The Washington Post Co. has ruled out very little in the wide array of potential business opportunities now possible because of the worldwide communications revolution, according to the firm's new president and chief operating officer.
Richard D. Simmons, a top executive of Dun and Bradstreet Corp. until he took over the Washington company's presidency almost six months ago, emphasized in an interview his assessment of overall management goals over those initial weeks as: "Everyone wants to grow. The question is how best to marshal resources . . . but we'll do it."
Simmons also stated it is premature to outline specific business goals for various sectors of the communications company, since Post Co. executives are in the midst of detailed analyses of future opportunities, at the end of a rather difficult year when three unprofitable subsidiaries were sold.
He said flatly, however, that the Post Co. "most definitely already is and wants to be in a leadership role" for the broad communications business.
"Technology is changing rapidly and communications companies are attempting to adapt their offerings . . . my guess is that companies that establish a leadership role in the next five to 10 years, the ones that best adapt new technologies and figure out which market niches they can best serve" will become the dominant suppliers of information services, Simmons added.
Although industry analysts said the Post Co. is talking to at least one newspaper about acquisition and is studying other technology investments, Simmons said nothing has reached the stage of formal negotiations.
To Wall Street analysts who follow communications companies for investors, the Post Co. has been something of a mystery in recent years because of a low business profile at a time when its media properties have gained worldwide attention.
The Washington firm was one of the first major newspaper publishers to begin diversification, entering television broadcasting in the late 1940s and buying Newsweek magazine in 1961. But since then, the firm's principal businesses have remained The Washington Post newspaper here, Newsweek magazine and broadcasting properties (The Post Co. owns four TV stations).
The Post Co. has experienced mixed results with new ventures it has tried: It purchased two other newspapers in the past decade (and sold one recently), purchased a major TV station and exchanged another, and started a new magazine (also sold recently).
Throughout, however, the local company's management has focused attention on existing properties and Simmons said that focus remains.
"Our main thrust has to be with existing franchises, relating to the accurate, authentic, individual expression of views related to the news, with a special expertise related to Washington events and international events," said Simmons in describing how the company is seeking to diversify at this time.
These franchises are The Post newspaper "with a very powerful" Washington concentration, Newsweek editions in the United States and abroad for worldwide focus, and TV stations in four markets--Detroit, Miami, Hartford, Conn., and Jacksonville.
In discussing how best to use these franchises to provide information on a larger scale, Simmons ruled out only a couple of possibilities. He virtually dismissed, for example, the possibility of publishing a national newspaper such as The New York Times is doing with regional editions or like Gannett Co.'s projected USA Today, scheduled to debut here next fall.
"We are far more interested in putting selected information in The Post in various communities around the country," through electronic means, he said.
Simmons also said the Post Co. remains uninterested in competitive bidding for cable television systems in large metropolitan areas. "We have no particular interest in digging up streets, nor is it cable bidding in keeping with the company's role to be a contestant in hotly debated franchise fights . . . from a financial standpoint, it's hard to figure out how to make much money since cable operators are giving away basic cable services and volunteering extra services."
But the Post Co. would be interested in acquiring existing cable systems in communities where the systems were designed to provide good TV reception from distant signals, Simmons said. Such operations could be used by the company to experiment with home delivery of information from Post Co. resources, he added.
"We avoided some of the mistakes others made and are in a position to appraise cable operations anew," Simmons said of the past decade.
Now, he added, a company-wide task force has been established to provide overall direction for electronic information activities. "There is a determination to be involved with cable, providing initially news and information, but I see no reason whatsoever that there's not a need for a shopping channel," which would have ads also sold and presented by the Post Co., Simmons said.
Already, negotiations have started with operators of Washington-area cable system about bringing Washington Post reporting into their customers' homes. National distribution would follow if local cablecasting is successful, Simmons said. Newsweek already has started a weekly news report of its own for national distribution and one cable network recently signed up for a weekly program produced by the Post Co. TV station in Detroit (WDIV).
In other areas, Simmons said Post Co. management will move to acquire existing properties "in the right market and at the right price" and to start new ventures. Specifically, he said:
* An afternoon newspaper in Washington, where The Star left a vacuum when it was closed last August by Time Inc., is "a matter under constant evaluation . . . my own thoughts are that it's quite obvious if there appears to be a real market need, I can't imagine anyone more suited than The Washington Post to provide it," he said of a possible afternoon daily here, for which public opinion sampling and other market research have been conducted.
* Even though Inside Sports magazine was not as successful as anticipated, the Newsweek division will continue to explore other new magazines and is "committed" to publish other periodicals in the future.
* The company is interested in buying additional TV stations (it could add one VHF and two UHF stations before hitting the maximum allowed by government rules on ownership), as well as other newspapers, at prices the company is willing to pay. Currently, the firm owns two newspapers--The Post here and the Herald in Everett, Wash.
* On radio broadcasting, "we have not made a determination in favor or against." Previous radio stations owned by the Post Co. were sold (or in the case of WHUR-FM at Howard University, given away) in the 1970s.
* TV programming continues to be a major thrust, with adventure films, entertainment series and talk programs among projects started last year and planned in 1982.
In general, Simmons said he thinks existing media outlets have a strong future. Of TV, for example, he said, "I do not share the view of some that the day of successful over-the-air broadcasting has passed. It will continue to be a very good business throughout our lifetime, the mass medium for the foreseeable future."
The most successful TV stations will emphasize local news reporting, such as Post-Newsweek stations do now, he added. Simmons said he expects TV station prices to remain high for a couple of years, after which there might be a decline in some markets out of "fear of erosion" of business. It is in such markets, at the right prices, that the Post Co. might find a TV station to be "very attractive."
As for newspapers, Simmons said he does not expect "the mass of advertisers" who currently use printed periodicals for classified and other ads to switch entirely to home electronic distribution. "Certain of those advertisers will be more than happy to avail themselves of electronic presentation," but not in large volume, he predicted.
The 46-year old Simmons has experience in these areas, because his former employer, Dun and Bradstreet, has moved rapidly into electronic dissemination of business news and information it has gathered over the years. A graduate of Harvard College and Columbia University's law school, Simmons joined D&B in 1969 and became vice president and general counsel the following year. He was a key executive of D&B and its subsidiaries, and was vice chairman of the board when tapped by the Post Co. to move to Washington last Sept. 1.
Since his arrival at the Post Co., the firm has sold an unprofitable newspaper in Trenton, N.J., and Inside Sports magazine, although Simmons said he can't be credited with making these decisions to cut losses and concentrate resources on other ventures; a firm which represents broadcasting stations with advertisers was sold earlier in the year.
Asked to assess the lessons from these cutbacks in company operations, Simmons said that in the case of Inside Sports: "Quite obviously there needs to be very comprehensive internal evaluation of the marketplace and its needs before launching a new product . . . the failure rate is enormously high. We did not do the kind of job of evaluation that by hindsight was needed." The major problem was the expectation that a quality monthly sports magazine would sell well on newsstands; it did not, and that forced the company into expensive subscription promotion costs, "totally changing the economic nature of the business."
In Trenton, he said, "market conditions changed rather dramatically during the period we were involved the last seven years . . . . We attempted to deliver a quality paper, but we couldn't deliver a quality paper at a profit." The Trenton Times was purchased by former Washington Star owner and Riggs National Corp. Chairman Joe L. Allbritton, who has reduced the paper's staff in an effort to make it profitable.
In the year just ended, Post Co. profits were reduced by $2.1 million (15 cents a share) because of the sale of money-losing businesses. Still, overall profits of $32.7 million ($2.32 a share) were stronger than had been forecast, down 5 percent from $34.3 million ($2.44) the previous year.
A strong fourth-quarter gain attributed mainly to The Post newspaper helped, and overall company revenues for the year rose 14 percent to $753 million; Post newspaper revenues jumped 18 percent to $368 million, reflecting in part dramatic changes in circulation that took place after The Star was closed. Post circulation soared more than 20 percent, adding to production costs and temporarily trimming the paper's profitability. Ad rates were boosted last fall and are scheduled to rise again on April 1, to reflect the higher readership.
Simmons said he doesn't expect a substantial change in economic conditions during the first half of this year but he hopes for progress in the final six months. But the Post Co. itself "should have a good year, absent an economic climate much worse than I forecast." Eliminating the drain on profits from businesses sold last year will have an impact, but The Post newspaper also should do very well and "I look for substantial progress in broadcast operations . . . with Miami very strong and Detroit coming back" from a previously weak position in that depressed market, Simmons added.
Newsweek is more difficult to forecast, with advertising pages to date in 1982 roughly the same as last year, "but experience has taught us that in the long run, the economy will dictate the extent of automobile" and other ads, he said. In 1981, Newsweek ad pages were up marginally from the previous year but ad revenues jumped about 14 percent to $200 million--third-highest in the industry, behind only Time ($253 million) and TV Guide ($239 million).
On another question, Simmons said he sees "no conflict" in serving on other corporate boards while in top management of a media company. He recently was elected to the board of Union Pacific Corp., owner of a major railroad and energy businesses.