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Washington Post's Kaplan unit sees new enrollments sink 47 percent in 4th quarter
Part of the reason was the phasing in of the "Kaplan Commitment," a program that allows higher-education students to withdraw from courses after a month without paying tuition. No reason is required. The program applies to students who feel misled about courses, who do not have enough time, or who simply feel the courses are not right for them. The program is also designed to improve the track record of Kaplan students for repaying government loans and finding good jobs, two areas in which the Education Department is seeking improvement.
The earnings report Wednesday gave a first glimpse of the effect of the program. The company said 28 percent of eligible students left before the deadline, though The Post Co. said a majority of them left because of "dismissal" by Kaplan. It reiterated that if the program had been in effect for all of 2010, it would have resulted in the loss of $140 million in revenue, much of that coming directly off the company's bottom line.
The Post Co. said it hopes the money-back program will attract new students and improve the retention of students for other courses, but the company also said it was too soon to tell whether that would turn out to be the case.
Other for-profit education companies have also reported large drops in new enrollments, but Kaplan's was among the biggest.
The Kaplan higher-education area, which includes more than 70 campuses and online programs, saw a 12 percent drop in operating income because of lower average enrollment, the implementation of the new Kaplan Commitment program, severance costs resulting from shrinking its workforce and increased regulatory compliance costs.
In its original area of business, preparing students for standardized tests, Kaplan struggled against competitors during the fourth quarter. Kaplan said that it would reorganize to cope with the migration of students to online offerings and that it reduced the number of leased test prep centers, leading to $10.4 million in costs in 2010.
Kaplan's international professional training and postsecondary businesses also stalled in the fourth quarter, with profit sliding 10 percent because of weak operating results in Australia and Asia.
At The Post Co.'s flagship paper, performance improved but many trends remained negative. Daily circulation for 2010 averaged 550,900, down 7.5 percent from the 2009 average; Sunday circulation averaged 763,100, a slide of 8.2 percent.
Comparisons with the previous year were made difficult because of the company's fiscal-year accounting, which resulted in a 13-week fourth quarter in 2010 compared with a 14-week quarter at the end of 2009. But general, classified and retail advertising at the newspaper all declined, even after the different-length periods were taken into account, the company said.
Still, the newspaper division - which also includes Express, the Gazette newspapers, a Spanish-language paper and a small newspaper in Washington state - showed a $19.9 million profit in the fourth quarter, up from $3.2 million, thanks to cuts in payroll, depreciation and other expense reductions, and a 15 percent drop in newsprint costs as lower consumption more than offset higher newsprint prices.