Washington Post 2005 Annual Report Download - page 52

related advertising at the Company's NBC affiliates in 2004 and increase discussed above, along with continued competition from
several days of commercial-free coverage in connection with the DBS providers.
Iraq war in March 2003. At December 31, 2004, Revenue Generating Units (RGUs), the
Operating income for 2004 increased 25% to $174.2 million, sum of basic video, digital video and cable modem subscribers,
from $139.7 million in 2003, primarily as a result of the revenue totaled 1,106,600, compared to 1,077,500 as of December 31,
increases discussed above. Operating margin at the broadcast 2003. The increase is due to an increase in the number of cable
division was 48% for 2004 and 44% for 2003. modem customers. RGUs include about 6,500 subscribers who
receive free basic video service, primarily local governments,
Competitive market position remained strong for the Company's schools and other organizations as required by various franchise
television stations. WDIV in Detroit and KSAT in San Antonio were agreements.
ranked number one in the November 2004 ratings period, Monday
through Friday, sign-on to sign-off; WKMG in Orlando ranked Below are details of cable division capital expenditures for 2004
second; WJXT in Jacksonville and KPRC in Houston ranked third; and 2003, in the NCTA Standard Reporting Categories (in
and WPLG was third among English-language stations in the Miami millions):
market. 2004 2003
Magazine Publishing Division. Revenue for the magazine
Customer premise equipment ÏÏÏÏÏÏÏÏÏÏÏÏ $23.5 $17.0
publishing division totaled $366.1 million for 2004, a 4% increase
CommercialÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.1 0.1
from $353.6 million in 2003. The revenue increase in 2004 is
Scaleable infrastructure ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8.6 5.3
primarily due to a 9% increase in advertising revenue, largely from Line extensionsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 14.0 10.6
increased ad pages at the domestic and international editions of Upgrade/rebuildÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 15.6 21.4
Newsweek and at Arthur Frommer's Budget Travel magazine, as Support capital ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 17.1 11.5
well as lower travel-related advertising revenues at the Pacific TotalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $78.9 $65.9
edition of Newsweek in 2003 due to the SARS outbreak, offset by
a 4% decline in circulation revenue. Education Division. Education division revenue in 2004
increased 35% to $1,134.9 million, from $838.1 million in 2003.
Operating income totaled $52.9 million for 2004, an increase of Excluding revenue from acquired businesses, primarily in the higher
22% from $43.5 million in 2003. The improvement in operating education division and the professional training schools that are part
results for 2004 is primarily due to increased advertising revenue, of supplemental education, education division revenue increased
continued cost controls at Newsweek's international editions and 24% in 2004. Kaplan reported operating income of $121.5 million
improved results at the Company's trade magazines. for the year, compared to an operating loss of $11.7 million in
Operating margin at the magazine publishing division was 14% for 2003; a significant portion of the improvement is from a $93.1 mil-
2004 and 12% for 2003. lion decline in costs associated with the Kaplan stock option plan
and the establishment of the Kaplan Educational Foundation, as
Cable Television Division. Cable division revenue of discussed previously. A summary of operating results for 2004
$499.3 million for 2004 represents a 9% increase from revenue of compared to 2003 is as follows (in thousands):
$459.4 million in 2003. The 2004 revenue increase is due to
continued growth in the division's cable modem and digital service 2004 2003 % Change
revenues and a $2 monthly rate increase for basic cable service,
effective March 1, 2004, at most of the cable division's systems. Revenue
Supplemental educationÏÏÏÏ $ 575,014 $ 469,757 22
Cable division operating income increased 18% in 2004 to Higher education ÏÏÏÏÏÏÏÏÏ 559,877 368,320 52
$104.2 million, from $88.4 million in 2003. The increase in 2004 $1,134,891 $ 838,077 35
operating income is due mostly to the division's significant revenue
Operating income
growth, offset by higher programming, Internet and depreciation
(loss)
costs. Operating margin at the cable television division was 21% in
Supplemental educationÏÏÏÏ $ 100,795 $ 87,044 16
2004 and 19% in 2003. Higher education ÏÏÏÏÏÏÏÏÏ 93,402 58,428 60
At December 31, 2004, the cable division had approximately Kaplan corporate overhead (31,533) (36,782) 14
OtherÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (41,209) (120,399) 66
219,200 digital cable subscribers, down slightly from 222,900 at
$ 121,455 $ (11,709) Ì
December 31, 2003. This represents a 31% penetration of the
subscriber base. At December 31, 2004, the cable division had Supplemental education includes Kaplan's test preparation, profes-
178,300 CableONE.net service subscribers, compared to sional training and Score! businesses. Excluding revenues from
133,800 at December 31, 2003. Both digital and cable modem acquired businesses, supplemental education revenues grew by
services are now offered in virtually all of the cable division's 14%. Test preparation revenue grew by 15% due to strong
markets. At December 31, 2004, the cable division had 709,100 enrollment in the SAT/PSAT, MCAT and Advanced Med. Operating
basic subscribers, compared to 720,800 at December 31, 2003. results in 2004 reflect increased course development costs. Also
The decrease is due to small losses associated with the basic rate
36 THE WASHINGTON POST COMPANY