NEW YORK (Business 2.0) - The sale of CBS MarketWatch to Dow Jones in November 2004 lifted the entire Web-publishing industry, setting off a multibillion-dollar wave of merger deals.

But a year later, one question remains: Has the $540 million deal helped Dow Jones—and has it helped MarketWatch?

As Om Malik demonstrated in the December issue of Business 2.0, MarketWatch's sale proved a high-water mark for valuing monthly unique visitors—a whopping $80 for each pair of eyeballs Dow Jones acquired. As it turns out, Dow Jones ended up paying much, much more for the eyeballs it actually kept over the course of the year.

Dow Jones (Research) has a long history of bungled acquisitions (the words "Telerate," "WBIS" and "Bridge" come to mind). But MarketWatch seems to buck that trend. Dow Jones' electronic publishing business now accounts for more than half of the company's profits, at a time when its print publishing is running a loss.

But it's hard to tell how much MarketWatch has contributed to that effort. Dow Jones fired most of MarketWatch's sales team and anyone else who was duplicative for cost savings of $18 million -- 50 percent higher than originally anticipated. Other than that, the company breaks out very few MarketWatch-specific numbers.

There is one benchmark that's publicly available: MarketWatch's traffic stats. During the last months of its independent life, MarketWatch averaged around 5 million unique visitors each month and 230 million pageviews, according to ComScore Media Metrix.

Today, MarketWatch has half the number of visitors and less than one-third the number of page views. The decline wasn't gradual, either -- the site lost a third of its audience in March, its first full month under the Dow Jones umbrella. The company appears to have bought a lot less traffic than it paid for.

Gordon Crovitz, Dow Jones' president of electronic publishing, dismisses both ComScore's and Nielsen/NetRatings' traffic numbers (even though he uses the latter in speeches and presentations to analysts) and says that while traffic may be down slightly, according to his internal figures, pageviews per reader are up around 12%, and ad rates on MarketWatch have risen 10%–25% percent, depending on the category.

Crovitz also says he's focused on "dialing up" lucrative frequent readers and "dialing down" the one-page-and-done crowd. He suggests, but not in so many words, that traffic isn't everything, even as he repeatedly describes the combined reach of MarketWatch and WSJ.com as "massive" and proudly notes that the pair are behind only Yahoo (Research) Finance and MSN Money in unique visitors.

And if you're going to position yourself among the big boys, then clearly, traffic matters. (Full disclosure: CNNMoney.com, a sister Time Warner (Research) website on which Business 2.0 articles also appear, competes with MarketWatch, among other financial-news websites.)

So where did that lost traffic go? "The only thing Dow Jones may have underestimated," says MarketWatch co-founder Larry Kramer, "was the power of the CBS brand."

Kramer, who stayed on to oversee the sale before joining one-time MarketWatch partner CBS to run its digital-media division, says that MarketWatch, when partnered with CBS was actually a positive example of media synergy. The on-air promotion by the network and traffic driven to the site from CBSNews.com was lost the instant the site moved to Dow Jones.

And MarketWatch couldn't gain readers from WSJ.com, a subscription site which had a smaller audience. "MarketWatch already had those readers, because we were free," says Kramer.

Even Dow Jones' Crovitz admits, after a fashion, that the MarketWatch deal wasn't enough to get his company to critical mass online. "One of my biggest frustrations since we acquired MarketWatch was that, try as we have, we haven't found another one," Crovitz says. "We would love to buy more of them." Seller beware.

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