Washington Post 2005 Annual Report Download - page 49

Operating income for 2005 decreased 18% to $142.5 million, through December 31, 2005 under the Company's property and
from $174.2 million in 2004. The operating income declines are business interruption insurance program; this recovery was record-
primarily related to the absence of significant political and Olympics ed as a reduction of cable division expense in the fourth quarter of
revenue in 2005, as well as the adverse impact of 2005 hurricanes 2005. The decrease in operating income is also due to higher
in Florida and Texas. Operating margin at the broadcast division depreciation, programming and customer service costs. Operating
was 43% for 2005 and 48% for 2004. margin at the cable television division declined to 15% in 2005,
from 21% in 2004, due largely to the impact of hurricane.
Competitive market position remained strong for the Company's
television stations. KSAT in San Antonio ranked number one in the At December 31, 2005, the cable division had approximately
November 2005 ratings period, Monday through Friday, sign-on to 689,200 basic subscribers, compared to 709,100 at Decem-
sign-off; WDIV in Detroit and WKMG in Orlando ranked second; ber 31, 2004. The Company estimates a decline of 21,400 basic
WPLG in Miami tied for second among English-language stations in subscribers as a result of the hurricane. At December 31, 2005, the
the Miami market; WJXT in Jacksonville ranked third; and KPRC in cable division had approximately 214,400 digital cable subscrib-
Houston ranked fourth. ers, down from 219,200 at December 31, 2004. This represents a
31% penetration of the subscriber base. The Company estimates a
Magazine Publishing Division. Revenue for the magazine decline of 7,700 digital subscribers as a result of the hurricane. At
publishing division totaled $344.9 million for 2005, a 6% decline December 31, 2005, the cable division had approximately
from $366.1 million in 2004. The revenue decline in 2005 reflects 234,100 CableONE.net service subscribers, compared to
the weak domestic and international advertising environment at 178,300 at December 31, 2004. The Company estimates a
Newsweek, particularly in the first quarter of 2005; overall, News- decline of 3,100 CableONE.net service subscribers as a result of
week advertising revenues are down 8% for the year as a result of the hurricane. Both digital and cable modem services are now
fewer ad pages at both the domestic and international editions of offered in virtually all of the cable division's markets. The estimated
Newsweek. hurricane-related basic, digital and cable modem subscriber losses
Operating income totaled $45.1 million for 2005, down 15% from are from destroyed or severely damaged homes.
$52.9 million in 2004. The decline in 2005 operating income is At December 31, 2005, Revenue Generating Units (RGUs),
due primarily to the revenue reductions at Newsweek discussed the sum of basic video, digital video and cable modem subscribers,
above, weaker results at the Company's trade magazines and a totaled 1,137,600, compared to 1,106,600 as of December 31,
$1.5 million early retirement charge at Newsweek International, 2004. The increase is due to growth in high-speed data customers,
offset by a reduction in subscription acquisition, distribution and offset by an approximate 32,200 RGU reduction due to the
advertising expenses at Newsweek's domestic and international hurricane. RGUs include about 6,500 subscribers who receive free
editions, and an increased pension credit. Operating margin at the basic video service, primarily local governments, schools and other
magazine publishing division was 13% for 2005 and 14% for organizations as required by various franchise agreements.
2004, including the pension credit.
Below are details of cable division capital expenditures for 2005
Cable Television Division. Cable division revenue of and 2004, in the NCTA Standard Reporting Categories
$507.7 million for 2005 represents a 2% increase from $499.3 (in millions):
million in 2004. Revenues for 2005 were adversely impacted by
2005 2004
approximately $12.5 million from subscriber losses and the granting
of a 30-day service credit to the 94,000 pre-hurricane Gulf Coast
Customer premise equipment ÏÏÏÏÏÏÏÏÏÏ $ 30.0 $23.5
subscribers; this was offset by increased growth in the division's
CommercialÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.2 0.1
cable modem revenues. Also, the Company did not implement an
Scaleable infrastructure ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8.1 8.6
overall basic rate increase in 2005. Line extensionsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 14.6 14.0
Cable division operating income decreased in 2005 to $76.7 mil- Upgrade/rebuildÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 13.1 15.6
Support capital ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 45.3 17.1
lion, from $104.2 million in 2004. The decline in operating income
in 2005 is due mostly to Hurricane Katrina, which had an estimated TotalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $111.3 $78.9
adverse impact of $23.7 million on the cable division's results.
Education Division. Education division revenue in 2005
Through the end of 2005, the cable division recorded $9.6 million
increased 24% to $1,412.4 million, from $1,134.9 million in
in property, plant and equipment losses; incurred an estimated
2004. Excluding revenue from acquired businesses, primarily in the
$9.4 million in incremental clean-up, repair and other expenses
higher education division and the professional training schools that
associated with the hurricane; and experienced an estimated
are part of supplemental education, education division revenue
$9.7 million reduction in operating income from subscriber losses
increased 18% in 2005. Kaplan reported operating income of
and the granting of a 30-day service credit to all of its 94,000
$157.8 million for the year, compared to $121.5 million in 2004;
pre-hurricane Gulf Coast subscribers. Offsetting these items, as of
a large portion of the improvement is from a $29.5 million decline in
December 31, 2005, the Company has recorded a $5.0 million
receivable for recovery of a portion of cable hurricane losses
2005 FORM 10-K 33