Washington Post Co. Swings to First-Quarter Loss
Friday, May 1, 2009; 6:21 PM
The Washington Post Co. swung to a loss for the second time in less than a year as first-quarter earnings were dragged down by losses in its newspaper and magazine divisions and expenses in its education division, the company reported yesterday.
The company reported a net loss of $19.5 million ($2.04 per share) on first-quarter revenue of $1.05 billion, compared with net income of $39.3 million ($4.08) on revenue of $1.06 billion in the first quarter of 2008.
The Post Co. went into the red during the second quarter of 2008 for the first time in its 37-year publicly traded history, as a result of heavy charges related to early retirements, or buyouts, offered to employees of its newspaper division.
In the first quarter of 2009, however, buyouts were not to blame.
The newspaper division reported an operating loss of $53.8 million caused by a steep fall-off in advertising, something that is being felt across the industry. It had a first-quarter operating income of $1.2 million a year earlier. Print advertising revenue at The Post plummeted 33 percent in the first three months of this year compared with the year-ago period, and revenue at The Post's online properties -- chiefly washingtonpost.com -- dropped 8 percent in the quarter, the first decline in ad revenue at the online unit since at least 2004.
By comparison, first-quarter ad revenue decreased 28 percent at the New York Times and 34 percent at USA Today.
Further, The Post is offering another round of employee buyouts -- the fourth since 2003 -- that will be counted as an expense on quarterly results later this year.
In a piece of good news for the embattled paper, Monday-to-Friday print circulation during the first quarter of this year rose 0.7 percent, bolstered by strong home-delivery and inauguration sales (nearly 1.5 million extra copies), despite an increase in the cover price, to 75 cents. The uptick marked the first year-over-year increase in daily circulation since the first quarter of 2002.
Daily average circulation now stands at 642,000. Average Sunday circulation, however, dropped 1.7 percent, to 871,000during the first quarter.
In recent years, The Post Co. has received most of its revenue and earnings from its Kaplan Inc. education division and its Cable One cable division, and the same was true in the first quarter of this year, as the two units combined to generate 74 percent of company revenue. The newspaper division is now The Post's third-biggest revenue generator, providing 15 percent of company revenue.
However, at Kaplan, a 9 percent increase in revenue and a 27 percent increase in enrollment in its higher education business were offset by the expense of a $21 million advertising campaign and $16.9 million in restructuring charges, the bulk of which came from closing Score, Kaplan's unsuccessful after-school online-learning business. By the end of the second quarter of this year, The Post Co. anticipates converting 14 Score centers into Kaplan test-prep centers and closing the remaining 64. The computer centers have been undercut by the rise of personal computers in children's homes.
All of which translated to Kaplan reporting $11.1 million in first-quarter operating income, a 76 percent drop compared with the first quarter of 2008.
Cable One -- which has about 1.4 million phone, cable and Internet customers concentrated in the Gulf states and the Northwest -- bucked the recession by increasing revenue 5 percent and operating income 23 percent in the quarter.
The Post Co.'s Newsweek magazine reported a $20.3 million operating loss in the first quarter, compared with a $32.3 million loss a year earlier.
Revenue at the company's six television stations fell 21 percent for the quarter, to $61.2 million, while operating income fell 54 percent, to $12.1 million.