Washington Post 2007 Annual Report Download - page 39

Post–Newsweek Media, Inc. includes recycled content. The domestic edition of Newsweek consumed about 26,000
tons of paper in 2007, the bulk of which was purchased from six major suppliers. The current cost of body paper (the
principal paper component of the magazine) is approximately $1,035 per ton.
More than 90% of the aggregate domestic circulation of both Newsweek and Budget Travel is delivered by periodical
(formerly second-class) mail, and most subscriptions for such publications are solicited by either first-class or standard
(formerly third-class) mail. Thus, substantial increases in postal rates for these classes of mail could have a significant
negative impact on the operating income of these business units. On February 26, 2007, the Postal Service Board of
Governors approved a rate increase of 5.1% for first-class letters and 9.3% for route-sorted standard mail effective
May 14, 2007 and 11.7% for periodicals effective July 15, 2007. Those increases had the effect of increasing
Newsweek’s 2007 postage costs (May through December) by approximately $1.8 million and Newsweek’s 2008
postage costs (January through June) are expected to increase by about $2.1 million. On December 20, 2006, the
Postal Accountability and Enhancement Act was signed into law. Among other things, it will abolish the current method
of ratemaking and generally limit future increases to increases in the Consumer Price Index. It is anticipated that,
effective May 2008, for all classes of mail the rate increase would be 2.9%, which would increase Newsweek’s 2008
postal costs (May through December) by approximately an additional $1.1 million.
Competition
Kaplan competes in each of its test preparation product lines with a variety of regional and national test preparation
businesses, as well as with individual tutors and in-school preparation for standardized tests. Kaplan’s Score!
Education subsidiary competes with other regional and national learning centers, individual tutors and other educa-
tional businesses that target parents and students. Kaplan PMBR competes with an online provider of Multistate Bar
Exam preparation services, as well as with various bar review providers (the largest of which is BAR/BRI, a unit of The
Thomson Corporation) that prepare students for the multistate portion of the bar exam in addition to the state-specific
portion of the exam. Kaplan’s Professional Division competes with other companies that provide alternative or similar
professional training, test preparation and consulting services. Kaplan’s Higher Education Division competes with both
facilities-based and other distance-learning providers of similar educational services, including not-for-profit colleges
and universities and for-profit businesses. Overseas, each of Kaplan’s businesses competes with other for-profit
companies and, in certain instances, with governmentally supported schools and institutions that provide similar
training and educational programs.
The Washington Post competes in the Washington, D.C., metropolitan area with The Washington Times, a newspaper
that has published weekday editions since 1982 and Saturday and Sunday editions since 1991. The Post also
encounters competition in varying degrees from other newspapers and specialized publications distributed in The
Post’s circulation area (including newspapers published in suburban and outlying areas and nationally circulated
newspapers), and from websites, television, radio, magazines and other advertising media, including direct mail
advertising. Express similarly competes with various other advertising media in its service area, including both daily
and weekly free-distribution newspapers.
The websites produced by Washingtonpost.Newsweek Interactive face competition from many other Internet services
(particularly in the case of washingtonpost.com from services that feature national and international news), as well as
from alternative methods of delivering news and information. In addition, other Internet-based services, including
search engines, are carrying significant amounts of advertising, and the Company believes that such services have
adversely affected the Company’s print publications and, to a lesser extent, its television broadcasting operations, all
of which rely on advertising for the majority of their revenues. National online classified advertising has become a
particularly crowded field, with competitors such as Yahoo! and eBay aggregating large volumes of content into
national classified or direct-shopping databases covering a broad range of product lines. Some nationally managed
sites, such as Fandango and Weather.com, also offer local information and services (in the case of those sites, movie
information and tickets and local weather). In addition, major national search engines have entered local markets. For
example, Google and Yahoo! have launched local services that offer directory information for local markets with
enhanced functionality, such as mapping and links to reviews and other information. At the same time, other
competitors are focusing on vertical niches in specific content areas. For example, AutoTrader.com and Autobytel.com
aggregate national car listings; Realtor.com and move.com aggregate national real estate listings; Monster.com,
Yahoo! Hotjobs (which is owned by Yahoo!) and CareerBuilder.com (which is jointly owned by Gannett, McClatchy,
TribuneCo.andMicrosoft)aggregateemploymentlistings.Allofthesevertical-nichesitescanbesearchedforlocal
listings, typically by using ZIP codes. Finally, several new services have been launched in the past several years that
have challenged established business models. Many of these are free classified sites, one of which is craigslist.com. In
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