Washington Post 2008 Annual Report Download - page 59

$28.6 million decrease in political advertising and $6.3 million in
incremental winter Olympics-related advertising at the Company’s
NBC affiliates in the first quarter of 2006.
In July 2007, the Company entered into a transaction to sell and
lease back its current Miami television station facility; a $9.5 million
gain was recorded as a reduction to expense in 2007. The
Company has purchased land and is building a new Miami
television station facility, which is expected to be completed in
2009.
Operating income for 2007 declined 12% to $142.1 million, from
$160.8 million in 2006. The decline in operating income is
primarily related to the absence of significant political and Olympics
revenue in 2007, as well as increased programming expenses,
offset by the $9.5 million gain on the sale of property at the Miami
television station. Operating margin at the broadcast division was
42% for 2007 and 44% for 2006; however, the operating margin
in 2007 would have been lower without the $9.5 million gain from
the sale of property at the Miami television station.
Competitive market position remained strong for the Company’s
television stations. KSAT in San Antonio and WPLG in Miami
ranked number one in the November 2007 ratings period, Monday
through Friday, sign-on to sign-off; WDIV in Detroit, WKMG in
Orlando and WJXT in Jacksonville ranked second; and KPRC in
Houston ranked third.
Magazine Publishing Division. Revenue for the magazine
publishing division totaled $288.4 million in 2007, a 13% decline
from $331.0 million for 2006. Magazine publishing division results
in 2006 included revenue of $23.4 million from PostNewsweek
Tech Media, which was sold in December 2006. The remainder
of the revenue decline is due primarily to a 9% reduction in
Newsweek advertising revenue for 2007, due to fewer ad pages
at both the Newsweek domestic and international editions, despite
one additional domestic and international issue in 2007. The
revenue decline was offset by increased revenue at Arthur
Frommer’s Budget Travel.
Operating income totaled $31.4 million in 2007, compared to
$27.9 million for 2006. Magazine publishing division results
in 2006 included an operating loss of $8.8 million from
PostNewsweek Tech Media, largely the result of a goodwill
impairment charge of $9.9 million in the third quarter of 2006.
Excluding PostNewsweek Tech Media, operating income at the
magazine publishing division was down due primarily to advertising
revenue reductions, offset by lower overall operating expenses.
Operating margin at the magazine publishing division was 11% in
2007 and 8% for 2006, including the pension credit, with the
increase primarily due to losses at PostNewsweek Tech Media in
2006. If the pension credit is excluded, the division would have
had operating losses in 2007 and 2006.
In January 2008, the Company announced a Voluntary Retirement
Incentive Program, which is being offered to certain Newsweek
employees. The program includes enhanced retirement benefits and
should be completed by the end of the first quarter of 2008; it will
be funded primarily from the assets of the Company’s pension
plans.
Other Businesses and Corporate Office. In October 2007, the
Company acquired the outstanding stock of CourseAdvisor, Inc.,
a premier online lead generation provider, headquartered in
Wakefield, MA. In 2006, the Company made a small investment
in CourseAdvisor. Through its search engine marketing expertise
and proprietary technology platform, CourseAdvisor generates
student leads for the post-secondary education market.
CourseAdvisor operates as an independent subsidiary of the
Company.
In 2007, other businesses and corporate office included the
expenses associated with the Company’s corporate office and the
operating results of CourseAdvisor since its October 2007
acquisition. In 2006, other businesses and corporate office
included the expenses of the Company’s corporate office. Revenue
for other businesses (CourseAdvisor) totaled $6.6 million in 2007.
Operating expenses were $42.2 million in 2007 and $42.5
million in 2006. The decline in expenses for 2007 is due to
$3.8 million in pre-tax charges recorded in 2006 related to early
retirement plan buyouts at the corporate office and other expense
reductions at the corporate office, offset by expenses from
CourseAdvisor.
Equity in Earnings (Losses) of Affiliates. The Company’s equity in
earnings of affiliates for 2007 was $6.0 million, compared to
$0.8 million in 2006. In the first quarter of 2007, the Company’s
equity in earnings of affiliates included a gain of $8.9 million on
the sale of land at the Company’s Bowater Mersey affiliate;
however, operating losses at Bowater Mersey in 2007 largely
offset the gain. The Company’s affiliate investments at the end of
2007 consisted primarily of a 49% interest in Bowater Mersey
Paper Company Limited. In November 2006, the Company sold its
49% interest in BrassRing and recorded a pre-tax non-operating
gain of $43.2 million in 2006.
Non-Operating Items. The Company recorded other non-operating
income, net, of $10.8 million in 2007, compared to $73.5 million in
2006. The 2007 non-operating income, net, included $8.8 million in
foreign currency gains and other non-operating items. The 2006
non-operating income, net, comprised a $43.2 million gain from the
sale of the Company’s interest in BrassRing, $33.8 million in gains
related to sales of marketable equity securities and $11.9 million in
foreign currency gains, offset by a $14.2 million write-down of a
marketable equity security and other non-operating items.
A summary of non-operating income (expense) for the years ended
December 30, 2007 and December 31, 2006 follows:
(in millions) 2007 2006
Foreign currency gains ...................... $ 8.8 $ 11.9
Gain on sales of marketable equity securities ...... 0.4 33.8
Gain on sale of affiliate ..................... —43.2
Impairment write-downs on investments ........... —(15.1)
Other gains (losses) ......................... 1.6 (0.3)
Total .................................. $10.8 $ 73.5
2008 FORM 10-K 47