The Washington Post Company (WPO) recently reported fourth-quarter 2009 results. Quarterly earnings jumped to $8.71 per share from $2.01 reported in the prior-year quarter.
However, excluding one-time items, quarterly earnings fell 16% to $8.82 per share from $10.54 posted in the year-ago quarter. While times are tough, the company’s diversified business mix is faring better than many of its publishing house competitors.
Revenue for the quarter rose by 6% year-on-year to $1,238.4 million, driven by revenue growth at the Education and Cable Television divisions, offset by revenue declines at the Newspaper, Magazine and Television Broadcasting divisions.
The Education division delivered strong performance — revenue was up 16% to $709.3 million, which we think will continue in fiscal 2010. At fiscal year-end 2009, enrollment totaled 104,900, up 32%. The increase in enrollment was particularly strong at Kaplan University’s online offerings, which surged 47% in the year.
The Cable division is also performing well — revenue was up 4% to $190.6 million, driven by sustained growth in cable modem and telephone revenue, and rate increase in June 2009.
The quarter was marked by continued weakness across Magazine, Newspaper and Television Broadcasting divisions due to the slump in advertising demand.
Newspaper Publishing division revenue dropped 4% to $193.3 million driven by a 9% fall in print advertising revenue at The Post due to the fall in classified, zones and retail advertising, partially offset by improvement in general advertising. Online classified advertising revenue tumbled 17% at washingtonpost.com.
Magazine Publishing division, whose fortunes are tied to the advertising market, also reported a decline in revenue – down 30% to $52.4 million driven by a 36% drop in advertising revenue at Newsweek.
Newspaper companies have long been grappling with the slump in print advertising demand due to the recent economic downturn, as advertisers are migrating to the Internet, driven by increasing online readership and lower ad prices than print.
This has compelled many newspaper companies to undertake cost-cutting measures like, headcount reduction, pay cuts, furloughs and closure of facilities. Recently, in December 2009, Newsweek sold its Newsweek Budget Travel magazine.
Television Broadcasting revenue fell 7% to $80.2 million due to sluggish advertising demand in a majority of the markets and product categories, most notably automotive. Political advertising revenue also dropped by $12.4 million in the quarter.
Read the full analyst report on “WPO”
Zacks Investment Research
