Post Co. Quarterly Earnings Decline 86%

The Washington Post Co. yesterday reported an 86 percent decline in third-quarter earnings compared to the same period last year, as a significant loss at the flagship newspaper division offset gains at the company's education and cable divisions.

However, the losses were largely the result of one-time charges; cost-cutting enabled the company and its newspaper division to emerge from a second-quarter dip into the red, The Post Co.'s first quarterly loss in its 37-year publicly traded history.

For the quarter, The Post Co. had net income of $10.3 million ($1.08 per share) on $1.13 billion in revenue, compared to net income of $72.5 million ($7.60) on $1.02 billion in revenue in the same period of 2007.

The company's stock closed up 8 percent at $426.80 yesterday, as Wall Street recognized the diminishing impact of the newspaper in The Post Co. and rewarded the surging growth of the company's education and cable divisions -- Kaplan Inc. and Cable One, respectively.

The company's newspaper division -- which includes The Post, the Herald in Everett, Wash., and several community papers -- reported an operating loss of $82.7 million for the quarter, largely resulting from a $59.7 million write-down on 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 cash-flow-positive by $3.8 million for the quarter, a reversal from last quarter, when it reported a loss.

Circulation of the Monday through 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. The company said it "found a more cost-effective way to print our products," so the move became unnecessary, said Ann L. McDaniel, a Post Co. senior vice president.

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 fell 8 percent.

Kaplan, which now provides 53 percent of company revenue, reported $602.7 million in third-quarter revenue, a 17 percent gain over last year, and $51.1 million in operating income, a 36 percent gain over the same period last year. Cable One -- the company's cable division with about 1.4 million cable, Internet and phone 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.