Freed from running a declining newspaper, the company will be able to focus on making its education business more profitable, analysts said.
“The businesses that now remain are growth businesses,” said Raul Fernandez, a local investor who sits with Graham on the board of the DC College Access Program. “They are solid, cash-flow-earning businesses. And, with the newspaper gone, now the Grahams and shareholders are going to get the benefit of that unleashed value.”
Although the transformation of the company rewards shareholders — the stock is up more than 50 percent this year — others worry about whether the Graham family will remain a force in the community without a powerful newspaper at their backs.
“Washington is a strange bird in terms of our politics,” said Donald L. Hense, founder and chief executive of Friendship Public Charter School. “Make sure you get to know who we are. I understand [Bezos is] in Washington state, but Washington, D.C., is not Washington state.”
All told, the newspaper division, the majority of which is being sold, constituted 15 percent of the $4 billion in revenue The Washington Post Co. generated in 2012. The newspaper publishing division lost $54 million last year, although the company reported a profit of $131 million. The company’s remaining holdings include real estate assets and small media properties, including Foreign Policy, the online magazine Slate, TheRoot.com and the Facebook application Social Reader.
The largest part of the remaining company — and the once-great hope for its future — is Kaplan, an education and test-preparation service that accounts for 55 percent of its revenue. But Kaplan has been restructuring as it faces congressional scrutiny of the for-profit education sector, and enrollment and operating profits have dropped rapidly.
One growth center will be the company’s television and cable properties. Phoenix-based Cable One, which has 720,000 customers in 19 states, accounts for 20 percent of Post Co. revenue and 37 percent of cash generation. Six local television stations in top markets such as Miami, Houston and Orlando produced 10 percent of revenue last year but account for more than half the company’s cash flow.
“Shedding its newspaper assets should only help to highlight the value of its cable and broadcast operations,” Westcott Rochette, a media analyst with S&P CapitalIQ, said in an analyst’s report Tuesday. He has a 12-month target stock price of $640, which includes the $250 million from Bezos. Washington Post shares closed Tuesday at $593, up 4.27 percent after the sale was announced Monday.