Capital Comment Blog > Harry Jaffe
More Bad News About the Washington Post’s Profits
Despite increase revenue from the digital side, the company continues to lose money.
Washington Post publisher Katharine Weymouth offered a broad view of her newspaper’s fortunes at Thursday’s lunch at DC’s Economic Club.
“We never got paid for the news,” she said to David Rubenstein, club president and moderator of an after-lunch discussion. But the Post had a “40 to 50 year period when it was incredibly profitable” because it was “effectively a monopoly” for local advertisers.
Then she said, “The monopoly is broken.”
Just how broken became evident Friday when the Post Company reported an 85 percent drop in net income for its 2013 first-quarter results. Bad news continues to confront the newspaper division and Weymouth.
The most depressing number for the newspaper division is the operating loss of $34.5 million for the first three months of this year. That’s close to $14 million more in losses compared with last year.
The Post Company overall reported a net income of $4.7 million, thanks to increased revenues from its TV broadcast and cable divisions. Beyond that, good news was hard to find. The Kaplan education division, the source of profits for many years, continues to lose money.
But the biggest drag on profits came from the Washington Post newspaper, where the decline worsened at many levels. Revenue was down 4 percent from last year. Daily newspaper circulation fell 7.2 percent, down to 457,100. Sunday circulation dropped to 659,500, a decrease of nearly 8 percent. In better times a decade ago, Sunday circulation topped 1 million.
Print advertising also declined 8 percent to 48.6 million, from $52.7 million. General and retail advertising both fell, the company reported.
One ray of sunlight came from the Post’s digital side. Revenue from Washingtonpost.com and Slate increased 8 percent, to $25.8 million. Display advertising on the Web was up 16 percent, but online classified advertising declined 6 percent.
The Post Company continues to spend millions on buyout and retirement costs. It paid $20.4 million in voluntary retirement and $26.2 million overall, including other “separation incentives.”
At Thursday’s Economic Club luncheon, Weymouth gave an upbeat read of the Post’s prospects, with no indication of the dire news that would hit the next day. She told the gathered business executives that the Post has the best market penetration of any major newspaper and added: “We’re in a great position.”
But the details didn’t seem so great. Under gentle questioning from Rubenstein, co-founder and co-chief executive of the Carlye Group, Weymouth indicated there will be more buyouts as the paper “continues to cut costs.” Rubenstein asked whether classified advertising revenues might return. “I don’t think that’s coming back,” Weymouth said.
At the start of her talk, Weymouth said journalism remains the core of her company and her mission: “We’re making a bet that quality matters more than ever.”
Perhaps that bet will begin paying off when the Post starts charging for its digital journalism next month.