S& P Revises Post Co. Outlook to Negative

By Frank Ahrens
Washington Post Staff Writer
Tuesday, October 28, 2008

Standard & Poor's credit-rating agency reaffirmed the A+ long-term debt rating of The Washington Post Co. yesterday but lowered its ratings outlook from "stable" to "negative," citing concerns over continued declines in circulation and advertising revenue at the company's newspaper and magazine divisions.

Moody's rated The Post Co.'s long-term debt as A1 but also downgraded the company's ratings outlook from stable to negative.

Shares of Post Co. stock closed down 8 percent at $322.41 yesterday, well off their 52-week high of $880.

The Post Co. will release its third-quarter earnings on Friday. For the second quarter of this year, it reported its first operating loss since becoming a publicly traded company in 1971, as the cost of early-retirement buyouts for 231 employees dragged the company into the red.

In addition to the flagship newspaper, The Post Co. owns Kaplan education company, which provides half of The Post Co.'s revenue; Cable One cable company, seven television stations, Newsweek and Slate magazines and a number of smaller publications.

"The negative outlook reflects our moderately weakened view of the company's business diversity, given the expectation that the economy and secular pressures will likely require The Washington Post to absorb losses in the newspaper and magazine publication division," the S&P report read.

Also yesterday, the Audit Bureau of Circulations, which monitors newspaper sales, said that circulation of The Post's Monday through Saturday editions declined 1.9 percent for the six months ended Sept. 30. The average Monday-Saturday decline for the more than 500 papers surveyed during the period was 4.6 percent, the bureau said.

"We are very pleased that we were able to maintain our print audience in 2008 in this fragmented media environment, despite raising our prices from 35 cents to 50 cents earlier this year," Post President Stephen P. Hills said in a statement. "Although we lost some paid circulation from copies sold via newsstand and boxes due to our price increase, the audience we deliver for advertisers each day is unchanged from last year."

© 2008 The Washington Post Company