 |   | 14,558   
|                                                                     |  |                 
|Plant, property and equipment, at cost                               |  |                  | 1,763,076 |                 |   | 1,731,874
|Less, accumulated depreciation                                       |  |                  | 1,110,016 |                 |   | 1,042,590
|                                                                     |  |                  |           |                 |   |          
|Plant, property and equipment, net                                   |  |                  | 653,060   |                 |   | 689,284  
|                                                                     |  |                 
|Goodwill                                                             |  |                  | 242,259   |                 |   | 153,320  
|                                                                     |  |                 
|Other intangible assets                                              |  |                  | 86,974    |                 |   | 70,124   
|                                                                     |  |                 
|Deferred income taxes                                                |  |                  | 15,786    |                 |   | 17,394   
|                                                                     |  |                 
|Other assets                                                         |  |                  | 30,100    |                 |   | 24,365   
|                                                                     |  |                  |           |                 |   |          
|Total assets                                                         |  | $                | 1,379,559 |                 | $ | 1,304,154
|                                                                     |  |                  |           |                 |   |          
|Liabilities:                                                         |  |                  |           |                 |   |          
|Current Liabilities:                                                 |  |                  |           |                 |   |          
|Accounts payable - trade                                             |  | $                | 53,669    |                 | $ | 65,732   
|Accrued wages, salaries and commissions                              |  |                  | 63,170    |                 |   | 63,240   
|Retirement plan contributions payable                                |  |                  | 19,483    |                 |   | 24,224   
|Other payables                                                       |  |                  | 65,684    |                 |   | 71,287   
|Dividend payable                                                     |  |                  | 20,486    |                 |   |          
|Contract guarantee obligation                                        |  |                  | 205,402   |                 |   | 164,642  
|Income taxes                                                         |  |                  | 56,315    |                 |   | 32,987   
|Unearned revenue                                                     |  |                  | 199,380   |                 |   | 191,411  
|                                                                     |  |                  |           |                 |   |          
|Total current liabilities                                            |  |                  | 683,589   |                 |   | 613,523  
|                                                                     |  |                 
|Long-term debt                                                       |  |                  | 196,553   |                 |   | 153,110  
|Deferred compensation, principally postretirement benefit obligation |  |                  | 302,395   |                 |   | 288,364  
|Contract guarantee obligation                                        |  |                  | 53,779    |                 |   | 89,083   
|Other noncurrent liabilities                                         |  |                  | 18,079    |                 |   | 23,834   
|                                                                     |  |                  |           |                 |   |          
|Total liabilities                                                    |  |                  | 1,254,395 |                 |   | 1,167,914
|                                                                     |  |                 
|Minority interests in subsidiaries                                   |  |                  | 3,310     |                 |   | 6,579    
|                                                                     |  |                 
|Stockholders Equity:                                                |  |                  |           |                 |   |          
|Common stock                                                         |  |                  | 102,181   |                 |   | 102,181  
|Additional paid-in capital                                           |  |                  | 124,687   |                 |   | 122,012  
|Retained earnings                                                    |  |                  | 803,824   |                 |   | 821,733  
|Accumulated other comprehensive income, net of taxes                 |  |                  | 8,960     |                 |   | 9,730    
|                                                                     |  |                  |           |                 |   |          
|                                                                     |  |                  | 1,039,652 |                 |   | 1,055,656
|Less, treasury stock, at cost                                        |  |                  | 917,798   |                 |   | 925,995  
|                                                                     |  |                  |           |                 |   |          
|Total stockholders equity                                           |  |                  | 121,854   |                 |   | 129,661  
|                                                                     |  |                  |           |                 |   |          
|Total liabilities and stockholders equity                           |  | $                | 1,379,559 |                 | $ | 1,304,154
|                                                                     |  |                  |           |                 |   |          



The accompanying notes are an integral
part of the financial statements.



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Dow Jones & Company, Inc.

(unaudited)



1. Basis of Presentation



The
accompanying unaudited condensed consolidated financial statements reflect all adjustments considered necessary by management to present fairly the Companys consolidated financial position as of September 30, 2004, and the consolidated results
of operations for the three and nine month periods ended September 30, 2004 and 2003 and consolidated cash flows for the nine month periods then ended. In managements opinion, all adjustments necessary for a fair presentation in accordance
with generally accepted accounting principles are reflected in the financial statements presented. Reclassifications of certain amounts for prior years have been recorded to conform to the current year presentation.



The condensed consolidated financial statements should be read in conjunction with the
consolidated financial statements and related notes included in the Companys annual report on Form 10-K for the year ended December 31, 2003 filed with the Securities and Exchange Commission. The results of operations for the interim periods
are not necessarily indicative of the results to be expected for the full year.



2. Restructuring Charges and September 11 Related Items



Reversal of Lease Obligation Reserve  World Financial Center (WFC)



In the fourth quarter 2001, the Company recorded a charge of $32.2 million as a result of its decision to permanently re-deploy certain personnel and to abandon four of seven floors that are leased at its World
Financial Center headquarters. This charge primarily reflected the Companys rent obligation through 2005 on this vacated space.



During the first quarter of 2004, the Company decided to extend the term of its lease for one of the floors that was previously abandoned and re-occupy this floor with
personnel from another of its New York locations, whose lease term was expiring. As a result, the Company reversed $2.8 million ($1.7 million, net of taxes, or $.02 per diluted share) of the remaining lease obligation reserve for the previously
abandoned floor at the WFC.



Gain on settlement of business interruption
insurance claim



In the second quarter of 2003, the Company recorded a
gain of $18.4 million ($11.1 million after taxes, or $.14 per diluted share) reflecting the settlement of its business interruption insurance claim for loss of operating income suffered as a result of the terrorist attacks on the World Trade Center
on September 11, 2001.



3. Contract Guarantee



Under the terms of the Companys 1998 sale of Telerate to Bridge Information Systems,
Inc. (Bridge), Dow Jones retained its guarantee under certain circumstances of certain minimum payments for data acquired by Telerate from Cantor Fitzgerald Securities (Cantor) and Market Data Corporation (MDC). The annual minimum payments average
approximately $50 million per year through October 2006 under certain conditions. Bridge agreed to indemnify Dow Jones for any liability Dow Jones incurred under the contract guarantee with respect to periods subsequent to Bridges purchase of
Telerate. In 2000, based in part on uncertainty about Bridges solvency as well as other factors, the Company established a reserve of $255 million representing the net present value of the total estimated payments from 2001 through October
2006, using a discount rate of 6%.



Earnings in 2004 and 2003 included charges
related to the accretion of the discount on the reserve balance. These charges totaled $1.7 million and $2.3 million in the third quarters of 2004 and 2003, respectively. For the first nine months of 2004 and 2003, charges related to the accretion
of discount totaled $5.5 million and $7.4 million, respectively.



Bridge filed
for bankruptcy in February 2001, but made payments for this data for the post-petition periods through October 2001, when Telerate ceased operations, went out of business, sold certain assets and rejected its contracts with Cantor and MDC. The
Company is now in litigation with Cantor and MDC with respect to their claims for amounts due under the contract guarantee. The Company has various substantial defenses to these claims and the litigation is proceeding. In January 2003, the trial
court denied motions by each of the parties that their own claims for relief be granted and the competing claims be dismissed. Appeals from those decisions are not being pursued. Discovery is proceeding and is scheduled to continue through the end
of 2004. Dispositive motions may be filed by any party early next year, and the trial is currently scheduled to begin in July 2005.



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##### Table of Contents

Due to the stage of the lawsuit at September 30, 2004, it is not possible to determine whether the court will find that
any obligation under the guarantee may be dismissed or reduced. Accordingly, the Company believes that the reserve continues to be appropriate.



While it is not possible to predict with certainty the ultimate outcome of this litigation, the Company believes the likelihood of a loss exceeding the amount reserved is
remote; however, it is possible that such loss could be less than the amount reserved.



4. Gain on Resolution of Telerate Sale Loss Contingencies



In
the first quarter of 2003, the Company recorded a gain of $59.8 million ($.73 per diluted share) on the resolution of certain loss contingencies resulting from the sale of its former Telerate subsidiary to Bridge Information Systems, Inc. (Bridge).
The reserve for loss contingencies was established as part of the loss on sale of Telerate in 1998 and related to various claims that arose out of the Stock Purchase Agreement, including a purchase price adjustment related to working capital, an
indemnification undertaking and other actual and potential claims and counter-claims between the Company and Bridge. In February 2001, Bridge declared bankruptcy. In March 2003, these matters were resolved by the bankruptcy court, and the
Companys contingent liabilities were thereby extinguished by the court.



5. Restructuring Reserves



The following table displays the
activity and balances of the restructuring reserve account through September 30, 2004:



|                   |  |                          |       |                   |   |                           |  |   |      
|------------------ |  | ------------------------ | ----- | ----------------- | - | ------------------------- |  | - | -----
|(in thousands)     |  | December 31 2003 Reserve |       | Net Cash Payments |   | September 30 2004 Reserve
|Employee severance |  | $                        | 3,298 |                   | $ | 1,192                     |  | $ | 2,106



As of September 30, 2004, the
workforce reductions related to the Companys restructuring were substantially complete. The remaining reserve relates primarily to continuing payments for employees that have been terminated.



6. Acquisitions and Dispositions



Acquisition of remaining interest in OsterDow Jones in 2004



On July 7, 2004, the Company acquired the remaining two-thirds interest in OsterDow Jones
Commodity News for $1.6 million. The new operation, Dow Jones Commodities Service, will be part of Dow Jones Newswires. Based on preliminary estimates, the step acquisition resulted in a purchase price allocation to goodwill and other
intangibles of $1.7 million and net liabilities of $0.1 million.



Acquisition of remaining interest in VWD news operations and disposition of non-news assets of VWD in 2004



On April 2, 2004, the Company acquired the remaining interest in the news operations of Vereinigte Wirtschaftsdienste GmbH (VWD), a German newswires business,
for $12.1 million. The acquired business consists of financial newswires and business newsletters, which have been combined into the Companys Dow Jones Newswires business, under the brand name Dow Jones-VWD News. Dow Jones was a minority
shareholder in VWD.



The acquisition was accounted for at fair
value as a step acquisition in accordance with SFAS 141, Business Combinations. The acquisition resulted in a purchase price allocation of goodwill of $9.2 million, other intangibles of $1.7 million and net assets of $0.5 million. The
other intangibles consist primarily of subscription contracts that will be amortized over their estimated useful life of 8 years. Substantially all of the acquired goodwill and intangible assets will be deductible for tax purposes.



On April 2, 2004, simultaneous with the Companys acquisition of the remaining interest
in the news operations of VWD, VWD sold its non-news assets to a third party, resulting in cash proceeds to Dow Jones of $6.7 million. As a result of this sale, the Company recorded an after-tax gain of $1.8 million, or $.02 cents per diluted share,
in the second quarter of 2004. Following the transaction, the Company had no involvement in the continuing operations of the disposed business. The consideration was received at the time of the sale and a gain was recognized pursuant to the guidance
in Staff Accounting Bulletin Topic 5E.



7



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Acquisition of Alternative Investor in 2004



On March 19, 2004, the Company acquired Alternative Investor from Wicks Business Information for $85 million, plus net working capital. The
$85 million purchase price could be increased by $5 million, payable in 2008, based on the performance of the acquired business. The acquisition was primarily funded by the issuance of debt under the Companys commercial paper program.



Alternative Investor is a provider of newsletters, databases and industry
conferences for the venture-capital and private-equity markets, and has been combined into the Companys Dow Jones Newswires business.



The acquisition resulted in a purchase price allocation of goodwill of $78.1 million, other intangibles of $18.6 million and net liabilities of $11.4 million (principally
acquired unearned revenue). Substantially all of the acquired goodwill and intangible assets will be deductible for tax purposes.



Acquired other intangible assets consisted of the following:



|                                          |  |                      |        |                                     |        
|----------------------------------------- |  | -------------------- | ------ | ----------------------------------- | -------
|(in thousands)                            |  | Acquired Intangibles |        | Weighted-AverageAmortization Period
|Subject to amortization:                  |  |                      |        |                                     |        
|Advertising accounts                      |  | $                    | 500    |                                     | 3 years
|Subscription accounts                     |  |                      | 4,370  |                                     | 4 years
|Conferences sponsor relationships         |  |                      | 1,200  |                                     | 6 years
|Database                                  |  |                      | 5,113  |                                     | 6 years
|Other                                     |  |                      | 700    |                                     | 2 years
|                                          |  |                      |        |                                     |        
|Total intangibles subject to amortization |  |                      | 11,883 |                                     | 5 years
|                                          |  |                     
|Not subject to amortization:              |  |                      |        |                                     |        
|Other, principally trade name             |  |                      | 6,750  |                                     |        
|                                          |  |                      |        |                                     |        
|Total acquired intangibles                |  | $                    | 18,633 |                                     |        
|                                          |  |                      |        |                                     |        



Acquisition of Technologic Partners
in 2003



On September 2, 2003, the Company purchased Technologic Partners,
a closely-held publications and events firm for $2.7 million. Technologic Partners, which has eight online newsletters and produces six conference events annually, was combined with the Newsletters group within Dow Jones Newswires. The purchase
resulted in the acquisition of goodwill of $3.4 million and other intangibles of $0.5 million to be amortized on a straight-line basis over five years.



Acquisition of the Record of Stockton in 2003



On May 5, 2003, the Companys Ottaway Newspaper subsidiary acquired The Record of Stockton, California from Omaha World-Herald Company for $146 million ($144 million
in cash, plus net working capital).



The purchase resulted in the acquisition
of tangible net assets of $12 million, goodwill of $76.6 million and other intangibles of $58.2 million. The acquired goodwill and intangible assets will be deductible for tax purposes.



Acquired other intangible assets consisted of the following:



|                                                                         |  |                     |       
|------------------------------------------------------------------------ |  | ------------------- | ------
|(in thousands)                                                           |  | AcquiredIntangibles
|Subject to amortization:                                                 |  |                     |       
|Advertising accounts (amortized on a straight-line basis over 12 years)  |  | $                   | 7,200 
|Subscription accounts (amortized on a straight-line basis over 14 years) |  |                     | 4,700 
|                                                                         |  |                     |       
|Total intangibles subject to amortization                                |  |                     | 11,900
|                                                                         | 
|Not subject to amortization:                                             |  |                     |       
|Other, principally masthead                                              |  |                     | 46,314
|                                                                         |  |                     |       
|Total acquired intangibles                                               |  | $                   | 58,214
|                                                                         |  |                     |       



Had these acquisitions been completed
as of January 1, 2004 or 2003, the impact on the Companys results of operations would not have been significantly different from those presented.



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##### Table of Contents

7. Goodwill and Intangible Assets



Goodwill balances by reportable segment are as follows:



|                        |  |                  |         |                 |   |        
|----------------------- |  | ---------------- | ------- | --------------- | - | -------
|(in thousands)          |  | September 302004 |         | December 312003
|Print publishing        |  | $                | 33,403  |                 | $ | 33,403 
|Electronic publishing * |  |                  | 96,839  |                 |   | 7,900  
|Community newspapers    |  |                  | 112,017 |                 |   | 112,017
|                        |  |                  |         |                 |   |        
|Goodwill                |  | $                | 242,259 |                 | $ | 153,320
|                        |  |                  |         |                 |   |        



|* | The increase in goodwill resulted from the acquisition of Alternative Investor, VWD and OsterDow Jones. See Note 6 for more information on these acquisitions.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------



Other intangible assets were as follows:



|                                  |  |                      |        |                         |   |           |  |                      |        |                         |   |           |  |   |       |  |   |       
|--------------------------------- |  | -------------------- | ------ | ----------------------- | - | --------- |  | -------------------- | ------ | ----------------------- | - | --------- |  | - | ----- |  | - | ------
|                                  |  | September 30, 2004   |        | December 31, 2003      
|(in thousands)                    |  | Gross CarryingAmount |        | AccumulatedAmortization |   | NetAmount |  | Gross CarryingAmount |        | AccumulatedAmortization |   | NetAmount
|Subscription accounts             |  | $                    | 15,891 |                         | $ | 3,929     |  | $                    | 11,962 |                         | $ | 10,249    |  | $ | 2,311 |  | $ | 7,938 
|Advertising accounts              |  |                      | 13,448 |                         |   | 1,819     |  |                      | 11,629 |                         |   | 12,948    |  |   | 827   |  |   | 12,121
|Databases                         |  |                      | 5,113  |                         |   | 520       |  |                      | 4,593  |                         |   |           |  |   |       |  |   |       
|Conferences sponsor relationships |  |                      | 1,200  |                         |   | 112       |  |                      | 1,088  |                         |   |           |  |   |       |  |   |       
|Other                             |  |                      | 700    |                         |   | 283       |  |                      | 417    |                         |   |           |  |   |       |  |   |       
|                                  |  |                      |        |                         |   |           |  |                      |        |                         |   |           |  |   |       |  |   |       
|Total                             |  |                      | 36,352 |                         |   | 6,663     |  |                      | 29,689 |                         |   | 23,197    |  |   | 3,138 |  |   | 20,059
|                                  |  |                      |        |                         |   |          
|Unamortizable intangibles         |  |                      | 57,285 |                         |   |           |  |                      | 57,285 |                         |   | 50,065    |  |   |       |  |   | 50,065
|                                  |  |                      |        |                         |   |           |  |                      |        |                         |   |           |  |   |       |  |   |       
|Total other intangibles           |  | $                    | 93,637 |                         | $ | 6,663     |  | $                    | 86,974 |                         | $ | 73,262    |  | $ | 3,138 |  | $ | 70,124
|                                  |  |                      |        |                         |   |           |  |                      |        |                         |   |           |  |   |       |  |   |       



Amortization expense, based on
intangibles subject to amortization held at September 30, 2004, is expected to be $1.4 million for the last quarter of 2004, $5.3 million in 2005, $4.7 million in 2006, $3.5 million in 2007 and $3.3 million in 2008 and $2.6 million in 2009.



8. Income Taxes



2004 Income tax matters



Income tax expense in the third quarter 2004 included a tax benefit of $1.5 million, or $.02
per diluted share, as a result of a favorable resolution of a federal tax matter during the quarter.



2003 Income tax matters



In the third
quarter of 2003, the Internal Revenue Service (IRS) completed its audit of the Companys tax returns for the 1995 through 1998 tax periods, which had been amended for additional tax refunds. In October 2003, the Company received
notification that the Congressional Joint Committee on Taxation had approved these claims for tax refunds of approximately $24 million. The Company received these funds plus interest of approximately $6.7 million in the fourth quarter of 2003.
Pursuant to the settlement of these claims, in the third quarter of 2003, the Company released $25 million of tax provisions no longer needed for loss contingencies and recorded interest income of $6.7 million ($4.0 million, net of taxes). The
Company also recorded a provision of $9.5 million in the third quarter for loss contingencies relating to recent developments in certain other tax matters. The net effect of these items was an increase in net income of $19.5 million, or $.24 per
share.



9



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##### Table of Contents

9. Other Guarantees and Contingencies



In addition to the litigation that is separately disclosed in Note 3 of this Form 10-Q, there are various libel actions, legal proceedings
and other matters that have arisen in the ordinary course of business that represent possible contingencies of the Company and its subsidiaries. In the opinion of management, based on advice of legal counsel, the ultimate outcome to the Company and
its subsidiaries as a result of these legal proceedings and other matters will not have a material effect on the Companys financial statements. In addition, the Company has insurance coverage for many of these matters.



The Companys bylaws provide for indemnification of officers and directors prosecuted in
a criminal action or sued in a civil action or proceeding to the full extent permitted by the Delaware General Corporation Law. The maximum potential amount of future payments the Company could be required to make under these indemnification
provisions is unlimited; however, the Company maintains directors and officers liability and corporation reimbursement insurance for the benefit of the Company and its directors and officers. The policy provides coverage for certain
amounts paid as indemnification pursuant to the provisions of Delaware law and the Companys bylaws. As a result of its insurance coverage, the Company believes that the estimated fair value of these indemnification provisions is minimal.



The Company enters into indemnification agreements in its ordinary course of
business, typically with companies from which it is acquiring or to which it is selling businesses, partners in joint ventures, licensees and licensors, and service providers and contractors. Under these agreements the Company generally indemnifies,
holds harmless, and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, as a result of the Companys activities or its breach of the agreement in question or in connection with any intellectual
property infringement claim by any third party with respect to the Companys products. These indemnification obligations generally survive termination of the underlying agreement, either for some set number of years or perpetually. In some
cases, the maximum potential amount of future payments the Company could be required to make under these indemnification obligations is unlimited. The Company believes that the estimated fair value of these indemnity obligations is minimal and the
Company has no liabilities recorded for these obligations as of September 30, 2004. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions.



The Company has guaranteed payment for office space occupied by certain of its joint
ventures. The Companys partners in these joint ventures have either directly guaranteed their share of any payments required under these guarantees or agreed to indemnify the Company for 50% of any payments the Company may be required to make
under these guarantees. As of September 30, 2004, Dow Jones share of this obligation totals $7.5 million through 2010.



10. Dilution and Stock Compensation Plans



Basic and diluted earnings per share have been computed as follows:



|                                                  |  |                             |        |                                |   |         |  |         |        |  |   |        
|------------------------------------------------- |  | --------------------------- | ------ | ------------------------------ | - | ------- |  | ------- | ------ |  | - | -------
|                                                  |  | Quarters Ended September 30 |        | Nine Months Ended September 30
|(in thousands, except per share amounts)          |  | 2004(2)                     |        | 2003(3)                        |   | 2004(2) |  | 2003(3)
|Net income                                        |  | $                           | 12,067 |                                | $ | 28,577  |  | $       | 63,924 |  | $ | 126,347
|                                                  |  |                             |        |                                |   |         |  |         |        |  |   |        
|Weighted-average shares outstanding  basic       |  |                             | 81,918 |                                |   | 81,507  |  |         | 81,825 |  |   | 81,568 
|Effect of dilutive securities:                    |  |                             |        |                                |   |         |  |         |        |  |   |        
|Stock options                                     |  |                             | 71     |                                |   | 104     |  |         | 142    |  |   | 80     
|Other, principally contingent stock rights        |  |                             | 306    |                                |   | 254     |  |         | 272    |  |   | 216    
|                                                  |  |                             |        |                                |   |         |  |         |        |  |   |        
|Weighted-average shares outstanding  diluted (1) |  |                             | 82,295 |                                |   | 81,865  |  |         | 82,239 |  |   | 81,864 
|                                                  |  |                             |        |                               
|Basic earnings per share                          |  | $                           | .15    |                                | $ | .35     |  | $       | .78    |  | $ | 1.55   
|Diluted earnings per share                        |  |                             | .15    |                                |   | .35     |  |         | .78    |  |   | 1.54   



|(1) | The diluted average shares outstanding have been determined using the treasury stock method, which assumes the proceeds from the exercise of outstanding options were used to
repurchase shares at the average market value of the stock during the quarter.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | For the quarter and nine months ended September 30, 2004, options to purchase 9.4 million shares at an average price of $53.94 and 8.2 million shares at an average price of $55.21,
respectively, have been excluded from the diluted earnings per share calculation because the options exercise prices were greater than the average market price during the quarter and nine months and to include such securities would be
antidilutive.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|(3) | For the quarter and nine months ended September 30, 2003, options to purchase 8.6 million shares at an average price of $53.93 and 8.5 million shares at an average price of $54.09,
respectively, have been excluded from the diluted earnings per share calculation because to include such securities would be antidilutive.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Fair Value Based Method



The Company accounts for its stock-based compensation in accordance with Accounting Principles Board Opinion No. 25 (APB 25), Accounting for Stock Issued to Employees, and its related interpretations. Had
the Companys stock-based compensation been determined by the fair-value based method of SFAS 123, Accounting for Stock-Based Compensation, the Companys net income and earnings per share would have been as follows:



|                                                                                                                     |  |                             |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|-------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                                                                     |  | Quarters Ended September 30 |        |   | Nine Months Ended September 30 |  
|(in thousands, except per share amounts)                                                                             |  | 2004                        |        |   | 2003                           |   |        | 2004 |  |   | 2003    |  
|Net income, as reported                                                                                              |  | $                           | 12,067 |   |                                | $ | 28,577 |      |  | $ | 63,924  |   |  | $ | 126,347 |  
|Add: Stock-based compensation expense included in reported net income, net of taxes                                  |  |                             | 1,604  |   |                                |   | 1,134  |      |  |   | 5,261   |   |  |   | 3,375   |  
|Deduct: Total stock-based compensation expense determined under fair-value based method for all awards, net of taxes |  |                             | (4,819 | ) |                                |   | (5,424 | )    |  |   | (15,132 | ) |  |   | (15,815 | )
|                                                                                                                     |  |                             |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|Adjusted net income                                                                                                  |  | $                           | 8,852  |   |                                | $ | 24,287 |      |  | $ | 54,053  |   |  | $ | 113,907 |  
|                                                                                                                     |  |                             |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|Basic earnings per share:                                                                                            |  |                             |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|As reported                                                                                                          |  | $                           | .15    |   |                                | $ | .35    |      |  | $ | .78     |   |  | $ | 1.55    |  
|Adjusted                                                                                                             |  |                             | .11    |   |                                |   | .30    |      |  |   | .66     |   |  |   | 1.40    |  
|Diluted earnings per share:                                                                                          |  |                             |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|As reported                                                                                                          |  | $                           | .15    |   |                                | $ | .35    |      |  | $ | .78     |   |  | $ | 1.54    |  
|Adjusted                                                                                                             |  |                             | .11    |   |                                |   | .30    |      |  |   | .66     |   |  |   | 1.39    |  



The following table provides the
estimated fair value under the Black-Scholes option-pricing model of each option granted in the first quarter of 2004 and 2003, and the significant weighted-average assumptions used in their determination.



|              |  |            |       |                       |     |   |               |     |   |              |           |            |      |  
|------------- |  | ---------- | ----- | --------------------- | --- | - | ------------- | --- | - | ------------ | --------- | ---------- | ---- | -
|              |  | Fair Value |       | Risk-FreeInterestRate |     |   | DividendYield |     |   | ExpectedLife |           | Volatility |     
|Stock Options |  |            |       |                       |     |   |               |     |   |              |           |            |      |  
|2004          |  | $          | 13.45 |                       | 3.0 | % |               | 1.7 | % |              | 5.0 years |            | 29.0 | %
|2003          |  | $          | 10.38 |                       | 3.0 | % |               | 2.2 | % |              | 5.0 years |            | 28.0 | %



11. Pension and Other
Postretirement Plans



The components of net periodic benefit costs were as
follows:



|                                   |  |                             |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|---------------------------------- |  | --------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                   |  | Pension Benefits            |       
|                                   |  | Quarters Ended September 30 |        |   | Nine Months Ended September 30 |  
|(in thousands)                     |  | 2004                        |        |   | 2003                           |   |        | 2004 |  |   | 2003   |  
|Service cost                       |  | $                           | 1,331  |   |                                | $ | 1,172  |      |  | $ | 3,955  |   |  | $ | 3,402  |  
|Interest cost                      |  |                             | 2,604  |   |                                |   | 2,472  |      |  |   | 7,680  |   |  |   | 7,140  |  
|Expected return on plan assets     |  |                             | (3,280 | ) |                                |   | (2,420 | )    |  |   | (9,840 | ) |  |   | (7,260 | )
|Amortization of prior service cost |  |                             | 181    |   |                                |   | 182    |      |  |   | 533    |   |  |   | 642    |  
|Recognized actuarial loss          |  |                             | 199    |   |                                |   | 301    |      |  |   | 526    |   |  |   | 772    |  
|                                   |  |                             |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Total benefit cost                 |  | $                           | 1,035  |   |                                | $ | 1,707  |      |  | $ | 2,854  |   |  | $ | 4,696  |  
|                                   |  |                             |        |   |                                |   |        |      |  |   |        |   |  |   |        |  



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|                                   |  |                               |       |                                |      |   |       |  |   |        |   |  |   |       
|---------------------------------- |  | ----------------------------- | ----- | ------------------------------ | ---- | - | ----- |  | - | ------ | - |  | - | ------
|                                   |  | Other Postretirement Benefits
|                                   |  | Quarters Ended September 30   |       | Nine Months Ended September 30
|                                   |  | 2004                          |       |                                | 2003 |   | 2004  |  |   | 2003  
|Service cost                       |  | $                             | 1,767 |                                |      | $ | 1,852 |  | $ | 5,749  |   |  | $ | 5,558 
|Interest cost                      |  |                               | 3,132 |                                |      |   | 3,183 |  |   | 9,604  |   |  |   | 9,548 
|Amortization of prior service cost |  |                               | (417  | )                              |      |   | 51    |  |   | (1,055 | ) |  |   | 113   
|Recognized actuarial loss          |  |                               | 187   |                                |      |   | 22    |  |   | 674    |   |  |   | 104   
|                                   |  |                               |       |                                |      |   |       |  |   |        |   |  |   |       
|Total benefit cost                 |  | $                             | 4,669 |                                |      | $ | 5,108 |  | $ | 14,972 |   |  | $ | 15,323
|                                   |  |                               |       |                                |      |   |       |  |   |        |   |  |   |       



12. Comprehensive Income



Comprehensive income was computed as follows:



|                                                               |  |                             |        |   |                                |   |        |      |  |   |        |   |  |   |         |  
|-------------------------------------------------------------- |  | --------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | ------- | -
|                                                               |  | Quarters Ended September 30 |        |   | Nine Months Ended September 30 |  
|(in thousands)                                                 |  | 2004                        |        |   | 2003                           |   |        | 2004 |  |   | 2003   |  
|Net income                                                     |  | $                           | 12,067 |   |                                | $ | 28,577 |      |  | $ | 63,924 |   |  | $ | 126,347 |  
|Add change in:                                                 |  |                             |        |   |                                |   |        |      |  |   |        |   |  |   |         |  
|Cumulative translation adjustment                              |  |                             | 56     |   |                                |   | 703    |      |  |   | 384    |   |  |   | 2,405   |  
|Adjustment for realized gain on hedging included in net income |  |                             | (57    | ) |                                |   | (1,030 | )    |  |   | (184   | ) |  |   | (2,629  | )
|Unrealized gain (loss) on hedging                              |  |                             | 90     |   |                                |   | (211   | )    |  |   | (98    | ) |  |   | 2,116   |  
|Unrealized (loss) gain on investments                          |  |                             | (285   | ) |                                |   | 864    |      |  |   | (872   | ) |  |   | 1,863   |  
|                                                               |  |                             |        |   |                                |   |        |      |  |   |        |   |  |   |         |  
|Comprehensive income                                           |  | $                           | 11,871 |   |                                | $ | 28,903 |      |  | $ | 63,154 |   |  | $ | 130,102 |  
|                                                               |  |                             |        |   |                                |   |        |      |  |   |        |   |  |   |         |  



13. Subsequent Event



On October 27, 2004, the Company announced that The Far Eastern Economic
Review, a Hong Kong based newsweekly, will change its format to a monthly periodical. This change will result in a workforce reduction of approximately 80 employees and accordingly the Company will record a restructuring charge in the fourth quarter
of 2004 of approximately $3 million, or $.02 per share, primarily representing severance benefits.



14. Business Segments



The Company
reports the results of its operations in three segments: print publishing, electronic publishing and community newspapers. In addition, the Company reports certain administrative activities under the corporate segment.



Print publishing, which is largely comprised of the global operations of The Wall Street
Journal, produces business and financial content world-wide. This content is published primarily in the U.S., Europe, Asia and Latin America editions of The Wall Street Journal and on U.S. television through a licensing arrangement with CNBC. The
Company manages the global Journal operations as one segment as their products comprise the global Journal brand, and there are significant interrelationships within the editions including global management, shared news flows and workforce and a
global advertising customer base and pricing. U.S. television, which represents a licensing agreement with NBC to provide branding, news content and on-air expertise to CNBC, is a further extension of the Journal brand and the content it produces.
The Company also includes the operations of Barrons within print publishing instead of reporting them separately because of their relative immateriality to the Companys results on a consolidated basis and because Barrons shares
services with and its operations are similar to the global Journal. The Companys overall performance is largely dependent on the operating performance of the global Wall Street Journal (including its extended U.S. television brand and
content).



12



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##### Table of Contents

Electronic publishing, whose products provide business and financial news and information to customers via electronic
dissemination and are expected to have similar long-term economic characteristics, includes the operations of Dow Jones Newswires, Consumer Electronic Publishing and Dow Jones Indexes/Ventures. Consumer Electronic Publishing includes the results of
WSJ.com and its related vertical sites as well as the Companys licensing/business development and radio/audio businesses. Revenues in the electronic publishing segment are mainly subscription based.



The community newspapers segment publishes general-interest news in 15 daily newspapers, 12
Sunday papers and more than 30 weeklies and shoppers in nine states in the U.S.



|                                                          |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|--------------------------------------------------------- |  | --------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                                          |  | Quarters Ended September 30 |         |   | Nine Months Ended September 30 |  
|(in thousands)                                            |  | 2004                        |         |   | 2003                           |   |         | 2004 |  |   | 2003      |  
|Revenues:                                                 |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Print publishing                                          |  | $                           | 209,604 |   |                                | $ | 213,586 |      |  | $ | 700,940   |   |  | $ | 662,295   |  
|Electronic publishing                                     |  |                             | 97,644  |   |                                |   | 79,352  |      |  |   | 280,227   |   |  |   | 238,551   |  
|Community newspapers:                                     |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Comparable operations                                     |  |                             | 87,644  |   |                                |   | 83,008  |      |  |   | 237,175   |   |  |   | 223,883   |  
|Newly-acquired operations                                 |  |                             |         |   |                                |   |         |      |  |   | 15,961    |   |  |   | 3,033     |  
|                                                          |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Consolidated revenues                                     |  | $                           | 394,892 |   |                                | $ | 375,946 |      |  | $ | 1,234,303 |   |  | $ | 1,127,762 |  
|                                                          |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Income before income taxes and minority interests:        |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Print publishing                                          |  | $                           | (16,589 | ) |                                | $ | (11,491 | )    |  | $ | 5,324     |   |  | $ | (10,598   | )
|Electronic publishing                                     |  |                             | 21,692  |   |                                |   | 17,098  |      |  |   | 63,152    |   |  |   | 50,012    |  
|Community newspapers:                                     |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Comparable operations                                     |  |                             | 23,491  |   |                                |   | 21,766  |      |  |   | 61,826    |   |  |   | 55,078    |  
|Newly-acquired operations                                 |  |                             |         |   |                                |   |         |      |  |   | 3,798     |   |  |   | 769       |  
|Corporate                                                 |  |                             | (8,166  | ) |                                |   | (10,557 | )    |  |   | (26,384   | ) |  |   | (26,050   | )
|                                                          |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Segment operating income                                  |  |                             | 20,428  |   |                                |   | 16,816  |      |  |   | 107,716   |   |  |   | 69,211    |  
|Restructuring charges and September 11 related items, net |  |                             |         |   |                                |   |         |      |  |   | 2,761     |   |  |   | 18,408    |  
|                                                          |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Consolidated operating income                             |  |                             | 20,428  |   |                                |   | 16,816  |      |  |   | 110,477   |   |  |   | 87,619    |  
|                                                          |  |                             |         |  
|(Losses) earnings in equity of associated companies       |  |                             | (13     | ) |                                |   | (16     | )    |  |   | 1,386     |   |  |   | 306       |  
|Gain on resolution of Telerate sale loss contingency      |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   | 59,821    |  
|Gain on disposition of investment                         |  |                             |         |   |                                |   |         |      |  |   | 3,260     |   |  |   |           |  
|Contract guarantee                                        |  |                             | (1,651  | ) |                                |   | (2,306  | )    |  |   | (5,455    | ) |  |   | (7,375    | )
|Other income (deductions), net                            |  |                             | (129    | ) |                                |   | 7,852   |      |  |   | (2,586    | ) |  |   | 7,558     |  
|                                                          |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Income before income taxes and minority interests         |  | $                           | 18,635  |   |                                | $ | 22,346  |      |  | $ | 107,082   |   |  | $ | 147,929   |  
|                                                          |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Depreciation and amortization (D&A):                      |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Print publishing                                          |  | $                           | 15,396  |   |                                | $ | 16,312  |      |  | $ | 49,938    |   |  | $ | 51,700    |  
|Electronic publishing                                     |  |                             | 7,294   |   |                                |   | 6,543   |      |  |   | 20,904    |   |  |   | 20,121    |  
|Community newspapers:                                     |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Comparable operations                                     |  |                             | 2,867   |   |                                |   | 3,132   |      |  |   | 7,899     |   |  |   | 8,836     |  
|Newly-acquired operations                                 |  |                             |         |   |                                |   |         |      |  |   | 786       |   |  |   | 163       |  
|Corporate                                                 |  |                             | 41      |   |                                |   | 171     |      |  |   | 124       |   |  |   | 431       |  
|                                                          |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Consolidated D&A                                          |  | $                           | 25,598  |   |                                | $ | 26,158  |      |  | $ | 79,651    |   |  | $ | 81,251    |  
|                                                          |  |                             |         |   |                                |   |         |      |  |   |           |   |  |   |           |  



13



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##### Table of Contents

ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations



Executive Overview



Dow Jones & Company is a global provider of business and financial news and information through newspapers, newswires, magazines, the Internet, indexes, television and radio. In addition, the Company owns
general-interest community newspapers throughout the U.S. Approximately 60% of the Companys revenues are derived from the print publishing segment, which is largely comprised of the global editions of The Wall Street Journal. The
Companys overall financial results are largely dependent on the operating performance of The Wall Street Journal, which, to a significant extent, is dependent upon business-to-business (B2B) advertising placed in its publications, particularly
from the financial and technology sectors. The remaining 40% of total revenues are split almost equally between our general-interest community newspapers segment and our electronic publishing segment, which includes newswires, WSJ Online, indexes
and other electronic operations.



We began to see a modest recovery in the
global B2B advertising environment beginning in the third quarter 2003. This carried into the first two quarters of 2004, where we posted a 27% increase in operating income on a 12% increase in total revenues and a 17% increase in advertising
revenues. Ad revenues were driven by increased advertising volume, or linage, and higher advertising rates at The Wall Street Journal. This recovery stalled in the third quarter.



In the third quarter, advertising linage at The Wall Street Journal declined 6%, which resulted in a decline in profits and revenue at print
publishing. Despite this decline, for the fifth consecutive quarter, we posted gains in revenue, operating profits and margins driven this quarter by our community newspapers and electronic publishing segments, continued companywide cost control
efforts and improved advertising rates.



While visibility into the fourth
quarter is limited as many ad buyers continue to make buying decisions very close to publication dates, we are projecting modest gains in the fourth quarter in financial, consumer and classified advertising. These gains however are expected to be
offset by continued weakness in technology advertising, resulting in a slight decline in overall Journal ad linage. This linage decline at the U.S. Journal, coupled with lower ad volume overseas, is projected to be more than offset by gains at our
other businesses, yielding a mid-single-digit percentage increase in total revenue for the fourth quarter. We will continue to maintain our focus on cost control such that operating expenses are expected to be up 5% in the quarter, with three
percentage points of the increase due to the operating expenses of businesses acquired in the past 12 months.



In September 2004, we announced the September 2005 launch of the Weekend Edition of the Journal, which will be a key element of our 2005 to 2007 strategic plan. We expect the launch of the Weekend Edition will build
off the success of our Weekend and Personal Journal sections in growing and diversifying our advertising customer base to more consumer-oriented advertisers and reduce our reliance over time on B2B financial and technology advertising. Revenue from
the Weekend Edition will mainly come from consumer advertising. We have a uniquely influential and affluent audience that not only makes large B2B spending decisions but also spends heavily on personal consumption items. The Weekend Edition will
enable advertisers to reach these readers in the right place at the right time  at home on the weekend  which is highly conducive to influencing their consumer spending decisions. While it is expected that this initiative will be
modestly dilutive to earnings in 2005 and 2006, we believe that Weekend Edition will be a major driver of long-term growth in earnings.



We are nearing the end of our Business Now three year plan, which was launched in 2002 and aimed at accelerating growth and modestly reducing cyclicality by improving
operational execution and enhancing existing products and creating new ones to reach new customers, markets and channels. The cornerstone of Business Now is Todays Journal, a package of content, organization and design changes to The Wall
Street Journal that also included a new Personal Journal section. Launched in April 2002, Todays Journal also increased total page capacity by 20% and tripled color page capacity to 24 pages a day. Todays Journal has produced strong
reader and advertiser response. The expanded color advertising capacity, which sells at a 27% premium to black and white advertising, drove a 13% increase in color advertising pages in the quarter, to approximately 8 pages per day. Since the launch
of this new color capacity in January 2002, color advertising pages have nearly doubled. Ad revenue in the Personal Journal section, which runs three days a week, is up 42% this year and advertising revenue in our targeted consumer categories of
auto, travel, health care and luxury goods was up 12% in the third quarter and 27% over the plan period.



The Companys electronic publishing segment continues to implement Business Now initiatives to improve its products, profits and margins as well as reduce overall Company cyclicality by expanding our
non-advertising dependent businesses. On March 19, 2004, the Company acquired Alternative Investor Group for $85 million. Alternative Investor has been integrated with our newsletters division and the recently acquired Technologic Partners business.
This newly formed business provides newsletters, databases and conferences primarily to the venture capital



14



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##### Table of Contents

and private-equity markets. On April 2, 2004, the Company acquired VWD, a German newswires business, for a net
acquisition price of $5.4 million, expanding on Dow Jones Newswires local language newswire businesses. Both of these businesses will be operated as part of Dow Jones Newswires within our electronic publishing segment.



Our Ottaway community newspapers segment serves relatively small, self-contained communities,
outside the heavy competitive pressures of large metro papers and other media. Ottaways strong and stable cash flow over the years has helped us weather a particularly harsh B2B ad environment. As part of our Business Now three year plan to
enhance our Ottaway property portfolio, we divested five low-growth papers in 2002, which provided after-tax proceeds of $235 million and utilized $190 million of capital loss carryforwards. The second phase of this plan is to acquire more strategic
and financially attractive properties, which has included the acquisitions in 2003 of The Record of Stockton, California and smaller papers in late 2002. Ottaways relatively stable revenues and high operating margins of nearly 26% remain in
the top third of the community newspaper peer group.



Finally, we continue to
improve the quality and breadth of our products and services. Thus far in 2004, we have won a number of awards including two Pulitzer prizes and a number of Loeb awards for the Journal. For the second year in a row, Dow Jones Newswires was named
Inside Market Datas News Provider of the Year and won its first ever Codie award and the Online Journal won two Codie awards.



Consolidated Results of Operations



Third Quarter 2004 Compared To Third Quarter 2003 - Consolidated



|                                         |  |      |         |   |      |   |         |                        |  |       |  
|---------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---------------------- |  | ----- | -
|(in thousands, except per share amounts) |  | 2004 |         |   | 2003 |   |         | % Increase/ (Decrease) | 
|Revenues                                 |  |      |         |   |      |   |         |                        |  |       |  
|Advertising                              |  | $    | 212,148 |   |      | $ | 208,897 |                        |  | 1.6   | %
|Information services                     |  |      | 84,906  |   |      |   | 71,278  |                        |  | 19.1  |  
|Circulation and other                    |  |      | 97,838  |   |      |   | 95,771  |                        |  | 2.2   |  
|                                         |  |      |         |   |      |   |         |                        |  |       |  
|Total revenues                           |  |      | 394,892 |   |      |   | 375,946 |                        |  | 5.0   |  
|                                         |  |      |        
|Operating expenses                       |  |      | 374,464 |   |      |   | 359,130 |                        |  | 4.3   |  
|                                         |  |      |         |   |      |   |         |                        |  |       |  
|Operating income                         |  |      | 20,428  |   |      |   | 16,816  |                        |  | 21.5  |  
|                                         |  |      |        
|Non-operating (loss) income*             |  |      | (1,152  | ) |      |   | 5,982   |                        |  |      |  
|                                         |  |      |        
|Income taxes                             |  |      | 7,209   |   |      |   | (5,779  | )                      |  |      |  
|                                         |  |      |         |   |      |   |         |                        |  |       |  
|Net income                               |  | $    | 12,067  |   |      | $ | 28,577  |                        |  | (57.8 | )
|                                         |  |      |         |   |      |   |         |                        |  |       |  
|Earnings per share:                      |  |      |         |   |      |   |         |                        |  |       |  
|Basic                                    |  | $    | .15     |   |      | $ | .35     |                        |  | (57.1 | )
|Diluted                                  |  |      | .15     |   |      |   | .35     |                        |  | (57.1 | )



|* | Net of minority interests
|- | -------------------------



Net Income



Net income in the
third quarter of 2004 was $12.1 million, or $.15 per diluted share, compared with third quarter 2003 earnings of $28.6 million, or $.35 per share (all per share amounts included herein are based on reported net income and use diluted
weighted-average shares outstanding). Earnings per share in 2004 included certain items affecting comparisons that had no net effect on earnings per share, while earnings per share in 2003 included certain items affecting comparisons that netted to
a gain of $.21 per share. These items are detailed further beginning on page 25. Historically, advertising linage and revenue levels and therefore earnings are seasonally lowest in the third quarter of the year.



Revenues



Third quarter revenues increased $18.9 million, or 5%, to $394.9 million. On a same property basis, meaning excluding properties
divested or acquired in the past 12 months, total revenue was up 2.1%. Advertising revenue was up 1.6% in total and, on a same property basis, increased 1.4% as increases in community newspaper and online Journal advertising were partially offset by
a modest decline at the print editions of The Wall Street Journal.



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##### Table of Contents

Information services revenues were up 19% and, on a same property basis, increased 6.9% reflecting strong organic growth
at Consumer Electronic Publishing and Dow Jones Indexes/Ventures. Circulation and other revenue were up 2.2% and, on a same property basis, was relatively flat compared to 2003.



Operating Expenses



Operating expenses in the third quarter of 2004 increased $15.3 million, or 4.3%, to $374.5 million. About three percentage points of this increase was due to incremental
costs from newly-acquired properties, with the remaining 1% due to higher newsprint and employee compensation expenses partially offset by lower administrative costs and depreciation expense. Employee compensation costs this quarter included a lump
sum payment of approximately $3 million related to the settlement of our union contract. Newsprint expense increased 7.4%, as a result of a 4.3% increase in newsprint prices and a 2.9% increase in consumption. The number of full-time employees at
September 30, 2004, was about 7,150, up 3% from 2003, primarily the result of recent acquisitions. Excluding these acquisitions, the number of full-time employees was down 1.1%.



Operating Income



Operating income for the quarter was $20.4 million (5.2% of revenues), up $3.6 million, or 21.5%, from 2003 operating income of $16.8 million (4.5% of revenues) driven by
improvements at the electronic publishing and community newspapers segments and companywide cost control efforts.



Non-operating (Losses)/Income



Non-operating losses totaled $1.2 million in the third quarter of 2004 compared with income of $6.0 million in the third quarter 2003, which included special interest
income of $6.7 million owed to the Company as a result of the approval of income tax refunds on its 1995 through 1998 federal tax returns.



Nine Months Ended September 30, 2004 Compared To Nine Months ended September 30, 2003 - Consolidated



|                                         |  |      |           |   |      |   |                        |  |       |  
|---------------------------------------- |  | ---- | --------- | - | ---- | - | ---------------------- |  | ----- | -
|(in thousands, except per share amounts) |  | 2004 |           |   | 2003 |   | % Increase/ (Decrease) | 
|Revenues                                 |  |      |           |   |      |   |                        |  |       |  
|Advertising                              |  | $    | 694,683   |   |      | $ | 622,733                |  | 11.6  | %
|Information services                     |  |      | 242,251   |   |      |   | 214,194                |  | 13.1  |  
|Circulation and other                    |  |      | 297,369   |   |      |   | 290,835                |  | 2.2   |  
|                                         |  |      |           |   |      |   |                        |  |       |  
|Total revenues                           |  |      | 1,234,303 |   |      |   | 1,127,762              |  | 9.4   |  
|Operating expenses                       |  |      | 1,123,826 |   |      |   | 1,040,143              |  | 8.0   |  
|                                         |  |      |           |   |      |   |                        |  |       |  
|Operating income                         |  |      | 110,477   |   |      |   | 87,619                 |  | 26.1  |  
|Non-operating (loss) income*             |  |      | (1,859    | ) |      |   | 61,569                 |  |      |  
|Income taxes                             |  |      | 44,694    |   |      |   | 22,841                 |  | 95.7  |  
|                                         |  |      |           |   |      |   |                        |  |       |  
|Net income                               |  | $    | 63,924    |   |      | $ | 126,347                |  | (49.4 | )
|                                         |  |      |           |   |      |   |                        |  |       |  
|Earnings per share:                      |  |      |           |   |      |   |                        |  |       |  
|Basic                                    |  | $    | .78       |   |      | $ | 1.55                   |  | (49.7 | )
|Diluted                                  |  |      | .78       |   |      |   | 1.54                   |  | (49.4 | )



|* | Net of minority interests
|- | -------------------------



Net Income



Net income for the
first nine months of 2004 was $63.9 million, or $.78 per diluted share, compared with 2003 earnings of $126.3 million, or $1.54 per share (all per share amounts included herein are based on reported net income and use diluted
weighted-average shares outstanding). Earnings per share in 2004 included certain items affecting comparisons that had no net effect on earnings per share, while 2003 included certain items affecting comparisons that netted to a gain of $1.02 per
share. These items are detailed further beginning on page 25.



16



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##### Table of Contents

Revenues



Revenues for the first nine months of 2004 increased $106.5 million, or 9.4%, to $1.2 billion. On a same property basis, meaning excluding properties divested
or acquired in the past 12 months, total revenue was up 6.2%. Advertising revenue was up 12% and, on a same property basis, increased 9.6%, primarily reflecting rate and volume gains at the U.S. Journal. Information services revenues were up 13%
and, on a same property basis, increased 4.9%, reflecting continued growth at Consumer Electronic Publishing and Dow Jones Indexes/Ventures. Circulation and other revenue were up 2.2% and, on a same property basis, decreased slightly.



Operating Expenses



Nine-month 2004 operating expenses increased $83.7 million, or 8%, to $1.1 billion. About
two percentage points of the increase was due to the fact that 2003 expenses were net of an $18.4 million gain on the settlement of a business interruption insurance claim, while the remaining increase reflected incremental costs from newly-acquired
properties (about three percentage points), increases in employee compensation, newsprint usage and prices, and foreign currency translation. Newsprint expense, on a same property basis, increased 9%, as a result of a 7% increase in newsprint prices
and a 1.8% increase in consumption.



Operating Income



Operating income for the first nine months of 2004 was $110.5 million (9% of revenues),
up $22.9 million, or 26%, from 2003 operating income of $87.6 million (7.8% of revenues). The increase in operating income reflected 56% growth in operating income at our business segments, partially offset by the unfavorable comparison to the
insurance gain in 2003.



Non-operating (Losses)/Income



Non-operating losses totaled $1.9 million in the first nine months of
2004 compared with income of $61.6 million a year before. The first quarter of 2003 included a non-cash gain of $59.8 million related to the resolution of a loss contingency related to the sale of our former Telerate subsidiary and the third quarter
of 2003 included $6.7 million of interest income related to an IRS tax refund, while the second quarter of 2004 included a $3.3 million gain on the disposition of an investment. Please see page 25 for additional information on these items.



Segment Data



The Company reports the results of its operations in three segments: print publishing,
electronic publishing and community newspapers. In addition, the Company reports certain administrative costs under the corporate segment.



Print Publishing



Print publishing, which is largely comprised of the global editions of The Wall Street Journal, publishes business and financial content world-wide. This content is published primarily in the U.S., Europe, Asia and
Latin America editions of The Wall Street Journal and on U.S. television through a licensing arrangement with CNBC. The Company manages the global Journal operations as one segment as their products comprise the global Journal brand, and there are
significant interrelationships within the editions including global management, shared news flows and workforce and a global advertising customer base, sales force and pricing. U.S. television, which represents a licensing agreement with NBC to
provide branding, news content and on-air expertise to CNBC, is a further extension of the Journal brand and content. U.S. television contributes a significantly higher operating margin than the publications within the segment since it largely
represents incremental revenue for the global Journal content and branding. The Company also includes the operations of Barrons within print publishing instead of reporting them separately because of their relative immateriality to the
Companys results on a consolidated basis and because Barrons shares services with and its operations are similar to the global Journal.



As discussed earlier, the Companys overall performance is largely dependent on the operating performance of the global Wall Street Journal (including its extended
U.S. television brand and content).



17



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##### Table of Contents

Third Quarter 2004 Compared To Third Quarter 2003  Print Publishing

|                                       |  |      |         |    |      |   |         |                        |  |       |   
|-------------------------------------- |  | ---- | ------- | -- | ---- | - | ------- | ---------------------- |  | ----- | --
|(in thousands)                         |  | 2004 |         |    | 2003 |   |         | % Increase/ (Decrease) | 
|Revenues                               |  |      |         |    |      |   |         |                        |  |       |   
|U.S. Publications:                     |  |      |         |    |      |   |         |                        |  |       |   
|Advertising                            |  | $    | 128,213 |    |      | $ | 129,790 |                        |  | (1.2  | )%
|Circulation and other                  |  |      | 62,750  |    |      |   | 63,562  |                        |  | (1.3  | ) 
|                                       |  |      |        
|International Publications:            |  |      |         |    |      |   |         |                        |  |       |   
|Advertising                            |  |      | 10,159  |    |      |   | 12,138  |                        |  | (16.3 | ) 
|Circulation and other                  |  |      | 8,482   |    |      |   | 8,096   |                        |  | 4.8   |   
|                                       |  |      |         |    |      |   |         |                        |  |       |   
|Total revenues                         |  |      | 209,604 |    |      |   | 213,586 |                        |  | (1.9  | ) 
|Expenses                               |  |      | 226,193 |    |      |   | 225,077 |                        |  | 0.5   |   
|                                       |  |      |         |    |      |   |         |                        |  |       |   
|Operating loss                         |  | $    | (16,589 | )  |      | $ | (11,491 | )                      |  | 44.4  |   
|                                       |  |      |         |    |      |   |         |                        |  |       |   
|Operating margin                       |  |      | (7.9    | )% |      |   | (5.4    | )%                     |  |       |   
|                                       |  |      |        
|Included in expenses:                  |  |      |         |    |      |   |         |                        |  |       |   
|Depreciation and amortization          |  | $    | 15,396  |    |      | $ | 16,312  |                        |  | (5.6  | ) 
|                                       |  |      |        
|Statistical information:               |  |      |         |    |      |   |         |                        |  |       |   
|Advertising volume increase/(decrease) |  |      |         |    |      |   |         |                        |  |       |   
|                                       |  |      |        
|The Wall Street Journal linage         |  |      |         |    |      |   |         |                        |  |       |   
|General                                |  |      | 1.7     | %  |      |   | 12.5    | %                      |  |       |   
|Technology                             |  |      | (35.7   | )  |      |   | 12.0    |                        |  |       |   
|Financial                              |  |      | (10.0   | )  |      |   | (12.8   | )                      |  |       |   
|Classified                             |  |      | 11.0    |    |      |   | 10.5    |                        |  |       |   
|Total linage                           |  |      | (6.0    | )  |      |   | 7.1     |                        |  |       |   
|                                       |  |      |        
|The Asian Wall Street Journal linage   |  |      | (20.6   | )  |      |   | 29.0    |                        |  |       |   
|The Wall Street Journal Europe linage  |  |      | (19.4   | )  |      |   | 23.6    |                        |  |       |   
|Barrons pages                         |  |      | (5.1    | )  |      |   | (8.9    | )                      |  |       |   



Revenues



Third quarter 2004 print publishing revenue decreased $4 million, or 1.9%, to $209.6
million, on lower advertising revenues at the U.S. and overseas editions of the Journal.



U.S. print publication revenue decreased $2.4 million, or 1.2%, to $191 million. U.S. print publication advertising revenue decreased $1.6 million, or 1.2%, to $128.2 million, reflecting a 6% decrease in advertising
linage at The Wall Street Journal partially offset by higher ad yield (or revenue per page). General advertising, which represented about 44% of total U.S. Wall Street Journal linage, increased 1.7% in the quarter, reflecting strong increases in
luxury and professional services advertising, partially offset by declines in travel, insurance, media and auto advertising. Financial advertising, which accounted for 15% of total Journal linage, decreased 10% in the quarter primarily the result of
weakness in retail and tombstone advertising. Technology advertising, which represented 14% of total U.S. Journal linage, fell 35.7% in the quarter as sharp declines in computer software and communications advertising more than offset strong gains
in B2B e-commerce and personal computer advertising. Classified and other advertising linage, which represented about 27% of total U.S. Journal linage, increased 11%. Color advertising pages increased 13%, and color premium revenue was up 33%.



18



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##### Table of Contents

Circulation and other revenue for the U.S. print publications decreased $0.8 million, or 1.3%, to $62.8 million. Average
circulation for the third quarter of 2004 for The Wall Street Journal was 1,844,000 compared with circulation of 1,750,000 in the third quarter of 2003. Barrons average circulation was 297,000 in the quarter, down from 323,000 in the third
quarter 2003.



International Print publication advertising revenues decreased
$2 million, or 16%, to $10.2 million, primarily as a result of decreases in advertising volume at The Asian Wall Street Journal and The Wall Street Journal Europe. International print circulation and other revenues increased $0.4 million, or 4.8%,
to $8.5 million. Combined average circulation for the International Journals was 151,000 in third quarter of 2004 compared with 165,000 in the third quarter of 2003.



Expenses



Print publishing expenses in the quarter increased $1.1 million, or 0.5%, to $226.2 million, reflecting modestly higher employee compensation as well as higher newsprint
costs mitigated by lower selling and depreciation costs. Newsprint expense was up 7% as a result of a 3.7% increase in newsprint prices coupled with a 3.1% increase in consumption.



Operating Loss



Print publishing operating loss was $16.6 million, compared with a loss of $11.5 million in the third quarter of 2003, primarily reflecting the advertising linage
declines.



Nine Months Ended September 30, 2004 Compared To Nine
Months Ended September 30, 2003  Print Publishing



|                                       |  |      |         |   |      |   |         |                        |  |      |  
|-------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---------------------- |  | ---- | -
|(in thousands)                         |  | 2004 |         |   | 2003 |   |         | % Increase/ (Decrease) | 
|Revenues                               |  |      |         |   |      |   |         |                        |  |      |  
|U.S. Publications:                     |  |      |         |   |      |   |         |                        |  |      |  
|Advertising                            |  | $    | 444,930 |   |      | $ | 406,745 |                        |  | 9.4  | %
|Circulation and other                  |  |      | 194,807 |   |      |   | 197,274 |                        |  | (1.3 | )
|                                       |  |      |        
|International Publications:            |  |      |         |   |      |   |         |                        |  |      |  
|Advertising                            |  |      | 36,075  |   |      |   | 33,272  |                        |  | 8.4  |  
|Circulation and other                  |  |      | 25,128  |   |      |   | 25,004  |                        |  | 0.5  |  
|                                       |  |      |         |   |      |   |         |                        |  |      |  
|Total revenues                         |  |      | 700,940 |   |      |   | 662,295 |                        |  | 5.8  |  
|                                       |  |      |        
|Expenses                               |  |      | 695,616 |   |      |   | 672,893 |                        |  | 3.4  |  
|                                       |  |      |         |   |      |   |         |                        |  |      |  
|Operating income (loss)                |  | $    | 5,324   |   |      | $ | (10,598 | )                      |  |     |  
|                                       |  |      |         |   |      |   |         |                        |  |      |  
|Operating margin                       |  |      | 0.8     | % |      |   | (1.6    | )%                     |  |      |  
|                                       |  |      |        
|Included in expenses:                  |  |      |         |   |      |   |         |                        |  |      |  
|Depreciation and amortization          |  | $    | 49,938  |   |      | $ | 51,700  |                        |  | (3.4 | )
|                                       |  |      |        
|Statistical information:               |  |      |         |   |      |   |         |                        |  |      |  
|Advertising volume increase (decrease) |  |      |         |   |      |   |         |                        |  |      |  
|                                       |  |      |        
|The Wall Street Journal linage         |  |      |         |   |      |   |         |                        |  |      |  
|General                                |  |      | 3.2     | % |      |   | (1.8    | )%                     |  |      |  
|Technology                             |  |      | (23.0   | ) |      |   | (7.8    | )                      |  |      |  
|Financial                              |  |      | 13.9    |   |      |   | (23.0   | )                      |  |      |  
|Classified                             |  |      | 9.8     |   |      |   | 12.3    |                        |  |      |  
|Total linage                           |  |      | 1.3     |   |      |   | (4.7    | )                      |  |      |  
|                                       |  |      |        
|The Asian Wall Street Journal linage   |  |      | (3.6    | ) |      |   | 8.7     |                        |  |      |  
|The Wall Street Journal Europe linage  |  |      | 0.5     |   |      |   | 16.2    |                        |  |      |  
|Barrons pages                         |  |      | 12.2    |   |      |   | (16.7   | )                      |  |      |  



19



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##### Table of Contents

Revenues



Print publishing revenues for the first nine months of 2004 increased $38.6 million, or 5.8%, to $700.9 million, reflecting gains at the U.S. and overseas editions of the
Journal.



U.S. print publication revenue increased $35.7 million, or 5.9%, to
$639.7 million. U.S. print publication advertising revenue increased $38.2 million, or 9.4%, to $444.9 million, reflecting an increase in advertising linage and rates at The Wall Street Journal, and Barrons as well as increased U.S. television
revenue from CNBC. Circulation and other revenue for the U.S. print publications decreased $2.5 million, or 1.3%, to $194.8 million, reflecting lower circulation at the Journal and a drop in other revenue as a result of a decrease in commercial
printing revenue.



International Print publication advertising revenues
increased $2.8 million, or 8.4%, to $36.1 million, primarily as a result of higher advertising rates at The Wall Street Journal Europe and The Asian Wall Street Journal. Circulation and other revenue for the International print publications
increased a modest $0.1 million, or 0.5%, to $25.1 million.



Expenses



Print publishing expenses in the first nine months of 2004 increased
$22.7 million, or 3.4%, to $695.6 million, as a result of increased employee compensation, increased newsprint costs, and higher costs as a result of unfavorable foreign exchange. Newsprint expense was up 9% as a result of a 6.9% increase in
newsprint prices coupled with a 2% increase in consumption.



Operating Income (Loss)



Print publishings
operating income for the first nine months of 2004 was $5.3 million (0.8% of revenues) compared with a loss of $10.6 million in the same period in 2003, reflecting improved profits at the U.S. Journal and U.S. television, partially offset by
increased losses at the international editions.



Electronic Publishing



Electronic publishing, whose products provide business and financial news
and information to customers via electronic distribution and are expected to have similar long-term economic characteristics, includes the operations of Dow Jones Newswires, Consumer Electronic Publishing and Dow Jones Indexes/Ventures. Consumer
Electronic Publishing includes the results of WSJ.com and its related vertical sites as well as the Companys licensing/business development and radio/audio businesses. Revenues in the electronic publishing segment are mainly
subscription-based.



On April 2, 2004, the Company acquired the remaining
interest in the news operations of Vereinigte Wirtschaftsdienste GmbH (VWD), a German newswires business. The acquired business consists of financial newswires and business newsletters, which have been combined into the Companys
Dow Jones Newswires business, under the brand name Dow Jones-VWD News. Dow Jones was a minority shareholder in VWD.



On March 19, 2004, the Company purchased Alternative Investor, a provider of newsletters, databases and industry conferences for the venture capital and private equity
markets. On September 2, 2003, the Company purchased Technologic Partners, a closely-held publications and events firm, which has eight online newsletters and produces six conference events annually. Alternative Investor was integrated with our
newsletters division and the recently acquired Technologic Partners business. This newly formed business within Dow Jones Newswires will provide newsletters, databases and conferences primarily to the venture capital and private-equity markets.



20



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##### Table of Contents

Third Quarter 2004 Compared To Third Quarter 2003 - Electronic Publishing



|                               |  |      |        |   |      |   |        |                        |  |      |  
|------------------------------ |  | ---- | ------ | - | ---- | - | ------ | ---------------------- |  | ---- | -
|(in thousands)                 |  | 2004 |        |   | 2003 |   |        | % Increase/ (Decrease) | 
|Revenues                       |  |      |        |   |      |   |        |                        |  |      |  
|Dow Jones Newswires:           |  |      |        |   |      |   |        |                        |  |      |  
|North America                  |  | $    | 50,021 |   |      | $ | 42,739 |                        |  | 17.0 | %
|International                  |  |      | 15,515 |   |      |   | 10,920 |                        |  | 42.1 |  
|                               |  |      |        |   |      |   |        |                        |  |      |  
|Total Newswires                |  |      | 65,536 |   |      |   | 53,659 |                        |  | 22.1 |  
|Consumer Electronic Publishing |  |      | 19,258 |   |      |   | 16,254 |                        |  | 18.5 |  
|Dow Jones Indexes/Ventures     |  |      | 12,850 |   |      |   | 9,439  |                        |  | 36.1 |  
|                               |  |      |        |   |      |   |        |                        |  |      |  
|Total revenues                 |  |      | 97,644 |   |      |   | 79,352 |                        |  | 23.1 |  
|                               |  |      |       
|Expenses                       |  |      | 75,952 |   |      |   | 62,254 |                        |  | 22.0 |  
|                               |  |      |        |   |      |   |        |                        |  |      |  
|Operating income               |  | $    | 21,692 |   |      | $ | 17,098 |                        |  | 26.9 |  
|                               |  |      |        |   |      |   |        |                        |  |      |  
|Operating margin               |  |      | 22.2   | % |      |   | 21.5   | %                      |  |      |  
|                               |  |      |       
|Included in expenses:          |  |      |        |   |      |   |        |                        |  |      |  
|Depreciation and amortization  |  | $    | 7,294  |   |      | $ | 6,543  |                        |  | 11.5 |  



|                              |  |                   |  |                  
|----------------------------- |  | ----------------- |  | -----------------
|Statistical information:      |  | September 30 2004 |  | September 30 2003
|Dow Jones Newswires terminals |  | 297,000           |  | 289,000          
|WSJ.com subscribers           |  | 701,000           |  | 686,000          



Revenues



Electronic publishing revenues for the third quarter of 2004 increased $18.3 million, or
23%, to $97.6 million, primarily as a result of business acquisitions at Dow Jones Newswires and revenue gains at Dow Jones Indexes/Ventures and Consumer Electronic Publishing.



Dow Jones Newswires revenue increased $11.9 million, or 22%, to $65.5 million, due to recent acquisitions and increases in both North
America and internationally. Excluding recent acquisitions, Dow Jones Newswires revenues were up 1.5%. English-language terminals carrying Dow Jones Newswires at September 30, 2004, were 297,000 compared with 289,000 at September 30, 2003. North
American terminals decreased by 1,000, while International terminals increased by 9,000. Consumer Electronic Publishing revenue increased $3 million, or 18.5%, to $19.3 million on a 25% increase in advertising revenue coupled with strong increases
in licensing revenue and WSJ.com subscriber revenue. At the end of September 2004, the number of WSJ.com subscribers reached a record high of 701,000, an increase of 2.2% from a year earlier. Dow Jones Indexes/Ventures revenues, which include Dow
Jones Indexes and reprints/permissions businesses, increased $3.4 million, or 36%, to $12.9 million primarily driven by a 40% increase in Indexes revenue.



Expenses



Electronic publishing expenses were up $13.7 million, or 22%, to $76 million, primarily resulting from incremental expenses from business acquisitions and an increase in employee compensation.



Operating Income



Electronic publishings operating income was $21.7 million (22.2% of revenues), an improvement of $4.6 million, or 27%, over third
quarter 2003 operating income of $17.1 million (21.5% of revenues). The improvement was driven by increased profits and margins at Dow Jones Indexes/Ventures and profits at Consumer Electronic Publishing.



21



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##### Table of Contents

Nine Months Ended September 30, 2004 Compared To Nine Months Ended September 30, 2003  Electronic Publishing



|                               |  |      |         |   |      |   |         |            |  |      |  
|------------------------------ |  | ---- | ------- | - | ---- | - | ------- | ---------- |  | ---- | -
|(in thousands)                 |  | 2004 |         |   | 2003 |   |         | % Increase | 
|Revenues                       |  |      |         |   |      |   |         |            |  |      |  
|Dow Jones Newswires:           |  |      |         |   |      |   |         |            |  |      |  
|North America                  |  | $    | 143,369 |   |      | $ | 127,971 |            |  | 12.0 | %
|International                  |  |      | 40,928  |   |      |   | 32,171  |            |  | 27.2 |  
|                               |  |      |         |   |      |   |         |            |  |      |  
|Total Newswires                |  |      | 184,297 |   |      |   | 160,142 |            |  | 15.1 |  
|Consumer Electronic Publishing |  |      | 57,320  |   |      |   | 49,207  |            |  | 16.5 |  
|Dow Jones Indexes/Ventures     |  |      | 38,610  |   |      |   | 29,202  |            |  | 32.2 |  
|                               |  |      |         |   |      |   |         |            |  |      |  
|Total revenues                 |  |      | 280,227 |   |      |   | 238,551 |            |  | 17.5 |  
|                               |  |      |        
|Expenses                       |  |      | 217,075 |   |      |   | 188,539 |            |  | 15.1 |  
|                               |  |      |         |   |      |   |         |            |  |      |  
|Operating income               |  | $    | 63,152  |   |      | $ | 50,012  |            |  | 26.3 |  
|                               |  |      |         |   |      |   |         |            |  |      |  
|Operating margin               |  |      | 22.5    | % |      |   | 21.0    | %          |  |      |  
|                               |  |      |        
|Included in expenses:          |  |      |         |   |      |   |         |            |  |      |  
|Depreciation and amortization  |  | $    | 20,904  |   |      | $ | 20,121  |            |  | 3.9  |  



Revenues



Electronic publishing revenues for the first nine months of 2004 increased $41.7 million, or
17.5%, to $280.2 million as a result of incremental revenues from recently acquired Dow Jones Newswires businesses coupled with revenue increases at Consumer Electronic Publishing and Dow Jones Indexes/Ventures.



Excluding recent acquisitions, Newswires revenues were up slightly. Consumer Electronic
Publishing revenue increased $8.1 million, or 16.5%, to $57.3 million on a 31% increase in advertising revenue coupled with a 9% increase in WSJ.com subscriber revenue and a 4% increase in licensing revenue. Dow Jones Indexes/Ventures revenues,
which include Dow Jones Indexes and reprints/permissions businesses, increased $9.4 million, or 32%, to $38.6 million.



Expenses



Electronic publishing expenses for the first nine months of 2004 were up $28.5 million, or 15%, to $217.1 million primarily as a result of incremental expenses from the recent acquisitions (comprising nearly three
quarters of the increase) as well as an increase in employee compensation.



Operating Income



Electronic publishing operating
income of $63.2 million (22.5% of revenues) was $13.1 million, or 26%, better than 2003 operating income of $50 million (21.0% of revenues). The improvement was driven by increased profits at Dow Jones Indexes/Ventures and Consumer Electronic
Publishing as well as incremental operating income from the newly acquired Dow Jones Newswires businesses.



Community Newspapers



Community
newspapers includes the operations of Ottaway Newspapers, which publishes general-interest news in 15 daily newspapers and more than 30 weekly newspapers and shoppers in nine states in the U.S.



22



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##### Table of Contents

Third Quarter 2004 Compared To Third Quarter 2003 - Community Newspapers



|                                       |  |      |        |   |      |   |        |                        |  |      |  
|-------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---------------------- |  | ---- | -
|(in thousands)                         |  | 2004 |        |   | 2003 |   |        | % Increase/ (Decrease) | 
|Revenues                               |  |      |        |   |      |   |        |                        |  |      |  
|Advertising                            |  | $    | 65,583 |   |      | $ | 60,748 |                        |  | 8.0  | %
|Circulation and other                  |  |      | 22,061 |   |      |   | 22,260 |                        |  | (0.9 | )
|                                       |  |      |        |   |      |   |        |                        |  |      |  
|Total revenues                         |  |      | 87,644 |   |      |   | 83,008 |                        |  | 5.6  |  
|                                       |  |      |       
|Expenses                               |  |      | 64,153 |   |      |   | 61,242 |                        |  | 4.8  |  
|                                       |  |      |        |   |      |   |        |                        |  |      |  
|Operating income                       |  | $    | 23,491 |   |      | $ | 21,766 |                        |  | 7.9  |  
|                                       |  |      |        |   |      |   |        |                        |  |      |  
|Operating margin                       |  |      | 26.8   | % |      |   | 26.2   | %                      |  |      |  
|                                       |  |      |       
|Included in expenses:                  |  |      |        |   |      |   |        |                        |  |      |  
|Depreciation and amortization          |  | $    | 2,867  |   |      | $ | 3,132  |                        |  | (8.5 | )
|                                       |  |      |       
|Statistical information:               |  |      |        |   |      |   |        |                        |  |      |  
|Advertising volume increase/(decrease) |  |      |        |   |      |   |        |                        |  |      |  
|Dailies                                |  |      | 2.8    | % |      |   | (2.5   | )%                     |  |      |  
|Non-Dailies                            |  |      | 14.5   |   |      |   | 2.4    |                        |  |      |  
|Overall                                |  |      | 4.9    |   |      |   | (1.7   | )                      |  |      |  



Revenues



Community newspapers revenue was up $4.6 million, or 5.6%, to $87.6 million in the third
quarter. Advertising revenue increased $4.8 million, or 8%, to $65.6 million, reflecting a 4.9% increase in ad linage as well as increases in advertising rates and preprint revenue. Circulation and other revenue decreased $0.2 million, or 0.9%.
Average daily circulation was about 440,000 in 2004 compared with 448,000 in 2003.



Expenses



Community newspapers expenses increased $2.9
million, or 4.8%, to $64.2 million, reflecting increases in compensation expense, newsprint, outside services and delivery costs. Newsprint expense increased 8.5% as a result of a 6.3% increase in newsprint prices coupled with an increase in
consumption of 2.1%.



Operating Income



Operating income in the third quarter of 2004 was $23.5 million (26.8% of revenues) up 7.9%
from 2003 income of $21.8 million (26.2% of revenues).



23



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##### Table of Contents

Nine Months Ended September 30, 2004 Compared To Nine Months Ended September 30, 2003  Community Newspapers



|                                        |  |      |         |   |      |   |         |                       |  |       |  
|--------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | --------------------- |  | ----- | -
|(in thousands)                          |  | 2004 |         |   | 2003 |   |         | % Increase/(Decrease) | 
|Revenues                                |  |      |         |   |      |   |         |                       |  |       |  
|Advertising                             |  |      |         |   |      |   |         |                       |  |       |  
|Comparable operations                   |  | $    | 175,251 |   |      | $ | 162,323 |                       |  | 8.0   | %
|Newly-acquired operations               |  |      | 13,517  |   |      |   | 2,616   |                       |  |      |  
|                                        |  |      |         |   |      |   |         |                       |  |       |  
|Total advertising                       |  |      | 188,768 |   |      |   | 164,939 |                       |  | 14.4  |  
|                                        |  |      |        
|Circulation and other                   |  |      |         |   |      |   |         |                       |  |       |  
|Comparable operations                   |  |      | 61,924  |   |      |   | 61,560  |                       |  | 0.6   |  
|Newly-acquired operations               |  |      | 2,444   |   |      |   | 417     |                       |  |      |  
|                                        |  |      |         |   |      |   |         |                       |  |       |  
|Total circulation and other             |  |      | 64,368  |   |      |   | 61,977  |                       |  | 3.9   |  
|                                        |  |      |        
|Total revenues                          |  |      | 253,136 |   |      |   | 226,916 |                       |  | 11.6  |  
|                                        |  |      |        
|Expenses                                |  |      |         |   |      |   |         |                       |  |       |  
|Comparable operations                   |  |      | 175,349 |   |      |   | 168,805 |                       |  | 3.9   |  
|Newly-acquired operations               |  |      | 12,163  |   |      |   | 2,264   |                       |  |      |  
|                                        |  |      |         |   |      |   |         |                       |  |       |  
|Total segment expenses                  |  |      | 187,512 |   |      |   | 171,069 |                       |  | 9.6   |  
|                                        |  |      |         |   |      |   |         |                       |  |       |  
|                                        |  |      |        
|Operating income                        |  |      |         |   |      |   |         |                       |  |       |  
|Comparable operations                   |  |      | 61,826  |   |      |   | 55,078  |                       |  | 12.3  |  
|Newly-acquired operations               |  |      | 3,798   |   |      |   | 769     |                       |  |      |  
|                                        |  |      |         |   |      |   |         |                       |  |       |  
|Total operating income                  |  | $    | 65,624  |   |      | $ | 55,847  |                       |  | 17.5  |  
|                                        |  |      |         |   |      |   |         |                       |  |       |  
|Operating margin                        |  |      |         |   |      |   |         |                       |  |       |  
|Comparable operations                   |  |      | 26.1    | % |      |   | 24.6    | %                     |  |       |  
|Newly-acquired operations               |  |      | 23.8    |   |      |   | 25.4    |                       |  |       |  
|                                        |  |      |        
|Included in expenses:                   |  |      |         |   |      |   |         |                       |  |       |  
|Depreciation and amortization           |  |      |         |   |      |   |         |                       |  |       |  
|Comparable operations                   |  | $    | 7,899   |   |      | $ | 8,836   |                       |  | (10.6 | )
|Newly-acquired operations               |  |      | 786     |   |      |   | 163     |                       |  |      |  
|                                        |  |      |        
|Statistical information:                |  |      |         |   |      |   |         |                       |  |       |  
|Advertising volume increase/(decrease)* |  |      |         |   |      |   |         |                       |  |       |  
|Dailies                                 |  |      | 3.0     | % |      |   | (2.0    | )%                    |  |       |  
|Non-Dailies                             |  |      | 13.7    |   |      |   | 1.8     |                       |  |       |  
|Overall                                 |  |      | 4.9     |   |      |   | (1.4    | )                     |  |       |  



|* | Percentage excludes divested/newly-acquired operations.
|- | -------------------------------------------------------



Revenues



Community newspapers revenue for the first nine months of 2004 was up $26.2 million, or 12%, to $253.1 million reflecting in part newly acquired properties. On a same property basis, revenue increased $13.3 million,
or 5.9%. Same property advertising revenue increased $12.9 million, or 8%, to $175.3 million, primarily reflecting an increase in advertising linage, as well as average advertising rates and preprint revenue. Same property circulation and other
revenue increased 0.6%, to $61.9 million.



Expenses



Community newspaper expenses for the first nine months of 2004 increased $16.4 million,
or 9.6%, to $187.5 million, reflecting newly acquired properties. On a same property basis, expenses increased $6.5 million, or 3.8%, as a result of increases in compensation expense, newsprint and outside service and delivery costs. Newsprint
expense, on a same property basis, increased 9% as a result of a 7.6% increase in newsprint prices coupled with a slight increase in consumption of 1.3%.



24



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##### Table of Contents

Operating Income



Community newspapers operating income for the first nine months of 2004 was $65.6 million (25.9% of revenues) compared with 2003 operating income of $55.8
million (24.6% of revenues). On a same property basis, operating income for the first nine months of 2004 of $61.8 million (26.1% of revenues) increased 12% from $55 million (24.6% of revenues) in 2003.



Certain Items Affecting Comparisons



The following table summarizes certain items affecting comparisons for the quarters and nine
months ended September 30, 2004 and 2003:



|                                                           |  |                                |     |     |      |      |     |  |   |           |   |     |   |      |     |   |      |   |  |   |      |  
|---------------------------------------------------------- |  | ------------------------------ | --- | --- | ---- | ---- | --- |  | - | --------- | - | --- | - | ---- | --- | - | ---- | - |  | - | ---- | -
|                                                           |  | Quarters Ended September 30    |    
|                                                           |  | 2004                           |     |     | 2003 |     
|(in millions, except per share amounts)                    |  | Operating                      |     | Net |      |      | EPS |  |   | Operating |   | Net |   |      | EPS |  
|Included in non-operating income:                          |  |                                |     |     |      |      |     |  |   |           |   |     |   |      |     |   |      |   |  |   |      |  
|Contract guarantee (a)                                     |  |                                |     |     | $    | (1.7 | )   |  | $ | (.02      | ) |     |   |      |     | $ | (2.3 | ) |  | $ | (.03 | )
|Certain income tax matters (b)                             |  |                                |     |     |      | 1.5  |     |  |   | .02       |   |     |   |      |     |   | 19.5 |   |  |   | .24  |  
|                                                           |  |                                |     |     |      |      |     |  |   |           |   |     |   |      |     |   |      |   |  |   |      |  
|Total                                                      |  |                                |    |     | $    | (0.2 | )   |  |   |          |   |     |   |     |     | $ | 17.2 |   |  | $ | .21  |  
|                                                           |  |                                |     |     |      |      |     |  |   |           |   |     |   |      |     |   |      |   |  |   |      |  
|                                                           | 
|                                                           |  | Nine Months Ended September 30 |    
|                                                           |  | 2004                           |     |     | 2003 |     
|(in millions, except per share amounts)                    |  | Operating                      |     | Net |      |      | EPS |  |   | Operating |   | Net |   |      | EPS |  
|Included in operating income:                              |  |                                |     |     |      |      |     |  |   |           |   |     |   |      |     |   |      |   |  |   |      |  
|Gain from business interruption insurance claim (c)        |  |                                |     |     |      |      |     |  |   |           |   |     | $ | 18.4 |     | $ | 11.1 |   |  | $ | .14  |  
|Reversal of lease obligation reserve  WFC (c)             |  | $                              | 2.8 |     | $    | 1.7  |     |  | $ | .02       |   |     |   |      |     |   |      |   |  |   |      |  
|Included in non-operating income:                          |  |                                |     |     |      |      |     |  |   |           |   |     |   |      |     |   |      |   |  |   |      |  
|Contract guarantee (a)                                     |  |                                |     |     |      | (5.5 | )   |  |   | (.06      | ) |     |   |      |     |   | (7.4 | ) |  |   | (.09 | )
|Gain on disposition of investment (d)                      |  |                                |     |     |      | 1.8  |     |  |   | .02       |   |     |   |      |     |   |      |   |  |   |      |  
|Gain on resolution of Telerate sale loss contingencies (e) |  |                                |     |     |      |      |     |  |   |           |   |     |   |      |     |   | 59.8 |   |  |   | .73  |  
|Certain income tax matters (b)                             |  |                                |     |     |      | 1.5  |     |  |   | .02       |   |     |   |      |     |   | 19.5 |   |  |   | .24  |  
|                                                           |  |                                |     |     |      |      |     |  |   |           |   |     |   |      |     |   |      |   |  |   |      |  
|Total                                                      |  | $                              | 2.8 |     | $    | (0.5 | )   |  |   |          |   |     | $ | 18.4 |     | $ | 83.0 |   |  | $ | 1.02 |  
|                                                           |  |                                |     |     |      |      |     |  |   |           |   |     |   |      |     |   |      |   |  |   |      |  



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(a) Contract guarantee:



Under the terms of the Companys 1998 sale of Telerate to Bridge Information Systems, Inc. (Bridge), Dow Jones retained its guarantee under certain circumstances
of certain minimum payments for data acquired by Telerate from Cantor Fitzgerald Securities (Cantor) and Market Data Corporation (MDC). The annual minimum payments average approximately $50 million per year through October 2006 under certain
conditions. Bridge agreed to indemnify Dow Jones for any liability Dow Jones incurred under the contract guarantee with respect to periods subsequent to Bridges purchase of Telerate. In 2000, based in part on uncertainty about Bridges
solvency as well as other factors, the Company established a reserve of $255 million representing the net present value of the total estimated payments from 2001 through October 2006, using a discount rate of 6%.



Earnings in 2004 and 2003 included charges related to the accretion of the discount on the
reserve balance. These charges totaled $1.7 million and $2.3 million in the third quarters of 2004 and 2003, respectively. For the first nine months of 2004 and 2003, charges related to the accretion of discount totaled $5.5 million and $7.4
million, respectively.



Bridge filed for bankruptcy in February 2001, but made
payments for this data for the post-petition periods through October 2001, when Telerate ceased operations, went out of business, sold certain assets and rejected its contracts with Cantor and MDC. The Company is now in litigation with Cantor and
MDC with respect to their claims for amounts due under the contract guarantee. The Company has various substantial defenses to these claims and the litigation is proceeding. In January 2003, the trial court denied motions by each of the parties that
their own claims for relief be granted and the competing claims be dismissed. Appeals from those decisions are not being pursued. Discovery is proceeding and is scheduled to continue through the end of 2004. Dispositive motions may be filed by any
party early next year, and the trial is currently scheduled to begin in July 2005.



Due to the stage of the lawsuit at September 30, 2004, it is not possible to determine whether the court will find that any obligation under the guarantee may be dismissed or reduced. Accordingly, the Company believes that the reserve
continues to be appropriate.



While it is not possible to predict with
certainty the ultimate outcome of this litigation, the Company believes the likelihood of a loss exceeding the amount reserved is remote; however, it is possible that such loss could be less than the amount reserved.



(b) Certain income tax matters:



2004 Income tax matters



Income tax expense in the third quarter 2004 included a tax benefit of $1.5 million, or $.02
per diluted share, as a result of a favorable resolution of a federal tax matter during the quarter.



2003 Income tax matters



In the third
quarter of 2003, the Internal Revenue Service (IRS) completed its audit of the Companys tax returns for the 1995 through 1998 tax periods, which had been amended for additional tax refunds. In October 2003, the Company received
notification that the Congressional Joint Committee on Taxation had approved these claims for tax refunds of approximately $24 million. The Company received these refunds plus interest of approximately $6.7 million in the fourth quarter of 2003.
Pursuant to the settlement of these claims, in the third quarter of 2003, the Company released $25 million of tax provisions no longer needed for loss contingencies and recorded interest income of $6.7 million ($4.0 million, net of taxes). The
Company also recorded a provision of $9.5 million in the third quarter for loss contingencies relating to recent developments in certain other tax matters. The net effect of these items was an increase in net income of $19.5 million, or $.24 per
diluted share.



(c) Restructuring charges and September 11 related items,
net:



Reversal of lease obligation reserve  World Financial
Center (WFC):



In the fourth quarter 2001, the Company recorded a charge
of $32.2 million as a result of its decision to permanently re-deploy certain personnel and abandon four of seven floors that were leased at its World Financial Center headquarters. This charge primarily reflected the Companys rent obligation
through 2005 on this vacated space.



In the first quarter 2004, the Company
decided to extend the term of its lease for one of the floors that was previously abandoned. The Company will re-occupy this floor with personnel from another New York location, whose lease term was expiring. As a result, the Company reversed $2.8
million ($1.7 million, net of taxes, or $.02 per diluted share) of the remaining lease obligation reserve of the previously abandoned floor at WFC.



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##### Table of Contents

Gain from business interruption insurance claim



In the second quarter of 2003, the Company recorded a gain of $18.4 million ($11.1 million after taxes, or $.14 per diluted share)
reflecting the settlement of its business interruption insurance claim for loss of operating income suffered as a result of the terrorist attacks on the World Trade Center on September 11, 2001.



(d) Gain on disposition of investment:



On April 2, 2004, simultaneous with the Companys acquisition of the remaining interest
in the news operations of Vereinigte Wirtschaftsdienste GmbH (VWD), VWD sold its non-news assets to a third party, resulting in cash proceeds to Dow Jones of $6.7 million. Dow Jones was a minority shareholder in VWD.



As a result of this sale, the Company recorded an after-tax gain of $1.8 million, or $.02
cents per diluted share, in the second quarter of 2004. See Footnote 6 on page 7 of this Form 10-Q for additional information.



(e) Gain on resolution of Telerate sale loss contingencies:



In the first quarter of 2003, the Company recorded a gain of $59.8 million ($.73 per diluted share) on the resolution of certain loss contingencies resulting from the
sale of its former Telerate subsidiary to Bridge Information Systems (Bridge). The reserve for loss contingencies was established as part of the loss on sale of Telerate in 1998 and related to various claims that arose out of the Stock Purchase
Agreement, including a purchase price adjustment related to working capital, an indemnification undertaking and other actual and potential claims and counter-claims between the Company and Bridge. In February 2001, Bridge declared bankruptcy. In
March 2003, these matters were resolved by the bankruptcy court, and the Companys contingent liabilities were thereby extinguished.



Non-operating (Losses) Income:



Interest Expense, Net of Investment Income



Interest expense, net was $0.9 million for the third quarter of 2004, compared with interest income, net of $6.6 million in 2003. Interest expense, net for the first nine
months of 2004 was $2.1 million compared with interest income, net of $5.6 million in the like 2003 period. The negative swing was primarily the result of an unfavorable comparison to 2003, which included $6.7 million of interest income from the
1995-1998 IRS refund.



Commercial paper outstanding at September 30, 2004 was
$196.6 million compared with $193.6 million at September 30, 2003 and $153.1 million at December 31, 2003. The increase in debt from December 31, 2003 was largely due to acquisitions this year.



Equity in Earnings of Associated Companies



In the third quarter of 2004, the Companys share of equity in earnings of associated
companies was near break even and flat compared to 2003. For the first nine months of 2004, the Companys share of equity in earnings of associated companies was $1.4 million compared to earnings of $0.3 million in 2003 reflecting increased
profits at Factiva; Vedomosti, a joint venture that publishes a Russian business daily; HB-Dow Jones SA, a part owner of a publishing company in the Czech Republic; and F.F. Soucy, the Companys Canadian newsprint venture, partially offset by
increased losses at CNBC International and SmartMoney.



Income Taxes



The following table presents the effective income tax rates, net of
minority interests, for the quarters and nine months ended September 30, 2004 and 2003:



|                                                                     |  |                             |   |  |                                |    |  |      |   |  |      |  
|-------------------------------------------------------------------- |  | --------------------------- | - |  | ------------------------------ | -- |  | ---- | - |  | ---- | -
|                                                                     |  | Quarters Ended September 30 |   |  | Nine Months Ended September 30 |   
|                                                                     |  | 2004                        |   |  | 2003                           |    |  | 2004 |   |  | 2003 |  
|Effective income tax rate                                            |  | 37.4                        | % |  | (25.3                          | )% |  | 41.1 | % |  | 15.3 | %
|Effective income tax rate, excluding items identified in table below |  | 41.5                        | % |  | 38.2                           | %  |  | 40.4 | % |  | 39.6 | %













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##### Table of Contents

The effective tax rates were affected by certain capital loss/gain transactions, which are detailed below.



|                                     |  |                             |      |   |              |   |      |                   |  |      |             |  |   |              |   |  |                   |      |   |  |       |   
|------------------------------------ |  | --------------------------- | ---- | - | ------------ | - | ---- | ----------------- |  | ---- | ----------- |  | - | ------------ | - |  | ----------------- | ---- | - |  | ----- | --
|                                     |  | Quarters Ended September 30 |     
|                                     |  | 2004                        |      |   | 2003         |  
|(dollars in millions)                |  | IncomeTaxes                 |      |   | PretaxIncome |   |      | EffectiveTax Rate |  |      | IncomeTaxes |  |   | PretaxIncome |   |  | EffectiveTax Rate |     
|Reported (net of minority interests) |  | $                           | 7.2  |   |              | $ | 19.3 |                   |  | 37.4 | %           |  | $ | (5.8         | ) |  | $                 | 22.8 |   |  | (25.3 | )%
|                                     |  |                             |      |   |              |  
|Adjusted to remove:                  |  |                             |      |   |              |   |      |                   |  |      |             |  |   |              |   |  |                   |      |   |  |       |   
|Cantor guarantee                     |  |                             |      |   |              |   | (1.7 | )                 |  |      |             |  |   |              |   |  |                   | (2.3 | ) |  |       |   
|                                     |  |                             |      |   |              |  
|Certain income tax matters           |  |                             | (1.5 | ) |              |   |      |                   |  |      |             |  |   | (12.8        | ) |  |                   | 6.7  |   |  |       |   
|                                     |  |                             |      |   |              |   |      |                   |  |      |             |  |   |              |   |  |                   |      |   |  |       |   
|Adjusted                             |  | $                           | 8.7  |   |              | $ | 21.0 |                   |  | 41.5 | %           |  | $ | 7.0          |   |  | $                 | 18.4 |   |  | 38.2  | % 
|                                     |  |                             |      |   |              |   |      |                   |  |      |             |  |   |              |   |  |                   |      |   |  |       |   



|                                                       |  |                                |      |   |              |   |       |                   |  |      |             |  |   |              |   |  |                   |       |   |  |      |  
|------------------------------------------------------ |  | ------------------------------ | ---- | - | ------------ | - | ----- | ----------------- |  | ---- | ----------- |  | - | ------------ | - |  | ----------------- | ----- | - |  | ---- | -
|                                                       |  | Nine Months Ended September 30 |     
|                                                       |  | 2004                           |      |   | 2003         |  
|(dollars in millions)                                  |  | IncomeTaxes                    |      |   | PretaxIncome |   |       | EffectiveTax Rate |  |      | IncomeTaxes |  |   | PretaxIncome |   |  | EffectiveTax Rate |      
|Reported (net of minority interests)                   |  | $                              | 44.7 |   |              | $ | 108.6 |                   |  | 41.1 | %           |  | $ | 22.8         |   |  | $                 | 149.2 |   |  | 15.3 | %
|                                                       |  |                                |      |   |              |  
|Adjusted to remove:                                    |  |                                |      |   |              |   |       |                   |  |      |             |  |   |              |   |  |                   |       |   |  |      |  
|Cantor guarantee                                       |  |                                |      |   |              |   | (5.5  | )                 |  |      |             |  |   |              |   |  |                   | (7.4  | ) |  |      |  
|Gain on disposition of investment                      |  |                                | 1.4  |   |              |   | 3.3   |                   |  |      |             |  |   |              |   |  |                   |       |   |  |      |  
|Gain on resolution of Telerate sale loss contingencies |  |                                |      |   |              |   |       |                   |  |      |             |  |   |              |   |  |                   | 59.8  |   |  |      |  
|Certain income tax matters                             |  |                                | (1.5 | ) |              |   |       |                   |  |      |             |  |   | (12.8        | ) |  |                   | 6.7   |   |  |      |  
|                                                       |  |                                |      |   |              |   |       |                   |  |      |             |  |   |              |   |  |                   |       |   |  |      |  
|Adjusted                                               |  | $                              | 44.8 |   |              | $ | 110.8 |                   |  | 40.4 | %           |  | $ | 35.6         |   |  | $                 | 90.1  |   |  | 39.6 | %
|                                                       |  |                                |      |   |              |   |       |                   |  |      |             |  |   |              |   |  |                   |       |   |  |      |  



Capital Loss Carryforward



As of September 30, 2004, the Company had a capital loss carryforward of
about $440 million (a deferred tax asset of about $167.3 million for which a full valuation allowance has been provided). About $155 million of this carryforward is recognized for tax purposes and expires in 2006. The remaining $285 million of this
carryforward, which primarily relates to the Cantor contract guarantee obligation, will be recognized for tax purposes only to the extent, if any, that the Company is required to make payment. If the Company is required to make any such payment, the
resulting loss carryforward will be available for use five years from the year it is recognized.



The Company could not conclude that it was more likely than not it would realize any net tax savings from the capital loss carryforward prior to its expiration and believes a full valuation allowance reserve was
appropriate at September 30, 2004.



Tax Contingencies



The Company must exercise judgment in assessing the likely outcome of contingencies
including those related to tax matters. Provisions made in the financial statements represent managements judgment of likelihood based on information available at the time. Judicial or governmental bodies largely determine the outcome of these
matters. The ultimate resolution of these matters, either by determinations by these bodies or other means, could be materially different from that assumed by the Company in making its provisions and related disclosures. At the time that these
contingencies are resolved by tax examination or the expiration of the statute of limitations, the Company adjusts its tax accounts accordingly.



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Liquidity and Capital Resources



Cash Flow Summary



For the Nine Months Ended September 30, 2004 and 2003



|                                                    |  |      |        |   |      |   |        |  
|--------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|(in millions)                                       |  | 2004 |        |   | 2003 |  
|Net cash provided by operating activities           |  | $    | 146.9  |   |      | $ | 144.6  |  
|Net cash used in investing activities               |  |      | (138.4 | ) |      |   | (193.2 | )
|Net cash (used in) provided by financing activities |  |      | (11.0  | ) |      |   | 31.4   |  
|                                                    |  |      |        |   |      |   |        |  
|Decrease in cash and cash equivalents               |  |      | (2.5   | ) |      |   | (17.2  | )
|                                                    |  |     
|Cash and cash equivalents at beginning of year      |  |      | 23.5   |   |      |   | 39.3   |  
|Cash and cash equivalents at September 30           |  | $    | 21.0   |   |      | $ | 22.1   |  
|                                                    |  |      |        |   |      |   |        |  



Cash provided by operating activities
for the first nine months of 2004 was $146.9 million, which was up $2 million from net cash provided by operations in the same period last year, primarily reflecting an increase in operating income offset by unfavorable changes in working capital
and higher income taxes paid in 2004.



Net cash used in investing activities
was $138.4 million in the first nine months of 2004, mainly reflecting the business acquisitions totaling $93 million and capital expenditures of $45 million. Net cash used in investing activities totaled $193.2 million in 2003, primarily reflecting
the acquisition of The Stockton Record for $146 million and capital expenditures of $37 million.



Net cash used in financing activities for the first nine months of 2004 was $11 million, reflecting the payment of $61 million in dividends to shareholders, partially offset by a net increase in debt of $43 million.
Net cash provided by financing activities in the first nine months of 2003 totaled $31.4 million reflecting a net increase in debt of $101 million, primarily to fund the purchase of The Stockton Record, partially offset by the payment of $61 million
in dividends to shareholders and the repurchase of treasury stock for $21 million.



As previously disclosed, in 2000 the Company established a reserve for the present value of the total estimated payments through October 2006 in connection with Dow Jones guarantee of certain minimum payments for data acquired by Dow
Jones former Telerate subsidiary from Cantor Fitzgerald Securities (Cantor) and Market Data Corporation (MDC). Bridge Information Systems, Inc., which purchased Telerate in 1998, filed for bankruptcy but made payments for this data for the
post-petition periods through October 2001, when Telerate ceased operations, went out of business, sold certain assets and rejected its contracts with Cantor and MDC. The Company is now in litigation with Cantor and MDC with respect to their claims
for amounts allegedly due under the contract guarantee. The Company has various substantial defenses to these claims and the litigation is proceeding.



As of September 30, 2004, the balance of the reserve for the contract guarantee was $259.2 million. The Company has classified $205.4 million of this reserve as current
based on the original due dates of the contract. Due to the stage of the lawsuit at September 30, 2004, it is not possible to determine whether the court will find that any obligation under the guarantee may be dismissed or reduced. Accordingly, the
Company believes the balance of the reserve continues to be appropriate.



The
Company expects its cash from operations to be sufficient to meet its normal operating commitments, fund capital expenditures and pay dividends. If necessary, the Companys liquidity requirements may be funded through the issuance of commercial
paper, which is supported by a $440 million revolving credit agreement with several banks, which was renewed in June 2004. Under this agreement, the Company can borrow up to $140 million through June 24, 2006 and $300 million through June 24, 2009.



The Company has access to borrowings in the form of commercial paper, bank
loans or long-term notes under a $300 million shelf registration statement filed with the Securities and Exchange Commission. As of September 30, 2004, the Companys commercial paper balance was $196.6 million, which is classified as long-term
because the Company has the intent and ability to refinance such debt on a long-term basis. The Company has temporarily suspended its share repurchase program to utilize excess cash flow to reduce its debt.



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Credit Ratings



|                  |  |           |  |           
|----------------- |  | --------- |  | ----------
|                  |  | Long Term |  | Short Term
|Standard & Poors |  | A         |  | A-1       
|Moodys           |  | Aa3       |  | P-1       
|Fitch             |  | A+        |  | F1        



During the quarter, Moodys
placed the Companys Aa3 long term corporate-credit rating on review for a possible downgrade. Moodys announced it anticipates that any downgrade to the Companys rating would be modest, and would likely change the Companys
rating to single A rating. Because the Companys current method of financing is in the form of commercial paper, a downgrade in its long-term credit rating would not affect its cost of financing.



Other Matters



In September 2004, the Company received a letter from the SEC requesting information about its circulation practices as part of an
industry-wide review that the SEC is conducting. We are cooperating fully with the SECs request. We believe our circulation reporting practices conform in all material respects to Audit Bureau of Circulation rules and we have confidence in our
reported circulation figures. In addition, we dont believe the result of this review will have a material impact on our financial statements.



Subsequent Event



On October 27, 2004, the Company announced that The Far Eastern Economic Review, a Hong Kong based newsweekly, will change its format to a monthly periodical. This change will result in a workforce reduction of
approximately 80 employees and accordingly the Company will record a restructuring charge in the fourth quarter of 2004 of approximately $3 million, or $.02 per share, primarily representing severance benefits.



Information Relating To Forward-Looking Statements



This document contains forward-looking statements that involve risks and uncertainties that
could cause actual results to differ materially from those anticipated. Such risks and uncertainties include, but are not limited to: the cyclical nature of the Companys business and the strong, negative impact of economic downturns on
advertising revenues, particularly in the Companys core advertising market-B2B advertising; the continuing softness and volatility in the B2B advertising market; the risk that inconsistent trends across major advertising categories, such as
technology and finance, will continue; the risk that advertising levels will not return to the pre-boom, pre-bust levels that the Company considers normal levels; the Companys ability to limit and manage expense growth, especially in light of
its prior cost cutting and its planned growth initiatives, such as the new Weekend Edition; intense competition for ad revenues, including in the planned new Weekend Edition, from other newspapers, national business magazines, television, trade
publications, free and paid Internet sites and other new media; the Companys ability to expand and diversify the Journals market segment focus beyond financial and technology; the challenge the Companys Personal Journal and the new
Weekend Edition will face in attracting and maintaining advertising revenues in new ad market segments, such as health care, automotive, telecom, and high-end consumer goods; the risk that the Companys initiatives, such as the new Weekend
Edition, to attract more consumer advertising, and other diversified advertising, to the Journal will not succeed; the risk that the new Weekend Edition will compete against its own current consumer advertising sections, such as the Weekend Journal
and Personal Journal, for consumer advertising revenues; the competition the Company will face in introducing new products and services from already existing newsletters, trade publications, research reports and services; the extent to which the
recent enhancements to the Journal will attract a broader base of readers, subscribers, and advertisers; the Companys ability to attract diverse advertisers to place color advertising in the Journal; the impact on the future circulation of the
Journal and community newspapers that may be caused by the declining frequency of regular newspaper buying by young people; with respect to Newswires, the challenges the Company will face in promoting its NewsPlus enhancement and in launching the
next stages of its Newswire of the Future initiative, in the face of competing resources for in-depth news analysis; with respect to Newswires and other subscription-based products and services, the negative impact of business
consolidations and layoffs in the financial services industry on sales of the Companys products and services; with respect to Newswires, the challenges the Company faces in striving to increase its international revenues given the competition
from and subscribers desire for, local language news services; with respect to Newswires, risks concerning the financial viability and future of the Moneyline Telerate business, with which Newswires has entered into a bundling arrangement that
is important to Newswires international revenues; with respect to Newswires, competition from other independent news service providers and the risk that distributors of Newswires products may decide to distribute only their own news
services; with respect to the Companys products and services aimed at the venture capital and private equity markets, the volatility of the venture capital and private equity markets and the extent to which these markets begin to grow,
following their contraction in recent years; the Companys ability to successfully integrate its new Financial Information Services business, which includes distinct newsletters, database and events businesses, into the Companys Newswires
business unit, and to achieve production and operational efficiencies in doing so; the competition from other news and information companies for products aimed at the venture capital or private equity markets; the volatility



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of the events business which is impacted by growth and contraction in the venture capital and private equity markets and
by external factors that impact willingness to travel, such as war and other geopolitical events; the Companys ability to find strategic and financially attractive core-business acquisition opportunities and to integrate those businesses; the
Companys ability to leverage its brands to develop new business opportunities and to generate advertising and other revenues from these products; the Companys ability to achieve strategic alliances and to improve the growth and
profitability of existing strategic alliances; with respect to the Companys community newspapers business, its ability to maintain or grow margins and to strengthen its portfolio of newspaper properties, particularly given the difficulty of
finding quality newspaper properties to acquire; the Companys ability to increase its circulation and advertising revenues from its international print publications and to further penetrate overseas markets through print and television
products, given the competition from local language publications and television networks and other international publications and television ventures; the ability of WSJ.com to continue to increase revenues through building subscriber and advertiser
numbers; the amount of user traffic on the Companys Internet sites and the pricing of advertising on Internet sites generally; the extent to which the Company is required to perform under the guarantee to Cantor Fitzgerald Securities and
Market Data Corporation, and other uncertainties relating to liability under this guarantee; potential increased regulation of online businesses; adverse developments relating to the Companys commitments, contingencies and equity investments;
adverse developments relating to changes in tax law or rates; risks related to the potential or actual insolvency or bankruptcy of any of the Companys suppliers, service providers or business partners, including providers of software and
software maintenance; the uncertainty of the labor unions ratification vote on the tentative agreement reached on the collective bargaining agreement; the Companys ability to negotiate collective bargaining agreements with its labor
unions without work interruptions and on reasonable terms; the Companys ability to attract and retain qualified personnel, particularly if the labor market tightens; cost of newsprint; and such other risk factors as may have been or may be
included from time to time in the Companys reports filed with the Securities and Exchange Commission and posted in the Investor Relations section of the Companys website (www.dowjones.com).



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Item 3: Quantitative And Qualitative Disclosures about Market Risk



In December 2003, the Company entered into foreign currency forward exchange contracts to exchange U.S. dollars for the following foreign currencies:



|                  |  |                  |  |             |     
|----------------- |  | ---------------- |  | ----------- | ----
|(in millions)     |  | Foreign Currency |  | U.S. Dollar
|British Pound     |  | 14.5             |  | $           | 25.4
|Euro              |  | 24.4             |  |             | 30.4
|Australian Dollar |  | 1.3              |  |             | 1.0 



These contracts, which expire ratably
over 2004, are designated as cash flow hedges of anticipated operating expenses that are denominated in these foreign currencies. Revenues of the Company are largely collected in U.S. dollars. These contracts are entered into to protect against the
risk that operating expenses will be adversely affected by devaluation in the U.S. dollar relative to these currencies. Realized gains or losses on foreign currency forward contracts are recognized currently through income and generally offset the
transaction losses or gains on the foreign currency cash flows which they are intended to hedge. In the second quarter 2004, the Company closed out the forward contracts that were intended to buy Australian dollars in the last half of 2004. The
resulting loss was insignificant.



The Company also enters into foreign
currency forward exchange contracts to limit the cash flow and earnings volatility that results from remeasuring certain foreign currency payables at prevailing exchange rates. The unrealized gains or losses of these forward contracts are recognized
in Other, net in the income statement. The forward contract acts as an economic hedge by increasing in value when the underlying foreign currency payable decreases in value and conversely decreases in value when the underlying foreign currency
payable increases. As of September 30, 2004, the Company had forward currency exchange contracts outstanding to exchange 11 million British Pounds for $19.7 million, which are due to expire in the fourth quarter of 2004.



The Companys commercial paper outstanding of $196.6 million at September 30, 2004 is
also subject to market risk as the debt reaches maturity and is reissued at prevailing interest rates. At September 30, 2004, interest rates outstanding ranged from 1.5% to 1.8%, with a weighted-average of 1.7%.



Item 4: Controls & Procedures



Evaluation
of Disclosure Controls and Procedures



As of the end of the period covered
by this report, under the supervision and with the participation of the Companys management, including the Companys Chief Executive Officer (CEO) and Chief Financial Officer (CFO), an evaluation of the effectiveness of the Companys
disclosure controls and procedures was performed. Based on this evaluation, the CEO and CFO have concluded that the Companys disclosure controls and procedures are effective to ensure that material information is recorded, processed,
summarized and reported by management of the Company on a timely basis in order to comply with the Companys disclosure obligations under the Securities Exchange Act of 1934 and the SEC rules thereunder.



Changes in Internal Controls over Financial Reporting



There were no changes in the Companys internal controls over financial reporting that
occurred during the three month period ended September 30, 2004 that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.



PART II. OTHER INFORMATION



Item 1: Legal Proceedings



On November 13, 2001,
the Company instituted a lawsuit in the Supreme Court of the State of New York against Market Data Corp. (MDC) and Cantor Fitzgerald Securities (together with its affiliates, Cantor) seeking a declaratory judgment with respect to the Companys
obligations, if any, under a guarantee issued to MDC and Cantor. The guarantee relates to certain annual minimum payments owed by Telerate under certain conditions for data acquired by Telerate from Cantor Fitzgerald and MDC under
contracts entered into when Telerate was a subsidiary of Dow Jones, and is described in Managements Discussion and Analysis.



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In this lawsuit the Company has asked the court to find that the Company does not and will not owe any payment under the
contract guarantee through October 2006. In the alternative, the Company has asked the court to find that if any amount is owed, it must be reduced by amounts that Cantor and MDC receive or should have received from other distribution of the data
after Telerate stopped receiving the government securities data from Cantor and MDC. MDC has asserted counterclaims demanding payment of $10,197,416 (allegedly the balance owed by Telerate on November 15, 2001), interest, attorneys fees,
specific performance of the guarantee, and a declaratory judgment as to the validity and interpretation of the guarantee through October 2006.



Cantor also commenced a separate lawsuit in the Supreme Court of the State of New York (since consolidated with the Companys case) seeking payment of $10 million
(allegedly the balance of the November 2001 minimum payment), payment of $250 million in breach of contract damages, specific performance of the guarantee, a declaration that the guarantee remains in full force and effect, payment of approximately
$16 million allegedly owed by Telerate and guaranteed by the Company in the guarantee for the distribution of certain other data, attorneys fees, interest, and other relief.



In January 2003, the trial court denied motions by each of the parties that their own claims for relief be granted and that competing claims
be dismissed. Appeals from those decisions are not being pursued. Discovery is proceeding and is scheduled to continue through the end of 2004. Dispositive motions may be filed by any party early next year, and the trial is currently scheduled to
begin in July 2005.



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds



In 1998 the Companys board of directors authorized the repurchase of $800 million of the Companys common stock and in September 2000 authorized the repurchase of an additional $500 million of the
Companys common stock. As of September 30, 2004, approximately $326.4 million remained under board authorization for share repurchases. The Company did not repurchase any shares of its common stock in the third quarter of 2004.



Item 6. Exhibits



|              |  |                                                                                                                                    
|------------- |  | -----------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Document                                                                                                                           
|10.1          |  | Agreement dated July 28, 2004 between the Company and Peter Skinner                                                                
|              | 
|31.1          |  | Certifications by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                            
|              | 
|31.2          |  | Certifications by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                            
|              | 
|32.1          |  | Certifications by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



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SIGNATURE



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.



|                        |  |                           |  |                                        
|----------------------- |  | ------------------------- |  | ---------------------------------------
|                        |  | DOW JONES & COMPANY, INC.
|                        |  | (Registrant)             
|                        |  |                          
|Dated: November 3, 2004 |  | By:                       |  | /s/ ROBERT PERRINE                     
|                        |  |                           |  | Robert Perrine                         
|                        |  |                           |  | Chief Accounting Officer and Controller



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