The decision of Dow Jones & Company to turn to a non-newsman as its next chief executive officer breaks a century-old tradition at the company that publishes the Wall Street Journal – and resolves one of the most closely watched succession questions in the newspaper industry.

Dow Jones said Richard Zannino, its chief operating officer, would take over the chief executive duties of its chairman, Peter Kann, who will remain as chairman until 2007, and the Journal’s publisher, Karen Elliott House, would leave the company by mutual agreement in February, after a transition. Shares of Dow Jones rose 10% on the news yesterday.

For Mr. Kann the appointment signals the beginning of the end of one of the most extraordinary careers in American journalism. The Journal’s chairman began working for the Princeton, N.J., Packet when it was owned by the man who built the modern Wall Street Journal, Bernard Kilgore, went to work for the Wall Street Journal full-time after graduating from Harvard College in 1964, and has worked for the Journal ever since.

A master stylist who learned narrative at the feet of his father – the leading historian of the Habsburg empire – Mr. Kann won a Pulitzer Prize for his coverage of the war that created Bangladesh and was widely admired for his coverage of the Vietnam war. While based in Hong Kong, Mr. Kann conceived, with several other Dow Jones executives, of the possibilities of expanding the Wall Street Journal to a global newspaper, starting with an Asian edition issued in the then British Crown Colony of Hong Kong. The Asian Wall Street Journal was launched in 1976 and, in 1978 Mr. Kann returned to New York as associate publisher of the Journal and heir apparent to its chairman and chief executive officer at the time, Warren Phillips, another newsman turned executive.

Mr. Kann’s tenure saw not only the launch of the Wall Street Journal/Europe but the launch of new sections of the Wall Street Journal’s U.S. edition. It was on Mr. Kann’s watch that Norman Pearlstine rose to become managing editor of the Journal and that Paul Steiger, his successor, emerged as one of the longest-serving managing editors in the newspaper’s history. It was also on Mr. Kann’s watch that Robert Bartley, the paper’s storied editor for more than 30 years, took the paper into some of its most contentious battles: campaigning for supply-side economics, an end to the nuclear missile targeting policy known as mutual assured destruction, and a campaign for the impeachment of President Clinton for providing misleading testimony in the Paula Corbin Jones lawsuit.

Critics, however, said Mr. Kann’s vision as a journalist was not matched by his skills as a businessman, though some of the problems from which Dow Jones suffered resulted from decisions made prior to Mr. Kann’s tenure as CEO. One was the acquisition of a market data company called Telerate, which failed and was sold in 1998. Mr. Kann is credited with launching the Wall Street Journal Online, the largest subscription site on the Web, with 764,000 paying subscribers.

Mr. Kann’s refusal to require that his wife leave the company following their marriage was widely criticized within Dow Jones, though Ms. House had been one of the paper’s star reporters and won the Pulitzer Prize in international reporting.

Mr. Zannino, 48, joined the company as part of an effort to shore up its business management and was chief operating officer for more than three years. The Bloomberg News Service noted yesterday that Mr. Zannino, who holds an MBA, takes over a publishing company that has posted five straight quarters of profit declines as it struggles to keep advertisers from defecting to the Internet and cable television. Mr. Kann, 63, will remain chairman until 2007, Dow Jones said yesterday in a statement.

“The company needed someone with strong financial experience,” the wire quoted Peter Appert, a publishing analyst at Goldman Sachs in San Francisco, as saying. Mr. Appert has an “underperform” rating on the shares and doesn’t own them, Bloomberg reported. “Maybe what the company needs as CEO isn’t a journalist but an extraordinary business person.”

Bloomberg quoted Dow Jones as also saying yesterday that it would beat its fourth-quarter profit forecast on improved results at the Wall Street Journal, the second-biggest American newspaper by circulation, and the Wall Street Journal Online. The company said it expects earnings “in the high 40 cents per share range,” compared with 43 cents a year earlier.

The stock rose $3.65 to $39.14 at 4:01 p.m. in New York Stock Exchange composite trading, the biggest rise since August 15,when the shares surged 11% on reports that members of the Bancroft family, which controls the company with a majority of its restricted Class B shares, were pressing to sell the company. Mr. Zannino’s elevation may work to quell talk the Bancroft family is poised to sell.

The change in management may portend a restructuring of the company. Mr. Zannino said he’s considering eliminating the publisher job vacated by Ms. House and making other changes to the business.

Mr. Zannino holds an MBA from Pace University in New York. He joined Dow Jones in February 2001 as chief financial officer and in July 2002 he became the company’s chief operating officer. Mr. Zannino earlier held positions at Liz Claiborne Incorporated, General Signal Corporation, and Saks Fifth Avenue.