Sunday, May 13, 2012

Is the Washington Post doomed?

The once-mighty Washington Post newspaper continues to hemorrhage cash, as seen in the latest quarterly earnings report, surviving on the profits generated by other units of the Washington Post Company.  In the last quarter, newspaper operations contributed just 15% of the total revenues of the company, while showing losses of  $23 million in the thirteen weeks of the first quarter of 2012.  Contributing to the losses were a 7% decline in revenue, and 8% decline in digital advertising revenue (at a time when spending on digital advertising was rapidly increasing).

The last quarter’s results weren’t an isolated outlier, either.  The Washington Post Company’s newspaper division has posted significant losses in thirteen of the last fifteen quarters (a total of $412 million in losses), and has seen revenues decline in 20 of the last 22 quarters. 2011 revenues were down more than 30% from its high point in 2006.  The impact on the newsroom has been staggering, with about half of the peak number of staff positions terminated.

But those aren’t the most troubling numbers to some analysts, including Ryan Chittum at the Columbia Journalism Review.  Chittum notes that the once healthy cash cow subsidizing the Washington Post Company, Kaplan, is experiencing difficulties, with revenues down 14% in the last fiscal year, and already down another 11% in this first quarter earnings report.  With reduced revenues and earnings, the ability to offset the substantial losses of the newspaper division may be at risk.
  More troubling to Chittum, though, is the more than one billion dollars that the Washington Post Company has spent in shareholder dividends and stock repurchases in the last few years.  To put that in context, the Washington Post Company has reported earnings of $546 million since the start of 2008, while paying out more than twice that amount in dividends and stock purchases aimed at slowing the decline of its stock prices.  And it hasn’t been smart about those behaviors either – buying back shares at prices 30-90% higher than current market value, and providing better dividend yields than Exxon Mobile, Apple, Microsoft, and Walmart.
  And then there’s the Newsweek fiasco.
  Chittum raises the obvious question – would the Post newspaper be in a better fiscal condition if the parent company had put some of that cash into investments in the newsroom, and/or developing new outlets and markets for its journalism?
  Add in the increasing number of amateurish hack jobs printed by the Post (to what should be their enduring embarrassment) and the decline in real investigative reporting (instead of rephrasing opposition research fed to them), and you have to wonder how long the Post will maintain the reputation and credibility that has kept circulation (or at least circulation revenues) fairly steady over the last five years.

Overall, you get the feeling that the folks at the Post and its parent compact don’t seem to understand what’s happening in journalism, media, or business for that matter.

Source -  The Washington Post Co.’s Self-Destructive CourseColumbia Journalism Review 
Washington Post Quarterly earnings release 

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