Washington Post Co. Returns to Profitability
Friday, July 31, 2009; 9:57 AM
The Washington Post Co. returned to profitability in the second quarter and the flagship newspaper division narrowed its first-quarter losses largely because of cost-cutting, according to earnings released Friday morning.
The Post Co. reported $11.4 million in net income ($1.30 per share) on $1.13 billion in second-quarter revenue, compared with a loss of $2.7 million (31 cents) on $1.11 billion in revenue in the same period last year, a 2 percent increase in revenue.
The Post Co. is now largely an education company -- its Kaplan Inc. education unit provided 58 percent of the parent company's second-quarter revenue, as opposed to the newspaper division, which chipped in 15 percent. Nevertheless, the ongoing decline in advertising revenue at The Post -- exacerbated by the recession -- had been so sharp that it dragged the entire company into the red in the first quarter, despite continued growth by Kaplan and The Post's Cable One cable company.
In the second quarter of this year, the newspaper division -- which includes The Post, Washingtonpost.com and some smaller publications -- recorded an $89.3 million loss.
However, that figure includes a one-time $56.8 million charge related to early-retirement (or "buyout") offers taken by 220 Post employees in the quarter, a cost-saving measure. The buyouts are paid from The Post Co.'s pension fund.
Subtracting the buyout charge reduces the newspaper division's second-quarter operating loss to $32.5 million. By comparison, the first-quarter newspaper division result -- which did not include a buyout charge -- was a $53.8 million loss. If $14.3 million in accelerated second-quarter depreciation is subtracted (compared with $13.4 million in the first quarter), the second-quarter loss is reduced to $18.3 million, compared with an appreciation-adjusted first-quarter loss of $40.3 million.
For the first time, The Post Co. estimated the annual savings of the buyouts: $20 million per year after this year.
Second-quarter newspaper division ad revenue was down 20 percent compared with the same period last year, and online ad revenue was down 9 percent from the second quarter of last year. However, online display advertising ticked up 2 percent.
Operating expenses at the newspaper division were cut by 12 percent in the second quarter of this year, compared with last year.
The pace of circulation decline has slowed significantly. The Post's daily circulation declined 1.5 percent in the first six months of 2009, while Sunday circulation dropped 2.6 percent. Daily circulation now stands at 622,700, with Sunday circulation at 858,100.
Elsewhere in the company, second-quarter revenue at Kaplan climbed 13 percent with a 23 percent gain in operating income.
At Cable One, revenue was up 4 percent, while operating income was down 1 percent.
The company's six television stations reported a 20 percent drop in revenue and a 52 percent drop in operating income.
The magazine division, which includes Newsweek and other titles, reported a $5 million operating loss and a 27 percent decline in revenue.