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 Course, Columbia Journalism Review
Washington Post Quarterly earnings release
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