An earlier version of this story incorrectly stated the amount that The Washington Post Co.'s pension plan is overfunded. At the end of 2008, it was overfunded by $320 million. The company reported a pension credit of $25.7 million on its income statement for 2008, and projects that credit will fall to $6 million by the end of 2009, partly as the result of a 25 percent drop in pension fund investment returns in 2008. This version has been corrected.
Washington Post Newspaper Facing Losses, Chairman Says
Thursday, March 26, 2009
The Washington Post newspaper will follow a money-losing 2008 by losing "substantial money" in 2009 and will continue to cut costs, Post Co. Chairman Donald E. Graham said in a letter to shareholders included in the company's annual report released yesterday.
The Post Co. newspaper division -- which is dominated by the flagship paper but also includes the Everett (Wash.) Herald, Express and a number of smaller papers -- reported a $24.9 million operating loss last year.
As a whole, The Post Co. -- which also owns the Kaplan education company, Cable One cable company, six television stations, Newsweek, Slate and a number of other publications -- saw its 2008 revenue rise compared with 2007, though earnings dropped, because of charges related to the falling value of assets and one-time charges.
"The familiar problems of the newspaper industry -- declining readership and the loss of classified -- are now made worse by bankrupt advertisers," Graham writes. "The newspaper will lose substantial money in 2009. Some will be non-cash accelerated depreciation because we will be closing a printing plant. Most will be real losses."
Newsweek "has a plan it hopes will change the direction of the business and put the magazine on a better and more profitable course," Graham writes.
Graham said The Post Co. is willing to lose money on The Post and Newsweek "as we did at Kaplan from 1994 to 2001" if the two publications show that they have a plan to achieve profitability.
Graham writes that "The Post will get every chance" to become profitable again.
"It sounds as though there's a commitment to the paper, which obviously doesn't surprise me," newspaper analyst John Morton said. "Clearly, the principal owners are committed to staying in the business even if it's not consistently profitable."
Nevertheless, Graham warns in the letter: "Post management knows that losses must diminish in 2010."
Despite the grim news, Graham is hopeful for the future of news as a business.
"Ten years from now, it is highly likely that customers will be getting news from profitable institutions staffed by talented reporters and editors," Graham writes. "We're going to try to show a way."
Kaplan and Cable One combined provide almost 70 percent of current Post Co. revenue. In 1998, Graham writes, The Post, Newsweek and the television stations provided 75 percent of company revenue.
The Post Co. said its pension was overfunded by $320 million at the end of 2008.
The company reported a pension credit of $25.7 million on its income statement for 2008, and projects that credit will fall to $6 million by the end of 2009, partly as the result of a 25 percent drop in pension fund investment returns in 2008.