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Washington Post Co. earnings drop 50 percent

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The Washington Post Co. on Friday reported a 50 percent drop in second-quarter earnings, with revenue continuing to fall in the Kaplan Higher Education unit and both the online and print operations of the newspaper division experiencing declines in advertising revenue.

Overall profits for the quarter that ended July 3 totaled $45.6 million, or $5.74 per share, the company said, compared with $91.9 million, or $10 per share, a year earlier. Revenue increased at The Post Co.’s television broadcasting and cable television divisions.

Circulation for the print edition declined more than 4 percent in the first six months of 2011, The Post Co. said. Average daily circulation totaled 531,400, and average Sunday circulation was 745,300.

The earnings came in well above analysts’ expectations — by 5 cents a share — sending Washington Post stock soaring $14.63, or nearly 4 percent, to close at $382.85 in trading on the New York Stock Exchange on Friday.

The Post is facing two major head winds in its business: weakening ad revenue for its news products and shrinking enrollment at Kaplan.

Advertising revenue for print and online declined 12 percent and 13 percent in the second quarter, respectively.

Earnings for Kaplan Higher Education fell by nearly two-thirds because of decreasing enrollment, severance payments linked to workforce reductions and the increased costs of complying with federal regulators.

It was the third straight quarter of declines, after a series of probes and criticism of recruiting techniques used by Kaplan and other for-profit education companies.

The Post Co. said the new “Kaplan Commitment” program, which allows students to withdraw without paying tuition after a one-month trial period, continues to affect its bottom line, shaving an estimated $27 million from revenue during the first half of the year. New enrollments during that period declined 47 percent compared with the previous year.

Operating income for Kaplan Higher Education is expected to continue to decline for the remainder of 2011, the company said. At the same time, revenue for Kaplan’s test-preparation division declined 2 percent during the first half of 2011, with strong enrollment increases in the pre-college and nursing programs offset by a need to reduce prices and offer less-expensive online courses.

In The Post Co.’s cable television division, revenue increased slightly, but profits fell about 8 percent because of increased costs and promotional discounts. The company said the devastating tornado in May in Joplin, Mo., resulted in at least a short-term reduction in subscribers and an anticipated $3 million cost to replace damaged property and equipment.

© The Washington Post Company