Washington Post Q4 net down 77 per cent
26 Feb 2009
The fourth quarter net income of Washington Post Co, the publisher of the Washington Post and Newsweek magazine, fell 77 per cent to $18.8 million or $2.01 per share, compared with $82.9 million or $8.71 per share in the fourth quarter of 2007, impacted by a large impairment charge.
This is the ninth consecutive quarter of declining profit for the diversified media organisation whose principal operations include newspaper and magazine publishing, broadcasting, and cable television systems, Washington Post Co.
The company's newspaper division, including its flagship proerties The Washington Post newspaper, weekly news magazine Newsweek, Slate, Washingtonpost.com, Express and other properties, continued to suffer declining circulation and advertising spending, as the ongoing recession added to the declines in print advertising and readers fleeing to the Internet.
Like most publishers across the US, the company's publications have been losing advertising revenue to the internet for several years. During the past six months, impacted by recession, many of the traditional advertisement spenders such as retailers, banks, auto dealers and builders have been shying away from the print media.
Operating income for the quarter declined to $62.3 million, from $149.3 million in 2007. Operating revenue for the quarter were $1.16 billion, up 3 per cent from $1.13 billion in the year ago quarter.
For the full year of 2008, the company earned $65.7 million ($6.87) on revenue of $4.46 billion, compared to $288.6 million in net income ($30.19) on revenue of $4.18 billion, a decline largely attributable to the impairment charge.
Excluding the impairment charges, the newspaper division reported a $24.9 million operating loss for 2008.
The company's newspaper division, which includes the flagship Washington Post, dropped 13 per cent for the quarter, to $201.7 million from $232.6 million in the same period last year. Overall, the division lost $192.7 million in 2008, nearly half of which came from the cost of early-retirement packages taken by some 231 employees.
The company's magazine division - largely Newsweek - reported a $10.9 million operating profit for the fourth quarter but a $16.1 million operating loss for 2008.
The biggest impact on Post Co's earnings came from a $69.7 million writedown of CourseAdvisor, an online lead-generator business that was bought by it in 2007 whose revenue and operating income have failed to hit expectations. The company also took a $65.8 million writedown on the value of its community newspapers and Everett Herald, owing to their diminished advertising revenue and outlook.
CableOne, Kaplan seen growth drivers
The company's growth-drivers continued to be its Kaplan education division, which accounted for 52 per cent of 2008 revenue, and its Cable One cable company, which accounted for 16 per cent of 2008 revenue.
Kaplan's higher-education division, its largest, saw a 24 per cent increase in enrollment in 2008 compared with 2007, a possible byproduct of recession-fueled layoffs. In the education segment, Q4 revenue rose 13 per cent, to $609 million from $537 million in Q407. The greatest revenue gain was in higher education, but costs were higher too.
CableOne increased revenue for Q408 by 11 per cent, to $184.1 million from $165.3 million in Q407. The increase reflects rise in digital voice, high-speed data and digital cable. Operating income was up 37 per cent.
Print advertising revenue at The Washington Post dropped 17 per cent in 2008 compared with 2007. Daily circulation dropped 2.6 per cent in 2008 and now stands at 633,100. On Sundays, a 3.3 per cent decline puts circulation at 872,500.
The newspaper division provided 18 per cent of the company's 2008 revenue, but that figure was down 10 per cent compared with 2007.
The results for the last quarter included after-tax charges of more than $82 million to account for the eroding value of the company's newspaper holdings, the upcoming closure of a Maryland printing plant and restructuring costs.
However, the strength of Kaplan and Cable One has enabled the company to maintain its quarterly dividend at $2.15.
Washington Post Co. shares fell $2.70 to close at $382.30 on Wednesday.