Washington Post 2004 Annual Report Download - page 45

television, newspaper publishing and magazine publishing divisions. margin at the newspaper publishing division was 15% for 2004
Advertising revenue increased 10% in 2004, and circulation and and 2003.
subscriber revenue increased 5%. Education revenue increased Print advertising revenue at The Washington Post newspaper in
35% in 2004, and other revenue was up 6%. The increase in 2004 increased 5% to $603.3 million, from $572.2 million in
advertising revenue is due to increases at the television broadcast- 2003. The increase in print advertising revenue for 2004 is primari-
ing, newspaper publishing and magazine publishing divisions. The ly due to increases in classified recruitment, preprints and general
increase in circulation and subscriber revenue is due to a 9% advertising categories. Classified recruitment advertising revenue
increase in subscriber revenue at the cable division from continued was up 20% to $74.8 million in 2004, a $12.5 million increase
growth in cable modem, basic and digital service revenues, a 2% compared to 2003.
increase in circulation revenue at The Post, and a 4% decline in
Newsweek circulation revenues due to subscription rate declines at Circulation revenue at The Post was up 2% for 2004 due to an
the domestic edition of Newsweek. Revenue growth at Kaplan, Inc. increase in home delivery prices in 2003 and an extra week in fiscal
(about 33% of which was from acquisitions) accounted for the 2004. Daily circulation at The Post declined 2.6% and Sunday
increase in education revenue. circulation declined 2.3% in 2004; average daily circulation
totaled 726,000 (unaudited) and average Sunday circulation
Operating costs and expenses for the year increased 11% to totaled 1,011,000 (unaudited).
$2,737.1 million, from $2,475.1 million in 2003. The increase is
primarily due to higher expenses from operating growth at the During 2004, revenue generated by the Company's online publish-
education, cable television and television broadcasting divisions, ing activities, primarily washingtonpost.com, increased 32% to
higher newsprint prices and a reduced pension credit, offset by a $62.0 million, from $46.9 million in 2003. Local and national
significant decrease in stock-based compensation expense at online advertising revenues grew 46% and online classified adver-
Kaplan. tising revenue on washingtonpost.com increased 33%.
Operating income increased 55% to $563.0 million, from On January 14, 2005, the Company completed the acquisition of
$363.8 million in 2003, due largely to significantly improved results Slate, the online magazine, which will be included as part of the
at the education and television broadcasting divisions. Kaplan Company's newspaper publishing division.
results for 2004 include $32.5 million in stock compensation Television Broadcasting Division. Revenue for the television
expense. In addition to pre-tax charges of $10.5 million for the broadcasting division increased 15% to $361.7 million in 2004,
10% buyout premium and $6.5 million for the Kaplan Education from $315.1 million in 2003, due to $34.3 million in political
Foundation, Kaplan results for 2003 included an additional $108.6 advertising in 2004, $8.0 million in incremental summer Olympics-
million in Kaplan stock compensation expense. Operating results for related advertising at the Company's NBC affiliates in 2004 and
2003 also included a $41.7 million pre-tax gain on the sale of land several days of commercial-free coverage in connection with the
at The Washington Post newspaper and $34.1 million in pre-tax Iraq war in March 2003.
charges from early retirement programs at The Washington Post
newspaper. Operating income for 2004 increased 25% to $174.2 million,
from $139.7 million in 2003, primarily as a result of the revenue
The Company's 2004 operating income includes $42.0 million of increases discussed above. Operating margin at the broadcast
net pension credits, compared to $55.1 million in 2003. These division was 48% for 2004 and 44% for 2003.
amounts exclude $0.1 million and $34.1 million in charges related
to early retirement programs in 2004 and 2003, respectively. Competitive market position remained strong for the Company's
television stations. WDIV in Detroit and KSAT in San Antonio were
DIVISION RESULTS ranked number one in the November 2004 ratings period, Monday
through Friday, sign-on to sign-off; WKMG in Orlando ranked
Newspaper Publishing Division. At the newspaper publish- second; WJXT in Jacksonville and KPRC in Houston ranked third;
ing division, 2004 generally included 53 weeks compared to and WPLG was third among English-language stations in the Miami
52 weeks in 2003. Newspaper publishing division revenue in 2004 market.
increased 7% to $938.1 million, from $872.8 million in 2003.
Division operating income for 2004 totaled $143.1 million, an Magazine Publishing Division. Revenue for the magazine
increase of 7% from $134.2 million in 2003. The increase in publishing division totaled $366.1 million for 2004, a 4% increase
operating income for 2004 reflects higher print and online advertis- from $353.6 million in 2003. The revenue increase in 2004 is
ing revenue, 2003 pre-tax charges of $34.1 million from early primarily due to a 9% increase in advertising revenue, largely from
retirement programs at The Washington Post newspaper and pay- increased ad pages at the domestic and international editions of
roll savings from the early retirement programs implemented at The Newsweek and at Arthur Frommer's Budget Travel magazine, as
Post in 2003. These factors were partially offset by a $41.7 million well as lower travel-related advertising revenues at the Pacific
pre-tax gain on the sale of land at The Washington Post newspaper edition of Newsweek in 2003 due to the SARS outbreak, offset by
in the fourth quarter of 2003, a 12% increase in newsprint expense a 4% decline in circulation revenue.
at The Post and a $10.8 million reduction in the net pension credit, Operating income totaled $52.9 million for 2004, an increase of
excluding charges related to early retirement programs. Operating 22% from $43.5 million in 2003. The improvement in operating
2004 FORM 10-K 29