6: GANNETT CO. INC. P.O. Box 7858 Washington, D.C. 20044
REVENUE: $1.96 billion PROFITS: $223.9 million EARNINGS PER SHARE: $2.80 DIVIDEND: $1.33 ASSETS: $1.81 billion STOCKHOLDERS' EQUITY: $1.14 billion RETURN ON EQUITY: 20.7 percent (est.) EXCHANGE: NYSE EMPLOYES: 28,300 TOP EXECUTIVES: Allen H. Neuharth, chairman and chief executive officer; John J. Curley, president and chief operating officer FOUNDED: 1906
DESCRIPTION: Gannett, a diversified communications company, is the nation's largest newspaper chain. It publishes 85 daily newspapers, including USA Today, and 35 nondaily papers. Gannett also operates six television and 16 radio stations, as well as the largest outdoor advertising company in North America.
DEVELOPMENTS: Gannett is in the process of moving its corporate staff to its new Arlington headquarters from its former base in Rochester, N.Y. The company posted its 17th consecutive year of record earnings in the year ended Dec. 30. Revenue last year increased 15.1 percent and net income jumped 16.8 percent.
Gannett continued to lose money on its colorful national newspaper, USA Today, but the company said the paper is making significant advertising gains. The company's major problem with the paper since it was launched in 1982 has been skepticism on Madison Avenue that USA Today is the right forum for national advertisers. Circulation has reached 1.3 million, making it the third-largest daily newspaper in the nation.
Gannett made several major acquisitions over the last 12 months. On Jan. 31, the company announced an agreement in principle to acquire The Des Moines Register and Tribune Co.'s newspaper operations for about $200 million. When the transaction is completed, the combined daily circulation of Gannett's newspapers will be more than 5 million. On March 20, Gannett announced the expansion of its outdoor advertising operations with the acquisition of Triangle Sign Co. of Chicago. The transaction increased the company's presence in the Chicago area by adding more than 1,000 billboards and other structures.
Less than two weeks later, Gannett completed the purchase of Family Weekly Magazine from CBS Inc. for $42.5 million. Family Weekly, with a circulation of 12.8 million, is the nation's third-largest weekly magazine, behind Parade and TV Guide, and is distributed as an insert in 362 newspapers. Gannett also added to its radio group in 1984, purchasing KKBQ-AM and KKBQ-FM in Houston and WDAE in Tampa/St. Petersburg.
Newspapers continue to generate more than three-quarters of Gannett's revenue, which is expected to top $2 billion in 1985. 7: MCI COMMUNICATIONS CORP. 1133 19th St. NW Washington, D.C. 20036
REVENUE: $1.96 billion PROFITS: $59.2 million EARNINGS PER SHARE: 25 cents DIVIDEND: None ASSETS: $3.89 billion STOCKHOLDERS' EQUITY: $1.2 billion RETURN ON EQUITY: 5 percent EXCHANGE: OTC EMPLOYES: 10,570 TOP EXECUTIVES: William G. McGowan, chairman; V. Orville Wright, president and chief operating officer FOUNDED: 1968
DESCRIPTION: MCI is a telecommunications company that earns the bulk of its revenue from its long-distance services. Besides competing for a portion of the $45 billion-a-year domestic long-distance market, MCI provides service to various foreign countries, invests in cellular radio, paging systems and data networks, and provides international and domestic electronic mail services through its MCI Mail subsidiary.
DEVELOPMENTS: MCI, like other competitors of American Telephone & Telegraph Co., had a tough year in 1984 because of higher charges long-distance companies must pay local telephone companies. The competition for customers also grew more intense. MCI's 1983 profit of $155.7 million (89 cents) on revenue of $1.66 billion sank to $59.2 million (25 cents) in the fiscal year ended Dec. 31, a 61 percent drop, despite slightly higher revenue. The effort to attract customers under the "equal access" process, which allows users to reach any long-distance company without dialing lengthy codes, forced MCI to eliminate monthly fees and introduce volume discounts. But MCI gained precious market share, and the company now holds about 6.5 percent of the long-distance market -- second behind AT&T -- while AT&T's share dropped from about 90 percent to 85 percent, according to industry analysts.
After cutting long-distance rates by 6 percent earlier in 1984, MCI had to reverse gears and raise rates about 5 percent because of the increased costs of paying local phone companies for equal access connections. Also contributing to higher costs was a Federal Communications Commission decision delaying until next month residential fees for gaining access to long-distance networks. MCI also sank $1.2 billion into expanding its long-distance network, but it still had $865 million on hand at year's end.
The company introduced a new marketing structure in 1984 that geographically mirrors the seven regional telephone companies formed by the Bell System breakup. The company began serving several foreign countries, including Argentina, Belgium, Greece, Brazil, the United Arab Emirates and Britain, and expanded overseas with its MCI Mail electronic mail service. Finally, MCI began operating its first cellular phone service in Minneapolis and began paging services in New York and Chicago. 8: USAIR GROUP INC. Washington National Airport Washington, D.C. 20001
REVENUE: $1.63 billion PROFITS: $121.6 million EARNINGS PER SHARE: $4.46 DIVIDEND: 12 cents ASSETS: $1.62 billion STOCKHOLDERS' EQUITY: $737.3 million RETURN ON EQUITY: 16.5 percent EXCHANGE: NYSE EMPLOYES: 12,524 TOP EXECUTIVE: Edwin I. Colodny, chairman and president FOUNDED: 1939
DESCRIPTION: USAir Group is a holding company whose wholly owned subsidiary, USAir Inc., is an airline flying to 95 cities in the United States and Canada. The seventh-largest airline in number of passengers and 11th-largest in revenue per passenger mile, USAir is widely considered one of the best-managed airlines in the industry. USAir flies 133 jets, 59 percent of them less than 5 years old, and operates with Pittsburgh as its principal hub (the National Airport office is a corporate headquarters). It serves some of its routes through eight affiliated commuter airlines that operate under the name Allegheny Commuter.
DEVELOPMENTS: USAir recorded record results last year, increasing its earnings by 51 percent and its revenue by 14 percent over fiscal 1983. It had the best profit margins of the 11 major airlines in the year ended Dec. 31; its operating margin was 11.8 percent, while its net profit margin was 7.5 percent.
The airline took delivery of four Boeing 737-300 jets last year and said it plans to acquire 26 more by the end of 1987. USAir also received five more 737-200s in addition to the 18 it already owned. The airline added only one route last year and turned down the chance to fly between Pittsburgh and London -- a move analysts considered wise. But it has announced plans to add flights to Myrtle Beach, S.C., and Newport News, Va.
Last year, USAir cut its relatively high labor costs with a lower salary scale for newly hired, noncontract employes. Officials said the decline in fuel prices and the addition of longer routes also brightened the company's financial picture. As a result, USAir said it needs only to fill an average of 52 percent of its seats to break even. 9: POTOMAC ELECTRIC POWER CO. 1900 Pennsylvania Ave. NW Washington, D.C. 20068
REVENUE: $1.2 billion PROFITS: $168.2 million EARNINGS PER SHARE: $3.23 DIVIDEND: $1.94 ASSETS: $2.89 billion STOCKHOLDERS' EQUITY: $944.7 million RETURN ON EQUITY: 16.9 percent EXCHANGE: NYSE EMPLOYES: 5,335 TOP EXECUTIVES: W. Reid Thompson, chairman; Edward F. Mitchell, president FOUNDED: 1896
DESCRIPTION: Pepco is an investor-owned utility that provides electricity in the District, suburban Maryland and a small part of Northern Virginia.
DEVELOPMENTS: In 1984, Pepco's earnings per share jumped 21.4 percent to $3.23, and the company increased its quarterly dividend in early 1985 by 11.3 percent. Income from Pepco's wholly owned subsidiary, Potomac Capital Investment Corp., accounted for 14 cents of the per-share earnings. The subsidiary, which arranges borrowings and investments, was such a success, Chairman Thompson said, that the company plans to increase its nonutility investments and income.
Pepco began the year with a rate case pending in the District of Columbia and won a rate increase of $29.9 million, or 5.9 percent. As part of the agreement, Pepco sold its citywide street-lighting system to the D.C. government and is maintaining the system under a renewable five-year contract.
Largely because of a strong economy and the success of programs to market electric heating in the winter, electricity sales increased 4.5 percent over 1983. Pepco also reached a record summer peak of 4,490 megawatts last June. The company is aggressively trying to delay construction of a new generating facility until the mid-1990s by creating a variety of energy management programs for residential and commercial customers. As part of this effort, the company is expanding its program of time-of-use rates, in which customers are billed according to season, day of the week and hour of the day. These rates, from which Pepco currently derives 27 percent of its revenue, create incentives for customers to shift demand away from peak periods.
Other programs under which customers agree to curtail their electricity use in exchange for rate incentives or permit Pepco to cycle electricity on and off during the summer for short periods also are helping the utility defer construction. Older generating facilities are being refurbished, and high-volume customers are being encouraged to use thermal storage systems and to recycle garbage to generate power. Lower fuel costs also saved customers an estimated $110 million in 1984. 10: THE WASHINGTON POST CO. 1150 15th St. NW Washington D.C. 20071
REVENUE: $984.3 million PROFITS: $85.9 million EARNINGS PER SHARE: $6.11 DIVIDEND: 80 cents ASSETS: $645.8 million STOCKHOLDERS' EQUITY: $380.1 million RETURN ON EQUITY: 24.6 percent (est.) EXCHANGE: Amex EMPLOYES: 5,700 TOP EXECUTIVES: Katharine Graham, chairman; Richard D. Simmons, president; Donald Graham, publisher of The Washington Post FOUNDED: 1877
DESCRIPTION: The Post Co. is a diversified communications company whose holdings include The Washington Post; Newsweek magazine; four Post-Newsweek television stations; the Everett (Wash.) Herald; shares in a regional cable television sports network and a cellular mobile telephone company; Legi-Slate, a computerized information service on federal legislation, and the Stanley H. Kaplan Educational Centers, which provide tutoring for standardized tests.
DEVELOPMENTS: The Washington Post Co. enjoyed a year of financial success as its profits shot up 26 percent to $86 million.
The Post Co., which has been interested in buying other newspaper properties, was an unsuccessful bidder for The Des Moines Register and Tribune. Several other large media companies also bid for the company. Gannett Co. won the bidding with a $200 million offer for all of the assets of the Iowa newspaper company. After losing the Des Moines bid, The Washington Post Co. purchased a 17 percent stake in Cowles Media Co. Inc., owner of The Minneapolis Star & Tribune.
The company also acquired the Stanley H. Kaplan Educational Centers, a company that specializes in helping students prepare for standardized tests and admissions examinations. The price of the acquisition was estimated at $70 million. In January, The Post Co. sold a portion of its SportsChannel cable television network to CBS Inc. for about $25 million, representing about a 60 cents-per-share boost to 1985 earnings.
Newsweek magazine, historically a weak link in The Post Co.'s profit picture, saw earnings jump 44 percent last year to $22 million with advertising revenue up 13 percent to $247 million. Profit margins, which have been as low as 5 percent, reached nearly 8 percent in 1984 and are expected to be close to 10 percent in 1985, according to company officials.
Similarly, The Washington Post newspaper saw both a redesign in format and a profitability increase of 20 percent to $85 million in 1984 -- more than triple the paper's 1981 profits.
The Post-Newsweek television stations continued to be a major profit center for the company, and the stations in Detroit, Miami, Hartford and Jacksonville ranked No. 1 in their respective markets.
For the first quarter of 1985, The Post Co. reported a 53 percent increase in net income, excluding one-time gains from the sale of parts of its SportsChannel and cellular phone operations, and an 11 percent rise in revenue. Including those extraordinary gains, profits for the three months ended March 31 were up 175 percent over the 1984 quarter.