Oct. 18 (Bloomberg) -- Dow Jones & Co., publisher of the Wall Street Journal, posted a 20 percent jump in third-quarter sales and reported profit that fell less than analysts estimated as it prepares to be acquired by Rupert Murdoch's News Corp.

An expansion online dovetailed with increasing sales of the Journal, allowing Dow Jones to raise its full-year forecast and weather the U.S. housing slump that slashed advertising at other publishers. Murdoch's $5.2 billion acquisition of Dow Jones gives him one of the few major U.S. newspapers with rising readership.

``We are not the wounded and malnourished media dinosaur that many in the press have recently portrayed us to be,'' Chief Executive Officer Richard Zannino said on a conference call today. ``We have industry-leading brands. News Corp. sought us out for these reasons.''

Excluding some costs, profit was 27 cents, beating the 22- cent average of analyst estimates compiled by Bloomberg. Net income dropped 87 percent to $13.8 million, or 16 cents a share, after a tax gain boosted year-earlier profit, the New York-based company said today in a statement. Sales rose to $493.3 million, helped by the purchase of the Factiva news archive last year.

Dow Jones shares rose 5 cents to $59.75 at 4:03 p.m. in New York Stock Exchange composite trading. They have advanced 57 percent this year.

Web Growth

Dow Jones lowered newsprint costs 32 percent in the third quarter by shrinking the size of the Wall Street Journal and increased online ad sales to offset print declines. Murdoch said yesterday he is likely to make the WSJ.com Web site free to draw readers and boost advertising once the $5.2 billion purchase of Dow Jones is complete.

``They're getting more revenue online,'' said Edward Atorino, an analyst at Benchmark Co. in New York, who rates the shares ``hold'' and doesn't own them. ``The company's sold, so it's really just academic.''

A decision on eliminating WSJ.com subscription fees will come in December, Murdoch said yesterday at the Web 2.0 conference in San Francisco.

Journal Register Co., publisher of the New Haven register in Connecticut, said today that third-quarter revenue declined 7.9 percent to $113 million as classifieds sales slumped 10 percent. At Media General Inc., owner of the Tampa Tribune, revenue declined 4.5 percent to $230 million during the period.

Higher Forecast

Dow Jones predicted full-year profit excluding some items will rise more than 40 percent, higher than earlier projections. Online advertising revenue in the current quarter will return to a 20 percent growth rate, and print ad revenue is improving, Zannino said in the statement today.

Expenses related to the News Corp. takeover lowered earnings by 11 cents a share in the quarter. In the third quarter of 2006, Dow Jones had net income of $105.4 million, or $1.26 a share.

The acquisition is still expected to close in December, Zannino said on the call.

Dow Jones also owns Barron's and Dow Jones Newswires. News Corp. has more than 110 newspapers, stretching from Sydney to New York to London, film and TV studios and the Fox Business Network.

Bloomberg LP, the parent of Bloomberg News, competes with Dow Jones in selling financial news and information.

To contact the reporter on this story: Leon Lazaroff in New York at llazaroff@bloomberg.net.

Last Updated: October 18, 2007 16:15 EDT