Washington Post Co. Earnings Preview

By: MICHAEL LIEDTKE Newspaper and magazine publisher Washington Post Co. is scheduled to report its fourth-quarter results before the stock market opens Wednesday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Washington Post likely benefited in the final quarter of an otherwise abysmal year from the traditional advertising blitz during the holiday shopping season and an influx of readers looking for news about the presidential election and transition to the Obama administration.

But profit will probably slide from the year-ago period. That would mark the Washington-based company's ninth consecutive quarter of declining profit.

Times are so tough that the Post's longtime chief executive, Donald Graham, made his biggest news of the quarter in December when he joined the board of Facebook Inc., which runs an online social hangout that shares information among people with common interests ? a role often filled by newspapers.

Like most other newspaper publishers, the Washington Post Co. is being undermined by the Internet. As more readers are turning to the Web for news and other information they used to get from print publications, advertisers are shifting their spending online too.

The advertising slide has accelerated in recent months as the economic havoc in financial services, automotive and real estate industries caused traditional big-spending companies in those sectors to clamp down on their marketing budgets.

Washington Post's pain would have been even worse if not for its aggressive push online. But that was probably not enough to fatten the company's profits, largely because online ads don't generate as much revenue as those published in print.

Furthermore, an uptick in newsstand sales still weren't enough to offset an overall decline in print readership. For instance, Newsweek's total paid circulation during the six months ended in December dropped 13 percent to 2.7 million, according to the Audit Bureau of Circulations.

Unlike some of its peers, the Washington Post has more insulation from the media turmoil because it owns a large educational services division and cable television franchise that are still thriving. Combined, the educational and cable TV operations raked in revenue of $2.26 billion through the first nine months of 2008, a 15 percent gain from the prior year. Combined revenue in the company's newspaper and magazine publishing dropped 9 percent to $776 million during the same period.

BY THE NUMBERS: In an reflection of the Washington Post Co.'s struggles, only one analyst provided a fourth-quarter estimate to Thomson Reuters. The analyst, Craig Huber of Barclays Capital, projects earnings of $8.17 per share on revenue of $1.17 billion. Washington Post earned $8.71 per share on revenue of $1.13 billion at the same time in the prior year.

WHAT'S AHEAD: Management will remain focused on figuring out new ways to make money online while trying to lower the costs for putting out the company's print products.

STOCK PERFORMANCE: Washington Post's stock price plunged 30 percent in the fourth quarter, bringing the decline for all of 2008 to 51 percent.