Post Now an 'Education and Media' Company

By Frank Ahrens
Washington Post Staff Writer
Thursday, December 6, 2007

Donald E. Graham rebranded The Washington Post Co. as an "education and media company" at a meeting with Wall Street analysts and shareholders yesterday, reflecting the rise of Kaplan Inc. within the company and the the decline of its flagship newspaper.

Kaplan, which The Post Co. purchased in 1984, now accounts for 50 cents of every dollar of company revenue, by far the top earner, according to the third-quarter earnings report released last month.

The change in description will likely have little short-term effect on the company's day-to-day operations, how it is viewed on Wall Street or among investors, analysts and company officials say. It simply was time to call the company what it is, Graham said.

"In the past 10 years, there has been quite a dramatic change in the composition of our company," Graham, the Post Co. chairman, said in an interview yesterday. "Most people who care about the company know that, but I wanted to make it clear."

Graham said he was waiting until Kaplan passed the 50 percent threshold to make the change. The newspaper division, primarily The Post, accounts for 21 cents of every dollar.

In recent years, The Post has lost subscribers and revenue as readers have turned to other media -- chiefly, the Internet -- for their news and information and advertisers have followed. Though is among the most popular news sites, and is profitable, it generates only about one-fifth of the ad revenue generated by the newspaper.

Kaplan is growing at about a 20 percent annual clip, as the company has diversified far beyond SAT test-preparation. When Graham took over The Post Co. from his mother, Katharine Graham, in 1991, Kaplan reported $78 million in annual revenue. This year, that figure is projected to exceed $2 billion; The Post Co.'s newspaper division revenue is likely to be less than half that.

The Post Co. also owns Cable One, a small cable television system with customers primarily in the South and Northwest that generates 15 cents of every dollar of company income; six television stations (8 cents of every dollar), Newsweek magazine and Arthur Frommer's Budget Travel magazines (6 cents), the Web magazine Slate and several smaller newspapers and publications.

"In 2008 and going forward, The Washington Post is really going to be an education and media company," Graham said yesterday at the 35th annual UBS global media and communications conference. "I don't say this for cosmetic reasons because I don't care about cosmetics. I do not say it to de-emphasize the importance to me or the importance to our results and to our shareholders of the media properties in the company. And this absolutely does not mean and will not mean in the future that The Washington Post and Newsweek mean less to me or the people running the company than they did."

The Graham family controls The Post Co. through a dual-class stock system.

Company officials believe The Post Co. will not be viewed differently by Wall Street, partly because Kaplan's rise within the company has been recognized for some time. Also, The Post Co. is more diversified than other education companies and may not be covered by the same analysts. Graham said yesterday he did not believe the rebranding would hurt the company's access to money.

Deutsche Bank noted that about 80 percent of The Post Co.'s profit-creating businesses -- almost everything but the newspaper -- have not been affected by the economic slowdown.

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