Washington Post 2004 Annual Report Download - page 46

results for 2004 is primarily due to increased advertising revenue, Excluding revenue from acquired businesses, primarily in the higher
continued cost controls at Newsweek's international editions and education division and the professional training schools that are part
improved results at the Company's trade magazines. of supplemental education, education division revenue increased
24% in 2004. Kaplan reported operating income of $121.5 million
Operating margin at the magazine publishing division was 14% for for the year, compared to an operating loss of $11.7 million in
2004 and 12% for 2003. 2003; a significant portion of the improvement is from a $93.1 mil-
Cable Television Division. Cable division revenue of lion decline in costs associated with the Kaplan stock option plan
$499.3 million for 2004 represents a 9% increase from revenue of and the establishment of the Kaplan Educational Foundation, as
$459.4 million in 2003. The 2004 revenue increase is due to discussed previously. A summary of operating results for 2004
continued growth in the division's cable modem and digital service compared to 2003 is as follows (in thousands):
revenues and a $2 monthly rate increase for basic cable service, 2004 2003 % Change
effective March 1, 2004, at most of the cable division's systems.
Revenue
Cable division operating income increased 18% in 2004 to
Supplemental educationÏÏ $ 575,014 $ 469,757 22
$104.2 million, from $88.4 million in 2003. The increase in 2004
Higher education ÏÏÏÏÏÏÏ 559,877 368,320 52
operating income is due mostly to the division's significant revenue $1,134,891 $ 838,077 35
growth, offset by higher programming, Internet and depreciation
costs. Operating margin at the cable television division was 21% in Operating income
2004 and 19% in 2003. (loss)
Supplemental educationÏÏ $ 100,795 $ 87,044 16
At December 31, 2004, the cable division had approximately Higher education ÏÏÏÏÏÏÏ 93,402 58,428 60
219,200 digital cable subscribers, down slightly from 222,900 at Kaplan corporate
December 31, 2003. This represents a 31% penetration of the overhead ÏÏÏÏÏÏÏÏÏÏÏÏ (31,533) (36,782) 14
subscriber base. At December 31, 2004, the cable division had OtherÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (41,209) (120,399) 66
178,300 CableONE.net service subscribers, compared to $ 121,455 $ (11,709) Ì
133,800 at December 31, 2003. Both digital and cable modem
Supplemental education includes Kaplan's test preparation, profes-
services are now offered in virtually all of the cable division's
sional training and Score! businesses. Excluding revenues from
markets. At December 31, 2004, the cable division had 709,100
acquired businesses, supplemental education revenues grew by
basic subscribers, compared to 720,800 at December 31, 2003.
14%. Test preparation revenue grew by 15% due to strong
The decrease is due to small losses associated with the basic rate
enrollment in the SAT/PSAT, MCAT and Advanced Med. Operating
increase discussed above, along with continued competition from
results in 2004 reflect increased course development costs. Also
DBS providers.
included in supplemental education is The Financial Training Compa-
At December 31, 2004, Revenue Generating Units (RGUs), the ny (FTC), which was acquired in March 2003. Headquartered in
sum of basic video, digital video and cable modem subscribers, London, FTC provides test preparation services for accountants and
totaled 1,106,600, compared to 1,077,500 as of December 31, financial services professionals, with training centers in the United
2003. The increase is due to an increase in the number of cable Kingdom and Asia. FTC revenues grew by 44% in 2004 over the
modem customers. RGUs include about 6,500 subscribers who same time period the business was owned by Kaplan in 2003.
receive free basic video service, primarily local governments, Supplemental education results also include professional real estate,
schools and other organizations as required by various franchise insurance and security courses. Real estate publishing and training
agreements. courses contributed to growth in supplemental education in 2004.
The final component of supplemental education is Score!, which
Below are details of cable division capital expenditures for 2004
provides academic enrichment to children and has lower operating
and 2003, in the NCTA Standard Reporting Categories (in
margins than the other supplemental education businesses due to
millions):
higher fixed costs. Revenues at Score! were up slightly compared to
2004 2003 2003.
Customer premise equipment ÏÏÏÏÏÏÏÏÏÏ $23.5 $17.0 Higher education includes all of Kaplan's post-secondary education
CommercialÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.1 0.1 businesses, including fixed-facility colleges as well as online post-
Scaleable infrastructure ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8.6 5.3 secondary and career programs (various distance-learning busi-
Line extensionsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 14.0 10.6 nesses). Excluding revenue from acquired businesses, higher edu-
Upgrade/rebuildÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 15.6 21.4 cation revenues grew by 35% in 2004. Higher education results
Support capital ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 17.1 11.5 are showing significant growth, especially the online programs, in
TotalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $78.9 $65.9 which revenues more than doubled in 2004. At the end of 2004,
higher education enrollments totaled 58,000, compared to 45,000
Education Division. Education division revenue in 2004
at the end of 2003.
increased 35% to $1,134.9 million, from $838.1 million in 2003.
30 THE WASHINGTON POST COMPANY