Washington Post Co. Profit Drops 39 Percent
By Frank Ahrens
The Washington Post Co. reported a 39 percent decline in first-quarter profit yesterday, as the company was hit by a large one-time charge at its Newsweek magazine and the continued slump at its newspaper division.
For the first three months of the year, The Post Co. reported profit of $39.3 million ($4.08 per share) on revenue of $1.1 billion, compared with $64.4 million ($6.70 per share) on revenue of $986 million in the first quarter of 2007.
The company took a charge of $25 million ($1.60 per share) to fund a round of early retirement packages, or buyouts, at Newsweek. The company is currently offering buyouts at The Post and will take the charge on second-quarter earnings. Both are funded by the company's pension plans.
The Post Co. continued to be fueled by its Kaplan Inc. education and Cable One cable companies.
Revenue at Kaplan rose 14 percent in the quarter to $543.3 million, up from $475.8 million, led by Kaplan's higher-education division, which reported a 22 percent gain in operating income. Kaplan's other main divisions -- test prep and professional -- showed declines in quarterly operating income. Five percent of the company's revenue increase came from acquisitions; the rest came from growth.
At Cable One, which has about 1.4 million customers and is concentrated in the Gulf states and Northwest, revenue was up 17 percent in the quarter to $174 million, thanks to increases in cable modem, telephone and digital revenues.
The troubled newspaper division, led by The Post, reported $1.2 million in operating income for the quarter, down 92 percent. Division revenue was $206 million, down 6 percent from $219 million. Print ad revenue dropped 11 percent for the quarter, to $112 million, caused largely by the continued decline in classified advertising.
Ad revenue at the newspaper division's online unit, primarily washingtonpost.com, rose 8 percent in the quarter, to $27 million following several quarters of double-digit ad revenue growth.
"We had a disappointing first quarter as a result of several factors: steep losses in classified revenues driven by local economic factors, continued migration of revenue to the Internet and general softness as advertisers affected by the tough economy pull back on spending," Washington Post Media chief executive Katharine Weymouth said.
Weymouth was appointed to the job, which oversees The Post and washingtonpost.com, in February. "But we are working hard to offer new opportunities to our advertisers both on-line and in print and to cut costs and increase efficiency where possible."
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