Dow Jones Settles Telerate Suit For $202 Million

By: E&P Staff On the eve of a possible trial, Dow Jones & Co. said Tuesday that it had settled all litigation related to a dispute involving its defunct Telerate market data system for a payment of $202 million.

Dow Jones said it will make the payment by March 27 to settle all litigation with Market Data Corp. (MDC) and Cantor Fitzgerald Securities related to Dow Jones's obligations under a guarantee it issued to the companies in 1995.

According to its lawsuit against Cantor Fitzgerald, filed in November 2001, Dow Jones was liable for annual payments of $48 million to Cantor for its bond market data.

Cantor provided the data through the Telerate system, which Dow owned until 1998 and which subsequently went out of business.

Dow contended it did not owe the annual payments because Telerate was defunct, and because Cantor breached the 1995 contract by distributing data over Cantor's eSpeed electronic trading system.

In January a New York State Supreme Court judge refused nearly all the litigants' requests for summary judgements, and ordered the sides to prepare for trial. She had called a status hearing for this month.

In its announcement Tuesday, Dow Jones said the settlement agreement "resolves claims in excess of $340 million against (Dow Jones) and is well below the amount the company would have paid under the terms of the guarantee."

Dow Jones noted it had previously recorded a non-cash accounting reserve totaling $265 million as of Dec. 31, 2005. It said it will record a special gain, after-tax of $63 million (or $0.75 per share) in the first quarter of 2006, representing the excess of the reserve over the settlement amount.

Dow Jones said it will initially finance the settlement payment with commercial paper or other short-term borrowings "and is currently evaluating a number of alternatives to refinance these amounts on a long-term basis."

It said it expects to incur approximately $7.5 million (or $0.05 per share) of additional interest expense in 2006.

"This long-running litigation has now been fully resolved and put behind us," Dow Jones CEO Richard F. Zannino said in a statement. "Dow Jones has a strong balance sheet and cash flows that will enable us to pay this settlement."