Washington Post 2003 Annual Report Download - page 52

Circulation revenues at The Post were up 4 percent for 2002 due to offered by Newsweek, and from significant cost savings programs
increases in single copy newsstand and home delivery prices in put into place at Newsweek's international operations.
2002. Daily circulation at The Post declined 1.7 percent and Excluding amortization of goodwill and other intangibles, operating
Sunday circulation declined 1.2 percent in 2002. For the year margin at the magazine publishing division was 7 percent for 2002
ended December 29, 2002, average daily circulation at The Post and 9 percent for 2001.
totaled 760,000 (unaudited) and average Sunday circulation
totaled 1,054,000 (unaudited). Cable Television Division. Cable division revenue of
$428.5 million for 2002 represents an 11 percent increase from
Revenue generated by the Company's online publishing activities, revenues of $386.0 in 2001. The 2002 revenue increase is
primarily washingtonpost.com, increased 18 percent to $35.9 mil- principally due to rapid growth in the division's cable modem and
lion during the year, from $30.4 million in 2001. Local and national digital service revenues. Cable division operating income increased
online advertising revenues grew 60 percent in 2002, while reve- 15 percent in 2002 to $80.9 million, from pro forma operating
nue at the Jobs section of washingtonpost.com decreased 1 per- income of $70.6 million in 2001. The increase in operating income
cent in 2002. for 2002 is due mostly to the division's revenue growth, offset by
Television Broadcasting Division. Revenue at the television higher depreciation expense and increased programming expense.
broadcasting division increased 9 percent to $343.6 million in The increase in depreciation expense for 2002 is primarily due to
2002, from $314.0 million in 2001, due primarily to $31.8 million significant capital spending, primarily in 2001 and 2000, which has
in political advertising, as well as Olympics-related advertising at enabled the cable division to offer digital and broadband cable
the Company's NBC affiliates in the first quarter of 2002. Addition- services to its subscribers; depreciation expense for 2002 also
ally, revenues in 2001 were lower due to a general softness in includes $5.4 million in charges for obsolete assets. The cable
advertising and several days of commercial-free coverage follow- division began its rollout plan for these services in the third quarter
ing the events of September 11. These increases were partially of 2000. At December 31, 2002, the cable division had approxi-
offset by reduced network compensation revenues in 2002. mately 214,900 digital cable subscribers, representing a 30 per-
Competitive market position remained strong for the Company's cent penetration of the subscriber base in the markets where digital
television stations. WDIV in Detroit was ranked number one in the services are offered. Digital services are currently offered in mar-
latest ratings period, Monday through Friday, sign-on to sign-off; kets serving 98 percent of the cable division's subscriber base. The
KSAT in San Antonio was tied for number one; WJXT in Jacksonville initial rollout plan for the new digital cable services included an offer
ranked second; WPLG was tied for second among English-language for the cable division's customers to obtain these services free for
stations in the Miami market; and KPRC in Houston and WKMG in one year. At December 31, 2002, the cable division had 194,200
Orlando ranked third in their respective markets. paying digital subscribers, compared to 31,000 at the end of
2001. Most of the benefits from these services began to show in
Operating income for 2002 increased 16 percent to $168.8 mil- the first quarter of 2002 and continued throughout the year, with the
lion, from pro forma operating income of $146.0 million in 2001. remaining portion of free one-year periods generally having ended
Operating income growth for 2002 is due to strong revenue by the close of 2002.
growth, along with tight cost controls, partially offset by a reduced
pension credit. Operating margin at the broadcast division was At December 31, 2002, the cable division had 718,000 basic
49 percent for 2002 and 46 percent for 2001, excluding amorti- subscribers, compared to 752,700 at the end of December 2001,
zation of goodwill and other intangibles. with the decrease due primarily to the difficult economic environment
over the past year; basic customer disconnects for non-payment of
In July 2002, WJXT in Jacksonville, Florida, began operations as an bills have increased significantly. At December 31, 2002, the cable
independent station when its network affiliation with CBS ended. division had 79,400 CableONE.net service subscribers, compared
Magazine Publishing Division. Revenue for the magazine to 46,400 at the end of December 2001, due to a large increase
publishing division totaled $349.1 million for 2002, a 7 percent in the Company's cable modem deployment (offered to 93 percent
decrease from $374.6 million in 2001. Revenues for 2001 reflect of homes passed at the end of December 2002) and subscriber
a significant spike in newsstand circulation revenue at Newsweek penetration rates. Of these subscribers, 78,100 and 32,900 were
due to regular and special editions related to the events of Septem- cable modem subscribers at the end of 2002 and 2001, respec-
ber 11. Advertising revenues were down for 2002, primarily due to tively, with the remainder being dial-up subscribers.
declines in the international division. Operating income totaled Education Division. Education division revenue in 2002
$25.7 million for 2002, a decrease of 20 percent from pro forma increased 26 percent to $621.1 million, from $493.7 million in
operating income of $32.0 million in 2001. Operating results for 2001. Kaplan reported operating income for the year of $20.5 mil-
2002 include $16.1 million in pre-tax charges in connection with lion, compared to a pro forma operating loss of $13.1 million in
early retirement programs at Newsweek. Expenses for 2001 includ- 2001. Approximately one-third of the increase in Kaplan revenue
ed approximately $5.0 million in nonrecurring costs associated with and approximately $9 million of the increase in Kaplan operating
regular and special editions related to the events of September 11. income is from newly acquired businesses, primarily in the higher
Costs for 2002 also have declined due to payroll and other related education division. Excluding goodwill amortization in 2001, a
cost savings from employees accepting early retirement programs
32 THE WASHINGTON POST COMPANY