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Washington Post Company (WPO)Stock (Media & Entertainment Industry, Newspapers Industry)WPO's newpaper and magazine divisions, have suffered in recent years as the growth of Internet advertising has siphoned a steady flow of advertising dollars away from traditional print media. Although WPO is seeking to recapture some of these dollars by strengthening its own online presence, overall growth rates for its print media devisions have been stagnant.
[edit] Business OverviewWPO's five main business divisions include education, newspapers, magazines, television broadcasting, and cable television. WPO's newspaper, television and magazine divisions make money from advertising and subscriptions. WPO 2006 Annual Report[1] [edit] EducationKaplan, Inc., a subsidiary of WPO, provides a range of educational services for children, students and professionals. In 2006, this was the largest division at the company, accounting for 43% of revenue.
[edit] Newspaper Publishing
[edit] Television BroadcastingWPO owns six television stations located in Houston (NBC), Detroit (NBC), Miami (ABC), Orlando (CBS), San Antonio (ABC), and Jacksonville, Florida (independent). These stations are located in the 10th, 11th, 16th, 19th, 37th and 50th largest broadcasting markets in the United States. [13] [edit] Magazine PublishingWPO owns Newsweek, a weekly news magazine published both domestically and internationally. In the US, Newsweek ranks second in circulation among the three leading weekly news magazines (Newsweek, Time and U.S. News & World Report. [14] [edit] Financial ResultsRevenue for 2006 was $3,905 million, up 10% compared to revenue of $3,554 million in 2005. Education division revenue in 2006 increased 19% to $1,684 million, while Newspapers revenue remained basically flat at $962 million. In recent years, print advertising revenue has seen a steady decline in recent years due in large part to the increasing popularity of the Internet and online advertising. As a result, the newspaper's website, generated over $100 million in revenue for the first time in 2006. Operating income declined slightly , primarily due to one-time increased stock compensation expense at the education division and early retirement plan buyouts at The Washington Post. [15] WPO 2006 Annual Report[16] While education and newspapers are the company's two largest segments, they have pretty low operating margins (<10%), whereas WPO's local TV and cable TV offerings have margins in excess of 20%. [17] WPO 2006 Annual Report[18]
[edit] Trends and Forces[edit] Impact of the InternetWPO, along with other leading newspaper publishers such as New York Times Company (NYT) and Gannett (GCI) have been impacted tremendously by the growth of the internet. One reason the Internet has dramatically affected the newspaper industry is because it has become cheaper to reach audiences. In 2006, it was estimated that the average newspaper advertising CPM (or cost per thousand viewers) was around $25, while the comparable metric for Internet hovered around $5. In addition, Internet advertising companies such as Google (GOOG) and Yahoo! (YHOO) have implemented performance-based business models, allowing advertisers to pay only when a viewer activates a desirable action (such as clicking on a link). Readers are also increasingly turning to the internet for getting their news and newspaper circulation has decreased. WPO 2006 Annual Report[19] [edit] Increases in Newsprint PricesOne of the biggest expenses for the newspaper and magazine divisions is newsprint (paper). In 2006 alone, WPO's newspapers consumed about 170,000 tons of newsprint for printing. The price of newsprint has increased over the past few years, ranging around $580 - $600/ton in 2006. As a whole, WPO spent more than $100 million in 2006 on newsprint. As seen above, WPO's newspapers and magazines are already very low margin businesses. Thus a further increase in the cost of newsprint would make it more expensive for WPO to print their publications, and this could negatively affect the company's profits. [20] [edit] Growth in Standardized TestingWPO's Kaplan division has grown tremendously over the years due to introduction of new standardized tests, for which Kaplan provides training. The No Child Left Behind Act (NCLB) has also positively impacted Kaplan. [21] NCLB, introduced in 2001 by President Bush, has put an increased emphasis on standardized testing in American Schools by requiring states to develop exams in various subjects to be given to all students in certain grades. Kaplan has capitalized on NCLB by offering supplemental education and training to students. [edit] HurricanesWPO's Cable One subsidiary is vulnerable to extreme weather conditions, especially hurricanes. Nearly 12% of Cable One's customers live in gulf coast area, which is frequently affected by hurricanes. Following Hurricane Katrina, the cable division reported a loss of $23.7 million in damaged property and lost thousands of subscriptions. [22] [edit] Market ShareUSA Today, The New York Times, and Wall Street Journal combined have nearly the same circulation as the next seven largest newspapers. The Washington Post has approximately 8% market share within the Top 10 US newspapers. Audit Bureau of Circulations[23] [edit] CompetitionIn the education segment, WPO competes with Princeton Review (REVU) and McGraw-Hill Companies (MHP), which also offer test and admission preparation services. In the national newspaper segment, WPO faces competition from New York Times Company (NYT), Gannett (GCI), and Dow Jones (DJ).
Washington Post Company2004 Data 2005 Data 2006 Data 2007 Data 2008 Data Most Recent Data Available
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