In November, newsprint hit $700 per ton, up over 26% from the same time a year earlier. Newsprint is WPO's second largest expense, second to labor.
Revenue increased 10% during the quarter, reaching $1.13 billion. However, its operating income dropped to $40.3 million, down from $110.5 million a year earlier because of several one-time costs. Although its education business continues to grow rapidly, WPO's newspaper business decreased by 7% in revenues during Q3 and its magazine revenue dropped 4%.
Although WPO has buoyed itself with its strong education and television busineses, many analysts warned that two-thirds of the company's revenue come from businesses in sectors in decline - newspapers and broadcasting. Also contributing to the perception that WPO is overvalued - the stock was trading at 14.3 times its expected 2009 EPS.
Revenue increased 6% during the quarter, primarily because of increases in sales in the education and cable divisions. However, revenue from its newspaper and magazine divisions declined by 13% and 15% each, respectively.
Revenue in the quarter grew by 8%, largely due to increases in the education and cable television segments. However, some of this growth was offset by declines in the newspaper, television broadcasting, and magazine segments which decreased by 6%, 4%, and 13% each respectively.
WPO shares rose after Standard & Poor's said it would include the stock in its S&P 500 index.