Post Co. Profit Falls 39 Percent
Saturday, May 3, 2008
The Washington Post Co. reported a 39 percent decline in first-quarter profit yesterday, as the company was hit by a large one-time charge at Newsweek magazine and the continued slump in its newspaper division.
For the first three months of the year, The Post Co. reported net income of $39.3 million ($4.08 per share) on revenue of $1.06 billion, compared with $64.4 million ($6.70 per share) on revenue of $985.6 million in the first quarter of 2007.
The company took a charge of $24.6 million ($1.60 per share) to fund a round of early retirement packages, or buyouts, at Newsweek. The company also is offering buyouts at The Post and will take the charge on second-quarter earnings. Both are funded by the company's pension plans.
The Post Co. continued to be fueled by its Kaplan education unit and Cable One. Revenue at Kaplan rose 14 percent, to $543.3 million from $475.8 million last year, led by Kaplan's higher-education division, which reported a 22 percent gain in operating income. Kaplan's other main divisions, test preparation and professional, showed declines in quarterly operating income. About a third of the company's revenue increase came from acquisitions; the rest came from growth.
At Cable One, which has about 1.4 million customers and is concentrated in the Gulf states and the Northwest, revenue was up 17 percent, to $174.3 million from $149 million, on increases in cable-modem, telephone and digital revenue.
The troubled newspaper division, led by The Post, reported $1.2 million in operating income for the quarter, down 92 percent from the first quarter last year. The division's revenue was $206.1 million, down 6 percent from $219.2 million last year. Print ad revenue dropped 11 percent, to $111.6 million from $125.1 million, caused largely by the continued decline in classified advertising.
Ad revenue at the newspaper division's online unit, primarily washingtonpost.com, rose 8 percent, to $27.1 million from $25.1 million, after several quarters of double-digit ad revenue growth.
"We had a disappointing first quarter as a result of several factors: steep losses in classified revenues driven by local economic factors, continued migration of revenue to the Internet and general softness as advertisers affected by the tough economy pull back on spending. But we are working hard to offer new opportunities to our advertisers both online and in print and to cut costs and increase efficiency where possible," said Katharine Weymouth, chief executive of Washington Post Media. Weymouth was appointed to the job, which oversees The Post and washingtonpost.com, in February.
Shares of Post Co. stock closed down $30.67, or 4.5 percent, at $652.83.