Washington Post 2006 Annual Report Download - page 28

circumstances. In addition to the changes to its local television ownership rules, the FCC liberalized its restrictions on
owning a combination of radio stations, television stations, and daily newspapers in the same market, allowing, for
example, one entity to own a daily newspaper and a TV station in the same market as long as there are four or more
television stations in the market. The FCC's decision to adopt these new rules, however, was appealed to the U.S. Court of
Appeals for the Third Circuit, and that court stayed the effectiveness of the new rules pending the outcome of the appeal.
Subsequently, in June 2004 the Third Circuit held that the FCC did not adequately justify its revised rules and remanded the
case to the FCC for further proceedings. In July 2006 the FCC initiated a broad remand proceeding to reconsider the
revised rules and asked for public comment on whether to revise, among other things, the numerical limits governing local
television ownership. In the interim, the former local ownership and cross-ownership rules remain in effect.
The Bipartisan Campaign Reform Act of 2002 imposed various restrictions both on contributions to political parties during
federal elections and on certain broadcast, cable television and DBS advertisements that refer to a candidate for federal
office. Those restrictions may have the effect of reducing the advertising revenues of the Company's television stations
during campaigns for federal office below the levels that otherwise would be realized in the absence of such restrictions.
During 2006 the FCC proposed to fine a number of television stations for programming it claimed was indecent, and it
issued decisions that collectively had the effect of expanding the scope of programming that the FCC will consider to be
indecent. Certain of the FCC's indecency decisions are presently being reviewed in litigation before the U.S. Court of
Appeals for the Second Circuit. Also during 2006 Congress passed the Broadcast Decency Enforcement Act of 2005,
which authorized the FCC to increase the maximum monetary forfeiture for an indecency violation. Under previous law and
FCC regulations, the maximum indecency penalty was $32,500 per occurrence. Although the FCC has not yet adopted
regulations implementing the change, the new legislation permits the FCC to increase the penalty to $325,000 per
occurrence.
In April 2006 a media watchdog group complained to the FCC about television stations including in their newscasts
material provided to them at no cost by a third party without identifying the source of the material. The complaint named
Company-owned station WJXT along with 76 other broadcast stations, and a second complaint by the same group named
Company-owned station WKMG and 45 other stations. In August 2006 the FCC instituted an inquiry in response to these
complaints. Because the Company-owned stations identified in these complaints did not receive any consideration in
exchange for the material that was broadcast, the Company does not believe that the actions of those stations violated
FCC rules or federal law. However it is not possible to predict what actions (if any) the FCC may take in response to these
events.
The FCC is conducting proceedings dealing with various issues in addition to those described elsewhere in this section,
including proposals to modify its regulations relating to the ownership and operation of cable television systems (which
regulations are discussed in the section titled ""Cable Television Operations'').
Depending on the respective outcomes, the various rule changes, FCC proceedings and other matters described in this
section could adversely affect the profitability of the Company's television broadcasting operations.
Magazine Publishing
Newsweek
Newsweek is a weekly news magazine published both domestically and internationally by Newsweek, Inc., another
subsidiary of the Company. In gathering, reporting and writing news and other material for publication, Newsweek
maintains news bureaus in 8 U.S. and 11 foreign cities.
The domestic edition of Newsweek includes more than 100 different geographic or demographic editions which carry
substantially identical news and feature material but enable advertisers to direct messages to specific market areas or
demographic groups. Domestically, Newsweek ranks second in circulation among the three leading weekly news
magazines ( Newsweek, Time and U.S. News & World Report ). For each of the last five years, Newsweek 's average
weekly domestic circulation rate base has been 3,100,000 copies and its percentage of the total weekly domestic
circulation rate base of the three leading weekly news magazines has been 34.0%.
Newsweek is sold on newsstands and through subscription mail order sales derived from a number of sources, principally
direct mail promotion. The basic one-year subscription price is $41.08. Most subscriptions are sold at a discount from the
basic price.
Newsweek 's newsstand cover price was increased to $4.50 from $3.95 effective with the May 8, 2006
issue and then was increased to $4.95 effective with the December 18, 2006 issue.
12 THE WASHINGTON POST COMPANY