Will Charging for Digital Content Help the “Washington Post” Stem Its Losses?
Publisher Katharine Weymouth announced the company will begin charging frequent users this summer.
The stock market didn’t seem too thrilled by the Washington Post’s announcement that it would start charging frequent users to view its website.
In midday trading, the Washington Post Company’s stock was down about two points. At .05 percent, that’s a pittance of a drop for a stock trading at $442 a share. Still, traders didn’t fall over one another to buy Post stock on the news it has finally decided to quit giving away its digital content for free.
“The impact should be relatively small,” says Liang Feng, a stock analyst with Morningstar who follows the Post Company. “The company has been losing money on its newspapers. If this can stop the cash flow loss, it would be positive.”
The Post’s digital and print publications represent one division in the Washington Post Company, which also owns the Kaplan for-profit education division as well as cable and TV stations.
“The company’s cable and TV broadcasting divisions are some of its most valuable,” Feng says.
That might help explain the rise in Post Company stock in the past year. From its low of $327 a share last May, the company has headed up and is reaching new highs for the past year. At its height the stock reached nearly $1,000 a share, in December 2004, before the recession and the advent of digital news drove down advertising and circulation. Federal regulation of Kaplan and other for-profit schools didn’t help.
Post Company chairman Donald Graham has been skeptical of charging digital readers, for fear it would cut into the number of viewers and depress advertising revenues. But Graham apparently has relented. The Post joins the New York Times, the Wall Street Journal, and other media companies that charge for digital news.
Washington Post publisher Katharine Weymouth announced Monday the paper would begin charging frequent users this summer. She didn’t provide details.
Feng, one of the few financial analysts who covers the Post Company, agrees with Graham’s move.
“Over the long run,” he says, “you have to believe you have a captive audience for both products, print and digital. You should not be giving one away for free. It’s good to be consistent.”
If charging a digital fee can help the Post publication division stem its multimillion-dollar losses, the winners will be the newsroom staff. Bowing to the need to make profits and balance its books, the newspaper division has been cutting costs and losing journalistic talent through buyouts and defections.
“I’m still pessimistic the company can draw profits from its newspaper business,” says Feng.
But any sign of increased revenue is good news for the newsroom.