Dow Jones is said to agree to a deal to buy MarketWatch

Dow Jones & Co., the publisher of The Wall Street Journal, agreed Sunday to buy MarketWatch, the parent company of the financial news Web site CBS MarketWatch, for about $486 million, executives close to the negotiations said.

The deal, which the companies plan to announce today, would give Dow Jones a way to reach a broad audience of consumers interested in financial news and a new source of revenue from online advertising.

The acquisition of MarketWatch, a free news site at cbsmarketwatch.com, marks a major strategic shift for Dow Jones, which until now had focused its online efforts almost exclusively on paid subscription services like The Wall Street Journal Online, one of the few successful subscription-based news Web sites.

That model, however, limited the company's ability to cash in on the recent surge in online advertising because the site's audience is confined to subscribers, who number about 701,000. In comparison, CBS MarketWatch's site had 5.8 million unique visitors in September, according to Nielsen/NetRatings.

Dow Jones beat out a list of media bidders for control of MarketWatch with a bid of $18 a share in the auction, which was handled by UBS, the executives said. That bid represents a premium of about 45 percent to the price of MarketWatch's stock before the news broke last month that the company was up for sale.

Analysts said the bid was much higher than expected, with some saying that Dow Jones may have overpaid.

Other bidders included Yahoo, The New York Times Co. and Viacom, which holds a 22.4 percent stake in MarketWatch as one of its original backers, the executives said. A spokesman for MarketWatch declined to comment. A spokesman for Dow Jones could not be immediately reached.

John Tinker, an analyst at ThinkEquity Partners, said in a recent research report that Dow Jones was "an obvious buyer given that MarketWatch could be leveraged through its wider distribution base."

The sale is a major success for Larry S. Kramer, a former newspaper editor who created the site, then called MarketWatch.com, for the Data Broadcasting Corp. in 1995. He took the company public after Data Broadcasting formed a joint venture with CBS, and he kept it afloat despite the bursting of the dot-com bubble in the late 1990s. The initial public offering of MarketWatch.com was one of the fireworks of the Internet boom: Its shares leaped 475 percent on their trading debut.

Dow Jones is expected to continue operating CBS MarketWatch as a separate site, the executives said, though they are likely to consolidate advertising sales, back-office functions and some editorial positions with others within their organization.

The site is also likely to lose the CBS part of its name and will no longer benefit from in-kind advertising with the network. The site's address is frequently mentioned on CBS programs.

It is unclear whether Dow Jones will publish any stories from The Wall Street Journal on the site, but it is expected to try to use the site to also upgrade some readers to WSJ.com. Dow Jones is also expected to continue operating MarketWatch's other businesses, including Bigcharts.com and a unit that licenses financial tools to other Web sites, allowing their users to chart stock prices and other data. MarketWatch also has several paid subscription newsletter products and is building a financial news service for big institutional investors with a partner, Thomson Financial, to compete with the Dow Jones Newswires and other financial news services.

The New York Times Co. is a partner of MarketWatch, using its data, charts and some articles in the business section of The New York Times on the Web at nytimes.com.

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