Shares of the Washington Post Company (NYSE: WPO) are trading in the red this morning after the company reported that its fourth quarter profit dropped by a massive 77%. Net income came in at $2.01 per share, verse $8.71 per share in the same period last year.As I noted in the earnings preview yesterday, the company's flagship newspaper and its magazine division (Newsweek Magazine) have been hit hard with losses in advertising revenue, and both had a dismal 2008 year. The company's newspaper division lost $14.4 million in the fourth quarter and had a $192.4 million operating loss for the entire 2008 year. Its newspaper division had a slight profit of $10.9 million in the fourth quarter, but on a full year basis it posted a loss of $16.1 million.
The company also is involved in academics, owns the Kaplan academic testing service and a various range of educational services. The Kaplan division of the company remains strong, accounting for 52% of the company's revenues in 2008. Another strong division for the company is its Cable One Cable company, which was responsible for 16% of the company's revenues in 2008.
As the recession continues to affect us all, and as layoffs are hitting more and more families, a lot of people out there are looking at beefing up their education in order to become more competitive in the work force. This is a possible reason why the company's Kaplan business is doing so well. In 2008, the Kaplan Higher Education division saw its enrollment lift by 24%, a clear sign that people are becoming more aware of the importance of staying relevant in today's work force.
As I discussed already, advertising remains one of the most dire concerns for the company. Looking at how much advertiser money has dried up, we get a little clearer picture when we compare 2008 and 2007. In 2008, there was a drop of 17% in the company's print advertising revenue. This is in part due to company's looking to tighten up its spending, but also a by-product of shrinking circulation. Circulation fell by 2.6% on weekdays and 3.3% on Sundays. Sunday circulation now is right around 872,500.
Definitely some tough times for the company. People are relying much more heavily on the internet as their way of keeping up with the news and world trends, and it is going to continue to be increasingly difficult for newspapers to keep their readership up.
So, papers like the Washington Post have been making big strides to adapt to the new world, and have been putting more emphasis on their online versions. While print advertising revenue was weak last quarter, the company actually saw a rise in online advertising. It is harder to get revenues online, since ad space is worth less than print ads, but the company did see a nice little 5% jump in its online ad revenues in the quarter.
Wall Street pushing the stock down around 2.8% following this morning's announcement.
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