Washington Post Co. fourth-quarter earnings drop 22 percent


In this file photo, flags wave in front of The Washington Post building in Washington, D.C. (Alex Wong/GETTY IMAGES)
February 24, 2012

The Washington Post Co. reported Friday fourth-quarter 2011 net income of $61.7 million, or $8.03 a share, down 22 percent from $79.0 million or $9.42 a share a year earlier as its Kaplan education division and flagship newspaper operations continued to shrink.

Profits at the company’s cable television unit and local television broadcast stations remained relatively stable.

Revenue for the entire company fell to $1.1 billion, down 10 percent from the fourth quarter of 2010.

Operating profits at The Post Co.’s once high-flying Kaplan education division sank to $32.3 million in the fourth quarter, down 51 percent from $66.2 million the year before. Revenue for the education division fell but still accounted for nearly 60 percent of the company’s revenue during the fourth quarter and the year.

Kaplan’s higher education unit is undergoing a wrenching contraction as it complies with Education Department regulations. Under criticism for recruiting techniques, it has offered first-time students the option of dropping out without paying fees during a trial period of up to a month. Student enrollments, online and on campuses, fell to 74,500 at the end of 2011, down 23 percent from 96,701 at the end of 2010.

But there were some signs of stabilization. Enrollment was just 5,107 lower at year-end than it had been Sept. 30, 2011, and new enrollments, which were down 37 percent for the year, increased slightly, 3 percent, in the fourth quarter.

Kaplan’s original test preparation business also showed improvement in the fourth quarter, earning $520,000 after losing more than $29 million earlier in the year. The unit has been struggling with increased competition, the growing use of online test prep materials and the costs of closing many of its centers.

The Kaplan division’s fourth-quarter results included a $9.6 million charge for severance and restructuring payments. The unit’s results the year before included $19.7 million in charges.

Operating income at The Post Co.’s newspaper division fell to $7.4 million in the fourth quarter, including a $2.4 million charge, compared with $19.9 million in the fourth quarter a year earlier.

The Washington Post newspaper showed ongoing weakness on several fronts. Print advertising at the newspaper slipped 6 percent in the fourth quarter. Despite big increases in online readership, online display advertising revenue at washingtonpost.com and Slate fell 15 percent and online classified revenue fell 5 percent for the fourth quarter. Daily circulation ebbed by 6.3 percent over the year to an average of 516,200, and Sunday circulation declined 4 percent to an average of 732,300. However, as a result, money spent buying newsprint fell 8 percent in the fourth quarter.

For the full year, The Post Co. earned $116.2 million, or $14.70 a share, compared with $277.2 million, or $31.04 a share, during the previous fiscal year ended Jan. 2, 2011. Revenue for 2011 fell 10 percent to $4.2 billion, down from $4.7 billion in 2010.

Excluding one-time charges, the company’s net income was $190.2 million, or $24.02 a share, in 2011, down from $336.2 million or $37.74 a share in 2010.

The company continued to buy back shares. It reduced the number of outstanding shares by 11 percent in 2011, spending $248 million to repurchase 644,948 shares of its class B common stock. On Sept. 8, the board of directors authorized the purchase of up to 750,000 shares, and as of Dec. 31 the company had bought more than a third of those.

Steven Mufson covers energy and other financial news.
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