Washington Post 2012 Annual Report Download - page 68

Kaplan International includes professional training and post-
secondary education businesses outside the United States, as well
as English-language programs. In May 2011, Kaplan Australia
acquired Franklyn Scholar and Carrick Education Group, leading
national providers of vocational training and higher education in
Australia. In June 2011, Kaplan acquired Structuralia, a provider
of e-learning for the engineering and infrastructure sector in Spain.
Kaplan International revenue increased 20% in 2011. Excluding
revenue from acquired businesses, Kaplan International revenue
increased 12% in 2011 due to favorable exchange rates and
enrollment growth in the pathways and English-language programs.
Kaplan International operating income declined in 2011 due to
overall losses from newly acquired businesses, as well as up-front
spending for admission and occupancy at its Asian and United
Kingdom (U.K.) businesses to support expanding operations. In
addition, Kaplan International operating income decreased due
to enrollment declines at its U.K. professional training schools
arising from new pending student visa restrictions.
Corporate represents unallocated expenses of Kaplan, Inc.’s
corporate office and other minor shared activities.
Cable Television Division. Cable television division revenue for
2011 increased slightly to $760.2 million, from $759.9 million
in 2010. The revenue results reflect continued growth of the
division’s Internet and telephone service revenues, offset by an
increase in promotional discounts and a decline in basic video
subscribers.
Cable television division operating income in 2011 decreased to
$156.8 million, from $163.9 million in 2010. The cable television
division’s operating income for 2011 declined primarily due to
increased programming, technical and sales costs. Operating
margin at the cable television division was 21% in 2011 and 22%
in 2010.
At December 31, 2011, Primary Service Units (PSUs) were up 2%
from the prior year due to growth in high-speed data and telephony
subscribers, offset by a decrease in basic video subscribers. A
summary of PSUs is as follows:
As of December 31,
2011 2010
Basic video .................... 621,423 648,413
High-speed data ................ 451,082 425,402
Telephony ..................... 179,989 153,044
Total ....................... 1,252,494 1,226,859
PSUs include about 6,300 subscribers who receive free basic
cable service, primarily local governments, schools and other organ-
izations as required by various franchise agreements.
Below are details of the cable television division’s capital expenditures
for 2011 and 2010 in the NCTA Standard Reporting Categories:
(in thousands) 2011 2010
Customer premise equipment .......... $ 53,139 $ 22,414
Commercial ...................... 3,487 1,338
Scaleable infrastructure .............. 34,748 50,458
Line extensions .................... 6,318 7,118
Upgrade/rebuild .................. 12,951 7,192
Support capital .................... 32,582 21,059
Total .......................... $143,225 $109,579
Newspaper Publishing Division. Newspaper publishing division
revenue in 2011 declined 8% to $622.5 million, from $675.9 million
in 2010. Print advertising revenue at the Post in 2011 declined 11%
to $264.5 million, from $297.9 million in 2010. The decline is
largely due to reductions in classified, zoned and general advertising.
Revenue generated by the Company’s newspaper online publishing
activities, primarily washingtonpost.com and Slate, decreased 8%
to $105.8 million, from $114.8 million in 2010. Display online
advertising revenue declined 11% in 2011, and online classified
advertising revenue decreased 2% in 2011.
Daily circulation at the Post declined 6.3%, and Sunday circulation
declined 4.0% in 2011. For 2011, average daily circulation at the Post
totaled 516,200, and average Sunday circulation totaled 732,300.
The newspaper publishing division reported an operating loss of
$21.2 million in 2011, compared to an operating loss of $11.1
million in 2010. As previously disclosed, The Herald recorded a
$2.4 million charge in the fourth quarter of 2011 in connection
with its withdrawal from the CWA-ITU Negotiated Pension Plan
(CWA-ITU Plan); in 2010, the Post recorded a $20.4 million
charge in connection with its withdrawal from the CWA-ITU Plan.
Excluding these charges and a $3.1 million loss recorded on an
office lease in the first quarter of 2010, operating results declined in
2011 due to the revenue reductions discussed above, offset by a
small decrease in overall costs. Newsprint expense was down 7%
in 2011 due to a decline in newsprint consumption.
Television Broadcasting Division. Revenue for the television broad-
casting division declined 7% to $319.2 million in 2011, from
$342.2 million in 2010. Television broadcasting division operating
income for 2011 declined 4% to $117.1 million, from $121.3
million in 2010.
The decline in revenue is due primarily to the absence of $4.7 million
in incremental winter Olympics-related advertising in the first quarter
of 2010 and a $32.8 million decrease in political advertising
revenue for 2011. For 2011, operating results declined as a result
of revenue reductions discussed above, offset by expense reductions
from various cost control initiatives. Operating margin at the television
broadcasting division was 37% in 2011 and 35% in 2010.
KSAT in San Antonio ranked number one in the November 2011
ratings period, Monday through Friday, sign-on to sign-off; WPLG in
Miami, WJXT in Jacksonville and WKMG in Orlando ranked
second; and WDIV in Detroit and KPRC in Houston ranked third.
Other Businesses. Other businesses includes the operating results of
Social Code, a marketing solutions provider helping companies with
marketing on social media platforms, and WaPo Labs, a digital team
focused on emerging technologies and new product development.
Corporate Office. Corporate office includes the expenses of the
Company’s corporate office as well as 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 in the fourth quarter of 2010.
56 THE WASHINGTON POST COMPANY