Post Co. Quarterly Earnings Fall 77%
Impairment Charges, Advertising Revenue Declines Fuel Drop

By Frank Ahrens
Washington Post Staff Writer
Thursday, February 26, 2009

Washington Post Co. earnings fell 77 percent in the fourth quarter of last year compared with the same period in 2007, as large impairment charges drove down net income.

The Post Co. yesterday reported fourth-quarter net income of $18.8 million ($2.01 per share) on revenue of $1.16 billion, compared with net income of $82.9 million ($8.71) on revenue of $1.13 billion in the fourth quarter of 2007.

The company's newspaper division, which includes the flagship Washington Post, reported a $14.4 million operating loss for the fourth quarter and a $192.7 million operating loss for all of 2008, 41 percent of which came from the cost of early-retirement packages taken by 231 Post employees. In the second quarter of 2008, the charge dragged The Post Co. into the red for the first time in its 37-year history as a publicly traded company.

The magazine division -- largely Newsweek -- reported a $10.9 million operating profit for the fourth quarter but a $16.1 million operating loss for 2008.

The biggest impact on Post Co. fourth-quarter earnings came from a $69.7 million write-down of CourseAdvisor, a Web site where higher-education companies advertise, that was bought by The Post Co. in 2007 and whose revenue and operating income have failed to hit expectations. The company also took a $65.8 million write-down on the value of its community newspapers and Everett (Wash.) Herald, owing to their diminished advertising revenue and outlook.

If those charges are backed out of The Post Co.'s earnings, the company's fourth-quarter 2008 earnings per share amount to $10.55, compared with $10.11 in the same period of 2007.

For all of 2008, The Post Co. earned $65.7 million ($6.87) on revenue of $4.46 billion, compared with $288.6 million in net income ($30.19) on revenue of $4.18 billion in 2007, a decline largely attributable to the impairment charges and the cost of the early-retirement package.

The growth-drivers continued to be its Kaplan education division, which accounted for 52 percent of 2008 revenue, and its Cable One cable company, which accounted for 16 percent of 2008 revenue. Kaplan's and Cable One's 2008 revenues were both up 15 percent for the year. Kaplan's higher-education division, its largest, had a 24 percent increase in enrollment in 2008 compared with 2007, a possible byproduct of recession-fueled layoffs.

The Post Co.'s newspaper division -- including The Post newspaper, Slate,, Express and other properties -- continued to suffer declining circulation and advertising spending, as the ongoing recession added to the declines in print advertising and readers fleeing to the Internet.

Excluding the impairment charges, the newspaper division reported a $24.9 million operating loss for 2008.

Print advertising revenue at The Post dropped 17 percent in 2008 compared with 2007. Daily circulation dropped 2.6 percent in 2008 and now stands at 633,100. On Sundays, a 3.3 percent decline puts circulation at 872,500.

The newspaper division provided 18 percent of the company's 2008 revenue. But the division's $801.3 million in revenue was down 10 percent from 2007.

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