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Executives with Dow Jones & Co., the unit of News Corp that includes The Wall Street Journal, have told the union representing its employees that it is preparing to restructure operations amid volatility in the ad market.

The Independent Association of Publishers' Employees, which has been engaged in contract talks with the company since the summer, said Dow Jones' negotiators on Tuesday backtracked on certain proposals in its latest offer, blaming business conditions.

The union said it was told to "expect a company restructuring announcement soon," although it said executives offered no specifics.

"Management, we were told, is looking at the company's cost base, the business as a whole and how it can proceed in the current business environment," the union said in a memo to employees it represents.

It is unclear what form the restructuring would take as a decision hasn't yet been announced. But it could include a reduction of head count across Dow Jones, according to people familiar with the matter.

The company has also been exploring a range of other options to reduce costs, including possibly combining or eliminating sections within the Journal, cutting the number of newspaper pages and closing or reducing noncore projects, the people said.

A spokeswoman for Dow Jones declined to comment.

The review comes amid a turbulent period for traditional publishers with a sharp decline in print advertising revenue this year and pressures in the digital ad market.

In the June quarter, News Corp reported a 5% decline in advertising revenue across its news and information services unit, which includes all of the company's newspapers in the U.S., U.K. and Australia. At the Journal, domestic advertising revenue fell 12%, according to News Corp Chief Financial Officer Bedi Singh.

According to the union, Dow Jones executives said there is no evidence that volatility in the advertising sales market will improve.

The union, which represents about 1,300 of Dow Jones' employees, has been operating without a contract since Oct. 1.

A main sticking point in negotiations has been wage increases, the union said. The company has offered a 2% increase each year for three years, according to the union.

The union said Dow Jones had postponed the last two negotiating sessions and then walked back parts of its offer at the meeting on Tuesday, including now requesting an option to terminate the proposed three-year contract for either the second or third year because business conditions required the need for flexibility. The union also said the company wants the new contract to go into effect the day it is ratified, as opposed to making any pay increase retroactive to the expiration of the prior contract.

Write to Lukas I. Alpert at lukas.alpert@wsj.com and Suzanne Vranica at suzanne.vranica@wsj.com

(END) Dow Jones Newswires

October 18, 2016 21:35 ET (01:35 GMT)

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