Washington Post 2005 Annual Report Download - page 48

operating income was approximately $27.5 million (after-tax a reduced pension credit, offset by a decrease in stock-based
impact of $17.3 million, or $1.80 per share). Most of the impact compensation expense at Kaplan.
was at the cable division, but the television broadcasting and Operating income declined 9% to $514.9 million, from
education divisions were also adversely impacted. 2005 results $563.0 million in 2004, due to declines at all of the Company's
also include non-operating gains from the sales of non-operating divisions except the Kaplan education division. Kaplan results for
land and marketable securities (after-tax impact of $11.2 million, 2005 include $3.0 million in stock compensation expense, com-
or $1.16 per share). pared to $32.5 million in stock compensation expense in 2004.
About 94,000 of the cable division's pre-hurricane subscribers The Company's 2005 operating income includes $37.9 million of
were located on the Gulf Coast of Mississippi, including Gulfport, net pension credits, compared to $42.0 million in 2004. These
Biloxi, Pascagoula and other neighboring communities where storm amounts exclude $1.2 million and $0.1 million in charges related to
damage from Hurricane Katrina was significant. Overall, the hurri- early retirement programs in 2005 and 2004, respectively.
cane had an estimated adverse impact of $23.7 million on the
cable division's results in 2005. Through the end of 2005, the DIVISION RESULTS
Company recorded $9.6 million in property, plant and equipment
Newspaper Publishing Division. At the newspaper publish-
losses; incurred an estimated $9.4 million in incremental cleanup,
ing division, 2005 included 52 weeks while 2004 generally includ-
repair and other expenses in connection with the hurricane; and
ed 53 weeks. Newspaper publishing division revenue in 2005
experienced an estimated $9.7 million reduction in operating
increased 2% to $957.1 million, from $938.1 million in 2004.
income from subscriber losses and the granting of a 30-day service
Division operating income for 2005 totaled $125.4 million, a
credit to all its 94,000 pre-hurricane Gulf Coast subscribers. As of
decrease of 12% from $143.1 million in 2004. The decline in
December 31, 2005, the Company has recorded a $5.0 million
operating income in 2005 reflects a 4% increase in newsprint
receivable for recovery of a portion of cable hurricane losses
expense at The Washington Post, as well as increased pension and
through December 31, 2005 under the Company's property and
payroll costs; in addition, operating results for 2005 include losses
business interruption insurance program; this recovery was record-
from the recent Slate acquisition. The declines were offset by
ed as a reduction of cable division expense in the fourth quarter of
improved results at Washingtonpost.Newsweek Interactive and
2005. Actual insurance recovery amounts for cable losses through
Gazette Newspapers. Operating margin at the newspaper publish-
December 31, 2005 may ultimately be higher than the estimated
ing division was 13% for 2005 and 15% for 2004.
$5.0 million. Additional costs and losses related to the hurricane will
continue to be incurred in 2006, and property and business Print advertising revenue at The Washington Post newspaper in
interruption insurance coverage is expected to cover some of these 2005 declined 1% to $595.8 million, from $603.3 million in
losses. 2004. The decline was partially due to one less week included in
2005 compared to 2004. The Post reported declines in national,
Revenue for 2005 was $3,553.9 million, up 8% compared to
retail and supplements advertising in 2005, offset by increases in
$3,300.1 million in 2004. The increase in revenue is due mostly to
zoned and classified advertising. Classified recruitment advertising
significant revenue growth at the education division, along with
revenue was up 6% to $79.3 million in 2005, from $74.8 million in
small increases at the Company's newspaper publishing and cable
2004.
divisions, offset by declines at the Company's television broadcast-
ing and magazine publishing divisions. Advertising revenue declined Circulation revenue at The Post was down 2% for 2005 due to
2% in 2005, and circulation and subscriber revenue increased 1%. declining circulation and one less week in fiscal 2005 compared to
Education revenue increased 24% in 2005, and other revenue was fiscal 2004. Daily circulation at The Post declined 4.3% and
up 1%. The decrease in advertising revenue is due to primarily to Sunday circulation declined 4.1% in 2005; average daily circula-
declines in the television broadcasting and magazine publishing tion totaled 694,100 (unaudited) and average Sunday circulation
divisions. The increase in circulation and subscriber revenue is due totaled 969,000 (unaudited).
to a 3% increase in subscriber revenue at the cable division from
During 2005, revenues generated by the Company's online pub-
continued growth in cable modem, basic and digital service reve-
lishing activities (including Slate, which was acquired in January
nues, offset by a 2% decrease in circulation revenue at The Post,
2005), primarily washingtonpost.com, increased 29% to
and a 3% decline in Newsweek circulation revenues due primarily
$80.2 million, from $62.0 million in 2004. Local and national
to subscription rate declines at the domestic and international
online advertising revenues grew 49%, partly due to Slate. Online
editions of Newsweek. Revenue growth at Kaplan, Inc. (about
classified advertising revenue on washingtonpost.com
27% of which was from acquisitions) accounted for the increase in
increased 22%.
education revenue.
Television Broadcasting Division. Revenue for the television
Operating costs and expenses for the year increased 11% to
broadcasting division declined 8% to $331.8 million in 2005, from
$3,039.0 million, from $2,737.1 million in 2004. The increase is
$361.7 million in 2004, due to strong 2004 revenues that included
primarily due to higher expenses from operating growth at the
$34.3 million in political advertising and $8.0 million in incremental
education division, higher expenses from operating growth and
summer Olympics-related advertising at the Company's
Hurricane Katrina at the cable division, higher newsprint prices and
NBC affiliates.
32 THE WASHINGTON POST COMPANY