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THE WASHINGTON POST COMPANY
10
Newsweek suffered from the same advertising
issues that affected The Post and our TV stations.
Newsweek ads work as well as ever, but with all
the new media available, some dollars are
siphoned off.
Publisher Greg Osberg persuaded many adver-
tisers that the best way to test new media was on
Newsweek.com. President Harold Shain kept our
usual tight control on expenses. And CEO/editor-
in-chief Rick Smith re-engineered Newsweek’s
international edition and sharply reduced its costs.
▼▼▼
The Post Company’s board of directors remains
aquite unique strength of our company.
Management consults directors on all pressing
business problems (with our board, wouldn’t you?).
This year Alice Rivlin and George Gillespie
leave the board. Alice, former vice chairman of
the Fed, president of the American Economics
Association and much more, is a brilliant woman
and a splendid director. A Washingtonian known
for her dedication to the city, she brought many
admirable qualities to our board.
Fortunately, Alice is around the corner from The
Post headquarters, and I’ll continue to consult her,
as well as George Gillespie. Grahams and Post
Company officers have been consulting this wise
adviser and great lawyer since the 1960s, greatly
to our benefit (and yours). Wewon’t stop now.
Christopher C. Davis, chairman of Davis
Selected Advisers, joined the board in February.
Chris is known for his investment savvy and for his
principled approach to business.
▼▼▼
Aquick word about pensions. Our pension plan
is overfunded; we haven’t had to contribute
money to it in some years. In keeping with the
financial conservatism around here, we have
reduced the assumed return on plan assets from
7.5% to 6.5%. This will result in reducing reported
operating income by about $15 million in “pension
credit”— a non-cash amount a company with an
overfunded pension plan must report. Our “pen-
sion credit” was $38 million in 2005.
▼▼▼
The threat to traditional advertising hovers over all
our media companies. It puts pressure on compa-
nies like ours to innovate — to create new publica-
tions and programs, make existing ones even better
and come up with more effective ways to advertise.
Thirty-five years ago, when I joined The
Washington Post, the future of the media business
appeared to be quite predictable. (Indeed,
Warren Buffett bought stock in our company a few
years later, in part because of that predictability.)
Today, the bad news is that there is far less cer-
tainty about the media business than there was in