Washington Post 2004 Annual Report Download - page 48

at the television broadcasting division. Advertising revenue was division, offset by a 3% increase in newsprint expense, incremental
essentially flat in 2003, and circulation and subscriber revenue costs associated with the war in Iraq, a reduced pension credit, and
increased 5%. Education revenue increased 35% in 2003, and a small loss from a new newspaper, Express, which was launched in
other revenue was up 8%. The change in advertising revenue is due August 2003. Operating margin at the newspaper publishing divi-
to increases at the newspaper publishing and magazine publishing sion was 15% for 2003 and 13% for 2002.
divisions, offset by a decline at the television broadcasting division Print advertising revenue at The Washington Post newspaper
due primarily to significant political revenues in 2002. The increase increased 3% to $572.2 million, from $555.7 million in 2002. The
in circulation and subscriber revenue is due to an 8% increase in rise in print advertising revenue for 2003 was due to increases in
subscriber revenue at the cable division from continued growth in general and preprint advertising revenue, which more than offset
cable modem and digital service revenues, a 1% increase in declines in classified and retail advertising revenue from volume
circulation revenue at The Post, and a slight increase in Newsweek declines. Classified recruitment advertising revenue decreased
circulation revenues due to increased newsstand sales for both the $6.1 million in 2003, due to a 14% volume decline. Classified
domestic and international editions of Newsweek. Revenue growth recruitment advertising revenue increased by $0.8 million, or 6%,
at Kaplan, Inc. (about 43% of which was from acquisitions) during the fourth quarter of 2003, with flat volume compared to
accounted for the increase in education revenue. 2002. This was the first quarter with an increase in classified
Operating costs and expenses for the year increased 12% to recruitment advertising revenue since the third quarter of 2000.
$2,475.1 million, from $2,206.6 million in 2002. The increase is Circulation revenue at The Post was up 1% for 2003 due to an
primarily due to a significant increase in stock-based compensation increase in home delivery prices. Daily circulation at The Post
expense at Kaplan, higher expenses from operating growth at declined 2.0%, and Sunday circulation declined 1.8%. Single copy
Kaplan, early retirement program charges, higher newsprint prices sales contributed to the decline, with a 9% daily decrease and a
and a reduced pension credit, offset by a $41.7 million pre-tax 6% Sunday decrease. For the year ended December 28, 2003,
gain on the sale of land at The Washington Post newspaper. average daily circulation at The Post totaled 745,000
Operating income declined 4% to $363.8 million, from (unaudited), and average Sunday circulation totaled 1,035,000
$377.6 million in 2002, due largely to the $84.6 million increase in (unaudited).
Kaplan stock compensation discussed above. Operating results for During 2003, revenue generated by the Company's online publish-
2003 also include a $41.7 million pre-tax gain on the sale of land ing activities, primarily washingtonpost.com, increased 30% to
at The Washington Post newspaper, $34.1 million in pre-tax $46.9 million, from $35.9 million in 2002. Local and national
charges from early retirement programs at The Washington Post online advertising revenues grew 59% and revenues at the Jobs
newspaper, and a $6.5 million charge for the Kaplan Educational section of washingtonpost.com increased 29%.
Foundation. Operating results for 2002 included $19.0 million in
pre-tax charges from early retirement programs. The Company's As previously discussed, the Post launched a new newspaper,
year-to-date results were adversely impacted by a reduction in Express, in August 2003. The new publication appears each
operating income at the television broadcasting division and a morning, Monday through Friday, in tabloid form and is distributed
reduced net pension credit. Improved results at the Company's free-of-charge in the Washington, D.C. area.
newspaper publishing, magazine publishing and cable television Television Broadcasting Division. Revenue for the television
divisions helped to offset these declines. broadcasting division decreased 8% to $315.1 million in 2003,
The Company's 2003 operating income includes $55.1 million of from $343.6 million in 2002, due to approximately $31.8 million in
net pension credits, compared to $64.4 million in 2002. These political advertising in 2002, $5.0 million in incremental Olympics-
amounts exclude $34.1 million and $19.0 million in charges related related advertising at the Company's NBC affiliates in the first
to early retirement programs in 2003 and 2002, respectively. quarter of 2002, and several days of commercial-free coverage in
connection with the Iraq war in March 2003.
DIVISION RESULTS Operating income for 2003 decreased 17% to $139.7 million,
Newspaper Publishing Division. Newspaper publishing divi- from $168.8 million in 2002, primarily as a result of the revenue
sion revenue in 2003 increased 4% to $872.8 million, from reductions discussed above. Operating margin at the broadcast
$842.0 million in 2002. Division operating income for 2003 division was 44% for 2003 and 49% for 2002.
totaled $134.2 million, an increase of 23% from operating income Competitive market position remained strong for the Company's
of $109.0 million in 2002. Operating results for 2003 include a television stations. WDIV in Detroit and KSAT in San Antonio were
fourth quarter $41.7 million pre-tax gain on the sale of land at The ranked number one in the November 2003 ratings period, Monday
Washington Post newspaper and $34.1 million in pre-tax charges through Friday, sign-on to sign-off; WJXT in Jacksonville ranked
from early retirement programs at The Washington Post newspaper. second; WKMG in Orlando was tied for second; KPRC in Houston
Operating results for 2002 included a $2.9 million charge from an ranked third; and WPLG was third among English-language stations
early retirement program at The Washington Post newspaper. in the Miami market.
Improved operating results for 2003 are due to increased advertis-
ing revenue and cost control initiatives employed throughout the
32 THE WASHINGTON POST COMPANY