Washington Post to Buy Back Shares – Analyst Blog

The shares of The Washington Post Company (WPO), the diversified media conglomerate, jumped 4.3% or $15.53 to close at $375.75 on Thursday, as the company revealed its plan to buy back 10.4% of its outstanding Class B shares numbering 7,235,962.

 

The company’s board of directors has authorized the buy back of up to 750,000 shares of its Class B common stock but did not specify the ceiling price or a time frame for the repurchase. Taking into consideration Thursday’s closing stock price, Washington Post would have to shell out $282 million to repurchase the shares.

 

The new repurchase authorization includes 16,312 shares remaining under the previous authorization. Washington Post’s board on September 22, 2003, had authorized a share repurchase program of up to 542,800 shares of class B, which was then increased to 750,000 on January 21, 2010.

 

The company also announced a regular quarterly dividend of $2.25 per share, which will be paid on November 5, 2010, to shareholders of record as on October 25, 2010.

 

Washington Post’s diversified business mix positions it to sustain growth momentum. The company’s second-quarter 2010 earnings rose 75% to $11.69 from the prior-year quarter, reflecting strong performance in the Education and Television Broadcasting divisions, despite registering operating losses in the Newspaper division.

 

The company’s role as a publisher has also shrunk with the sale of Newsweek magazine, which was grappling with dwindling advertising revenues. Advertising, an important source of revenue depends upon the health of the economy. Print advertising revenue at The Washington Post dropped 6% in the second quarter due to the fall in retail and classified advertising.

 

Washington Post notified that another current potential risk looming is the regulation proposed by the Department of Education that may weigh upon students enrollments and could hurt results at the company’s wholly-owned subsidiary Kaplan, Inc., one of the leading global providers of educational services. The Department of Education proposed that an educational program could only qualify for Title IV funds if it helps in achieving gainful employment. The company derives a major portion of its revenues from federal student financial aid programs, the Title IV programs.

 

Other stocks to be affected by the regulation are Capella Education Company (CPLA) and American Public Education Inc. (APEI).