The Washington Post Co.
The Washington Post Co. swung to a loss in the third-quarter as advertising revenue fell for the fourth consecutive period and its one-time cash cow, the Kaplan education unit, reported a steep drop in profits.
Newspaper publishing division revenue declined 9 percent in the quarter to $149.3 million, pushed by a 20 percent decline in print advertising revenue at the flagship Washington Post. The company said its declines were largely due to drops in classified, zoned and general advertising.
Digital dimes are not making up for the print loss in the newspaper division’s online unit, which include the Post Website and Slate. Newspaper online revenue dropped 14 percent in the quarter to $23.3 million. Display online ad revenue plunged 17 percent and online classified dipped 5 percent.
Overall, the Post Co. recorded a third-quarter loss of $6.2 million, or 82 cents a share. That contrasts with a third-quarter 2010 profit of $60.9 million or $6.48 a share.
Wall Street analysts had been expecting the Post Co. to report another profit this quarter, with the average estimate being a profit of $3.85 per share, according to Wall Street Cheat Sheet. Expect to see the stock (NYSE: WPO) fall on its opening Friday morning.
The Post Co. did exceed analysts expectations on company-wide revenue, which declined 13 percent to $1.03 billion. Wall Street’s expectation had been for a steeper decline of 16 percent to $1 billion.
The Washington Post Co.’s biggest problem these days isn’t the sluggish performance of newspaper advertising, an industry-wide problem – it’s the sudden change in fortunes at its Kaplan education unit.
Kaplan has not only been hit by an uncertain economic climate, this third-quarter report shows new federal regulations on student loans have taken exactly the devastating effect on its for-profit college business that analysts feared when the rules were first proposed in 2010. The new regulations are intended to prevent the all-too-common situation in which students takes on big debts to pay for an education at a for-profit college that doesn’t prepare for any meaningful career. For-profit colleges whose students mostly can’t pay back loans will no longer be eligible to participate in the federally subsidized program.
New enrollments at Kaplan’s colleges fell 30 percent in the third quarter as the schools were forced to become more selective in recruiting students. Revenue plunged 33 percent in the quarter and is down 27 percent for the year.
Operating income fell like a rock in the third quarter to $18 million from $106 million in the same period a year ago. || Related: Dallas Morning News and Providence Journal parent A.H. Belo reports small Q3 loss as print and digital ad revenue fall 12%.
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