Wash Post Co. Profits Down 15.7% On Plunging Newspaper Income

By: E&P Staff A big drop in newspaper operating income hammered earnings in the first quarter of 2007, the Washington Post Co. reported Friday, even though online revenue climbed again.

Washington Post reported a first-quarter net income of $64.4 million , or $6.70 a share, a 15.7% drop from the year-ago period's net income of $76.9 million , or $7.95 a share.

Revenue for the first quarter of 2007, ended April 1, was $985.6 million, up 4% from $948.3 million in 2006.

Overall revenue grew on strength in the education and cable television divisions, offsetting revenue decreases in its newspaper publishing, magazine publishing and television broadcasting divisions.

Operating income for the quarter plunged 33% to $92.0 million, from $137.8 million a year ago, Washington Post said. Operating results were down at each of its operating divisions, except the cable television division, which reported improved results for the quarter.

Newspaper revenue dropped 10% in the quarter to $219.2 million from $243.5 million for the first quarter of 2006. Newspaper division operating income plunged 53% to $14.9 million, from $32.0 million a year ago.

Print advertising revenue at newspapers fell 16% to $125.1 million, from $149.8 million in 2006.

"This decline is due to advertising revenue reductions in real estate, which was a very strong category in the first quarter of 2006, along with declines in classified recruitment, retail and zones," the company said. "These declines were offset by an increase in preprint revenues."

Classified recruitment advertising revenue fell to $15.8 million, from $21.8 million a year ago.

For the first quarter of 2007, Post daily and Sunday circulation declined 3.9% and 3.3%, respectively, compared to the first quarter of 2006. For the three months ended April 1, 2007, average daily circulation at the Post totaled 663,900 and average Sunday circulation totaled 927,400.

Online publishing revenue, generated primarily by washingtonpost.com, increased 10% to $25.1 million for the first quarter of 2007, the company said.

Display online advertising revenue grew 20%, and online classified advertising revenue on washingtonpost.com increased 4%.

Washington Post said its revenue at its education division revenue increased 16% to $475.8 million for the first quarter of 2007. On a same-property basis, education division revenue was up 9% in the quarter.

Revenue for the broadcast division declined 6% in the first quarter to $80.8 million, from $85.9 million in 2006, the company said. Broadcast operating income plunged 22% to $29.4 million.

"The decrease in revenue and operating income is primarily due to $6.3 million in incremental winter Olympics-related advertising at the company's NBC affiliates in the first quarter of 2006," Washington Post said.

Revenue fell 18% at the magazine publishing division, with the flagship Newsweek reporting a 14% decline in ad revenue, due to fewer ad pages in both the domestic and international editions.