Washington Post 2010 Annual Report Download - page 66

Newspaper Publishing Division. For most of the newspaper
division’s print publications, operating results in 2010 included 52
weeks, compared to 53 weeks in 2009. Newspaper publishing
division revenue in 2010 increased slightly to $680.4 million,
from $679.3 million in 2009. Print advertising revenue at The
Washington Post in 2010 declined 6% to $297.9 million, from
$317.0 million in 2009. The print revenue declines in 2010 are
due to reductions in general, classified and retail advertising, along
with one less week in 2010 versus 2009. Revenue generated
by the Company’s newspaper online publishing activities at
washingtonpost.com and Slate increased 14% to $113.0 million,
from $99.6 million in 2009. Display online advertising revenue
grew 18% in 2010, and online classified advertising revenue on
washingtonpost.com increased slightly in 2010. Daily circulation
at The Washington Post declined 7.5% and Sunday circulation
declined 8.2% in 2010. For 2010, average daily circulation at the
Post totaled 550,900 (unaudited) and average Sunday circulation
totaled 763,100 (unaudited).
As previously disclosed, The Washington Post contributes to multi-
employer plans on behalf of three union-represented employee
groups. The Post has negotiated in collective bargaining the
contractual right to withdraw from two of these plans; the right to
withdraw from the CWA-ITU Negotiated Pension Plan (CWA-ITU
Plan) was the subject of contract negotiations that reached an
impasse. In July 2010, the Post notified the union and the CWA-
ITU Plan of its unilateral withdrawal from the Plan, effective
November 30, 2010. In connection with this action, The
Washington Post recorded a $20.4 million charge based on an
estimate of the withdrawal liability.
As previously reported, The Washington Post recorded early
retirement program expense of $56.8 million in the second quarter
of 2009, and Robinson Terminal Warehouse Corporation recorded
early retirement program expense of $1.1 million in the third quarter
of 2009. The costs of these early retirement programs are funded
mostly from the assets of the Company’s pension plans. Also as
previously reported, the Post closed a printing plant in July 2009
and consolidated its printing operations. The Post also completed
the consolidation of certain other operations in Washington, DC,
in the first quarter of 2010. In connection with these activities,
accelerated depreciation of $33.8 million was recorded in 2009,
along with $3.9 million in shutdown costs and lease losses. An
additional $3.1 million loss on an office lease was recorded by
the Company in the first quarter of 2010.
The newspaper division reported an operating loss of $9.8 million
in 2010, compared to an operating loss of $163.5 million in
2009. Excluding the multiemployer pension plan charge, early
retirement program expense and accelerated depreciation,
operating results improved in 2010 due to expense reductions
in payroll, newsprint, depreciation, bad debt and agency fees,
and expense reductions at washingtonpost.com. Newsprint
expense decreased 16% in 2010 due to a decline in newsprint
consumption, offset by an increase in newsprint prices.
Television Broadcasting Division. Revenue for the television
broadcasting division increased 25% to $342.2 million in 2010,
from $272.7 million in 2009. Television broadcasting division
operating income for 2010 increased 72% to $121.3 million, from
$70.5 million in 2009.
The increase in revenue and operating income is due to improved
advertising demand in all markets and most product categories,
particularly automotive. The increased revenue and operating
income also includes $4.7 million in incremental winter Olympics-
related advertising at the Company’s NBC affiliates in the first
quarter of 2010, and a $32.2 million increase in political
advertising revenue for 2010. Operating margin at the television
broadcasting division was 35% in 2010 and 26% in 2009.
Competitive market position remained strong for the Company’s
television stations. KSAT in San Antonio, WPLG in Miami and WJXT
in Jacksonville ranked number one in the November 2010 ratings
period, Monday through Friday, sign-on to sign-off; WDIV in Detroit
and WKMG in Orlando ranked second; and KPRC in Houston
ranked third.
Other Businesses. Other businesses includes the operating results of
Avenue100 Media Solutions and other small businesses. In the third
quarter of 2010, a goodwill and other long-lived assets impairment
charge of $27.5 million was recorded at Avenue100 Media
Solutions, the Company’s digital marketing business that sources
leads for academic institutions and recruiting organizations.
Corporate Office. Corporate office includes the expenses of the
Company’s corporate office and the pension credit previously
reported in the magazine publishing division (refer to Discontinued
Operations discussion below). In the fourth quarter of 2010, certain
Kaplan operations moved to the former Newsweek headquarters
facility. In connection with this move, $11.5 million in lease
termination and other charges were recorded by the corporate
office.
Equity in Losses of Affiliates. The Company’s equity in losses of
affiliates for 2010 was $4.1 million, compared to $29.4 million in
losses for 2009. Results for 2009 included $29.0 million in write-
downs at two of the Company’s affiliate investments; most of the
loss related to an impairment charge recorded on the Company’s
interest in Bowater Mersey Paper Company as a result of the
challenging economic environment for newsprint producers in
2009.
The Company holds a 49% interest in Bowater Mersey Paper
Company, a 16.5% interest in Classified Ventures, LLC and interests
in several other affiliates.
Non-Operating Items. The Company recorded other non-operating
income, net, of $8.7 million in 2010, compared to other
non-operating income, net, of $13.2 million in 2009. The 2010
non-operating income, net, included $6.7 million in unrealized
foreign currency gains and other items. The 2009 non-operating
income, net, included $16.9 million in unrealized foreign currency
gains, offset by $3.8 million in impairment write-downs on cost
method investments and other items. As noted above, a large part
of the Company’s non-operating income (expense) is from
unrealized foreign currency gains or losses arising from the
translation of British pound and Australian dollar denominated
intercompany loans into U.S. dollars.
50 THE WASHINGTON POST COMPANY