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How Did The Wall Street Journal Escape Its $80 Million Hole?

How did The Wall Street Journal bounce back from an $80 million loss last year? A look at owner News Corp.'s 10K filing may shed some lightMaybe Les Hinton did deserve that publisher of the year award after all. Anyone who can take a newspaper from a loss of more than $80 million in one year to a profit in the next year -- and in this economy, no less -- deserves some kind of prize.

And that's exactly what the Journal says Hinton did, sort of. Officially, no one there will comment on writer Sarah Ellison's claim, in an upcoming book about the paper, that it lost $87 million* in fiscal 2009, ended in June of last year.

A Journal spokeswoman would only re-confirm to DailyFinance what she told The New York Observer's John Koblin: that the paper will turn a profit in fiscal 2010. That goes for both the print edition of the Journal by itself and the Journal franchise as a whole, including WSJ.com.

10-K Filing May Have Clues

What the Journal spokeswoman wouldn't say was how the paper achieved that supposed $80 million swing. Sure, the paper did some downsizing of its staff from one fiscal year to the next, but the numbers were small relative to the pruning going on elsewhere in the newspaper industry. And, sure, ad revenues were up 23% in the first quarter, but that has to be weighed against the money -- reportedly $15 million -- that owner Rupert Murdoch is sinking into the launch of a new New York City section.

The simplest explanation would be if that $80 million included the $60 million Murdoch reportedly spent to relocate the Journal from its old digs at the World Financial Center to shiny new offices in News Corp.'s (NWS) headquarters building in midtown Manhattan.

The Journal spokeswoman wouldn't comment on how the expense of the move was accounted for, but a glance at News Corp.'s 10-K filing for fiscal 2009 suggests that at least some of the cost was assigned to the parent company, not the paper: The company reported $126 million in liabilities related to executive separation payments and lease terminations as part of something called the Dow Jones Integration Plan.

How to get to the bottom of this? If only there were some large newspaper that specialized in financial analysis...

Update: This item originally pegged the Journal's FY2009 loss at $80 million, basing that on news stories citing Ellison's book, which hasn't been published yet. The actual figure in Ellison's book is $87 million. The post has been updated to reflect that.

(Thanks to my colleague Dan Burrows for digging through the News Corp. SEC filing.)

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