Washington Post 2003 Annual Report Download - page 35

The announced price of newsprint (excluding discounts) was approximately $750 per ton throughout 2003. Discounts
from the announced price of newsprint can be substantial, and prevailing discounts increased slightly during the first quarter
of the year and then decreased during the second and fourth quarters. The Company believes adequate supplies of
newsprint are available to The Post and Express through contracts with various suppliers. Over 90% of the newsprint used
by The Post and Express includes some recycled content. The Company owns 80% of the stock of Capitol Fiber Inc., which
handles and sells to recycling industries old newspapers and other paper collected in Washington, D.C., Maryland and
northern Virginia.
In 2003 the operations of The Daily Herald Company and Post-Newsweek Media, Inc. consumed approximately 6,800
and 21,800 tons of newsprint, respectively, which were obtained in each case from various suppliers. Approximately
85% of the newsprint used by The Daily Herald Company and 45% of the newsprint used by Post-Newsweek Media, Inc.
include some recycled content.
The domestic edition of Newsweek consumed about 30,000 tons of paper in 2003, 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 $860 per ton.
Over 90% of the aggregate domestic circulation of both Newsweek and Budget Travel is delivered by periodical
(formerly second-class) mail; most subscriptions for such publications are solicited by either first-class or standard A
(formerly third-class) mail; and all PostNewsweek Tech Media publications are delivered by periodical 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 the other hand, since advertising distributed by standard A mail competes to some
degree with newspaper advertising, the Company believes increases in standard A rates could have a positive impact on
the advertising revenues of The Washington Post, Express, The Herald, The Gazette Newspapers and Southern Maryland
Newspapers,
although the Company is unable to quantify the amount of such impact.
Competition
The Washington Post competes in the Washington, D.C. metropolitan area with The Washington Times, a newspaper
which has published weekday editions since 1982 and Saturday and Sunday editions since 1991. The Post also
encounters competition in varying degrees from newspapers published in suburban and outlying areas, other nationally
circulated newspapers, and from 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.
Washingtonpost.Newsweek Interactive faces competition from many other Internet services, particularly 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 increasing amounts of advertising, and such services
could also adversely affect the Company's print publications and television broadcasting operations, all of which rely on
advertising for the majority of their revenues. Several companies are offering online services containing information and
advertising tailored for specific metropolitan areas, including the Washington, D.C. metropolitan area. For example, Digital
City (a unit of Time Warner) produces a Washington, D.C. city guide which is part of AOL's nationwide network of local
online sites. National online classified advertising is becoming a particularly crowded field, with competitors such as
Yahoo! and eBay aggregating large volumes of content into a national classified database covering a broad range of
product lines. Other competitors are focusing on vertical niches in specific content areas: autos.msn.com (which is majority
owned by Microsoft), AutoTrader.com and Autobytel.com, for example, aggregate national car listings; Realtor.com
aggregates national real estate listings; while Monster.com, HotJobs.com (which is owned by Yahoo!) and Career-
Builder.com (which is jointly owned by Gannett, Knight-Ridder and Tribune Co.) aggregate employment listings.
The Herald circulates principally in Snohomish County, Washington; its chief competitors are the Seattle Times and the
Seattle Post-Intelligencer, which are daily and Sunday newspapers published in Seattle and whose Snohomish County
circulation is principally in the southwest portion of the county. Since 1983 the two Seattle newspapers have consolidated
their business and production operations and combined their Sunday editions pursuant to a joint operating agreement,
although they continue to publish separate daily newspapers. The Enterprise Newspapers are distributed in south
Snohomish and north King Counties where their principal competitors are the
Seattle Times and The Journal Newspapers, a
group of weekly controlled-circulation newspapers. Numerous other weekly and semi-weekly newspapers and shoppers
are distributed in The Herald 's and The Enterprise Newspapers ' principal circulation areas.
2003 FORM 10-K 15