The Washington Post Company said sales at its newspaper publishing division and magazine unit for the third-quarter ended September 28 fell seven percent to $196.2 million and four percent to $59.9 million, respectively, as circulation and print advertising revenue continued to decline as readers and ad dollars migrate online. Albeit its newsprint businesses are awash in red ink, The Washington Post is positioned to survive the shakeout rocking the print media landscape, for it has presciently diversified into education products and related services with its 1984 acquisition of Kaplan, a provider of college test preparation courses and post-secondary education programs. Education now accounts for more than 53 percent of total sales, according to the third-quarter 10-Q regulatory filing:
- Education division revenue totaled $602.7 million for the third quarter of 2008, a 17% increase over revenue of $514.6 million for the same period of 2007. Excluding revenue from acquired businesses, education division revenue increased 14% for the third quarter of 2008. Kaplan reported operating income of $51.1 million for the third quarter of 2008, up 36% from $37.6 million in the third quarter of 2007.
Kaplan’s domestic and international post-secondary education businesses remains a visible growth vehicle, as laid-off workers seek job re-tooling and the company expands its English-language and other educational course offerings outside the United States. Enrollments increased 22 percent year-on-year to 99,700 at September 30, 2008, due to growth in both online and fixed-facility programs.
Against the backdrop of The Tribune Company bankruptcy and continued turmoil in the credit markets, adequate liquidity is a pressing concern for all media properties. At September 28, The Washington Post had a working capital deficit of $420.9 million, a result of $399.9 million in unsecured notes due February 15, 2009. In my opinion, cash on hand of $247.9 million at the end of the third-quarter, free cash flow of $147 million, and a Moody’s Prime-1 investment grade rating should make it easier for the company to repay its short-term borrowings due and be sufficient to cover anticipated liquidity needs throughout 2009.
