Post Co. Reports First Operating Loss in 37 Years
Saturday, August 2, 2008
The Washington Post Co. yesterday reported its first operating loss in 37 years as a publicly traded company, as deteriorating conditions at the company's flagship newspaper combined with the cost of payroll reductions to drag down second-quarter earnings.
Although company revenue rose 6 percent in the quarter, the gain was not enough to offset the $87.4 million cost of early-retirement packages offered to employees across the company in an effort to slash payroll costs. As a result, the company suffered an operating loss of $2.7 million for the quarter.
The red ink flowed largely from The Post Co.'s newspaper division -- the flagship Post, the suburban Gazettes, the Express, El Tiempo Latino and other papers -- which reported an operating loss of $96.7 million for the quarter, compared to $17.8 million in operating income in the same quarter of 2007.
It was only the second time in decades that the newspaper division dipped into the red.
"We're troubled by the results of the last six months, but as our shareholders know, we are focused on the long-term," said Katharine Weymouth, Post publisher and chief executive of Washington Post Media. "To that end, we've already made significant cuts in our expenses through a voluntary buyout and the closure of one of our printing plants.
"We're planning more expense cuts, but we're also investing in new features, both in print and on the Web, new Web sites and niche products," she added. "We will weather this storm and get back to the profitable business our shareholders expect."
Shares of The Post Co. closed down $19.50 yesterday at $598.75.
In addition to The Post, The Post Co. owns the Kaplan education company, Cable One cable company, six television stations, Newsweek, Slate and other publications. Newsweek reported an operating loss of $3.7 million for the quarter.
Strong performances by Kaplan and Cable One were not enough to prevent The Post Co.'s quarterly loss of 31 cents per share. In the second quarter of last year, The Post Co. reported a profit of $68.8 million ($7.19) on revenue of $1.05 billion.
Like almost all U.S. newspapers, The Post is losing subscribers and advertising. Gains in viewership and ad revenue at washingtonpost.com have not made up for the losses suffered by the ink-on-paper Post.
Unlike many other papers, however, The Post's dominance of local advertising has kept it in the black -- until recently, that is.
The newspaper division was responsible for $79.8 million of the total $87.4 million cost of the early retirements, or "buyouts" -- 231 staff members with the newspaper division took buyouts.