Washington Post Co. Earnings Plummet in Third Quarter
Friday, October 31, 2008; 10:52 AM
The Washington Post Co. today reported an 86 percent decline in third-quarter earnings compared with the same period last year, as a significant loss at the flagship newspaper offset gains at the company's education and cable divisions.
For the quarter, The Post Co. had net income of $10.3 million ($1.08 per share) on $1.1 billion in revenue, compared with net income of $72.5 million ($7.60) on $1 billion in revenue in 2007.
The company's newspaper division -- which includes The Post, the Everett (Wash.) Herald and several community papers -- reported an operating loss of $82.7 million for the quarter, largely resulting from a $59.7 million goodwill impairment charge at the Herald and the small papers, reflecting their diminished value. The loss also includes $12.5 million in accelerated depreciation of The Post's College Park printing presses.
Excluding these items, the newspaper division was cashflow-positive by $3.8 million for the quarter, a reversal from last quarter, when it dipped into the red. In the second quarter, The Post Co. reported its first loss since becoming a publicly traded company in 1971, as earnings were dragged down by a $79.8 million charge to pay for early retirement buyouts taken by more than 230 Post employees, an effort to reduce payroll costs.
Circulation of the Monday-Saturday editions of The Post dropped 2.4 percent through the first nine months of the year, with Sunday circulation dropping 3.6 percent. The Post's daily circulation now stands at 623,100 with Sunday at 872,700.
The company still intends to close its College Park plant next year. However, plans to move presses to the company's Springfield plant have been abandoned.
For the first nine months of the year, The Post Co. had $46.9 million in net income on $3.3 billion in revenue, compared to $205.7 million in net income on $3.1 billion in revenue during the same period last year.
Print advertising revenue at The Post dropped 14 percent for the quarter to $97.2 million, and was down 16 percent for the first nine months of 2008, to $308.6 million. The company's online revenue -- generated chiefly by washingtonpost.com -- grew 13 percent to $30.8 million in the quarter, although online classified revenue dropped 8 percent.
Kaplan Inc., The Post Co.'s education division, which now provides 53 percent of company revenue, reported $603 million in third-quarter revenue, a 17 percent gain over last year, and $51 million in operating income, a 36 percent gain over the same period last year. Cable One -- the company's cable division with about 700,000 subscribers largely in the Gulf States and the Northwest -- reported $181.8 million in third-quarter revenue, a 15 percent gain over last year, and $41.6 million in operating income, a 40 percent gain over the same period last year.
Revenue at The Post Co.'s six television stations in the third quarter was essentially flat at $78 million, but operating income declined 16 percent to $30.1 million. The company purchased a seventh station this year, Miami's WTVJ, and expects the deal to close by the end of the year.
At The Post Co.'s magazine division, largely Newsweek, third-quarter revenue was down 4 percent to $60 million. However, the division's operating income rose from $7 million in the third quarter of last year to $9 million in the same period of this year, thanks to cost-cutting measures.