Washington Post 2009 Annual Report Download - page 34

The domestic edition of Newsweek consumed about 17,000 tons of paper in 2009, the bulk of which was purchased
from four major suppliers. The current cost of body paper (the principal paper component of the magazine) is
approximately $1,000 per ton.
In 2009, the operations of The Daily Herald Company and Post–Newsweek Media, Inc. consumed approximately
4,648 and 8,740 tons* of newsprint, respectively, which were obtained in each case from various suppliers.
Approximately 40% of the newsprint used by The Daily Herald Company and 68% of the newsprint used by Post–
Newsweek Media, Inc. includes recycled content.
More than 90% of the aggregate domestic circulation of Newsweek is delivered by periodical (formerly second-class)
mail, and most subscriptions for such publications are solicited by either first-class or standard (formerly third-class) mail.
Thus, substantial increases in postal rates for these classes of mail could have a significant negative impact on the
operating income of these business units. Postal rates have increased in each of the past four years. Future postal rate
increases generally will be limited to increases in the Consumer Price Index. Effective May 2009, there were rate
increases of 4.8% for first-class, 3.9% for standard and 4.0% for periodical mail, which increased Newsweek’s 2009
postal costs (January through April) by about $0.3 million.
Competition
Kaplan’s businesses operate in fragmented and competitive markets. Kaplan Higher Education competes with both
facilities-based and other distance-learning providers of similar educational services, including not-for-profit colleges and
universities and for-profit businesses. Kaplan Test Preparation division’s test preparation and tutoring business competes
with a variety of regional and national test preparation businesses, with individual tutors and with in-school preparation
for standardized tests. Kaplan Test Preparation division’s professional and licensure business competes in each of its
professional lines with other companies that provide alternative or similar professional training, test preparation and
consulting services. Overseas, each of Kaplan’s businesses competes with other for-profit companies and, in certain
instances, with governmentally supported schools and institutions that provide similar training and educational programs.
Cable television systems operate in a highly competitive environment. In addition to competing with over-the-air reception,
cable television systems face competition from various other forms of video program delivery systems, including DBS
services, telephone companies and the Internet. Certain of the Company’s cable television systems have also been
partially or substantially overbuilt, using conventional cable system technology by various small to mid-sized independent
telephone companies, which typically offer cable modem and telephone service, as well as basic cable service. Even
without constructing their own cable plant, local telephone companies compete with cable television systems in the
delivery of high-speed Internet access by providing DSL service. In addition, some telephone companies have entered into
strategic partnerships with DBS operators that permit the telephone company to package the video programming services
of the DBS operator with the telephone company’s own DSL service, thereby competing with the video programming and
cable modem services being offered by existing cable television systems. Satellite-delivered broadband and high-
powered WiMAX services will increasingly provide competition to Cable ONE. Finally, video programming is becoming
increasingly available on the Internet, where viewers can watch programming for free, as well as access pay-per-view
offerings. Cable ONE distinguishes itself from its competition by providing excellent local customer service and
consistently attaining very high levels of customer satisfaction.
The Washington Post competes in the Washington, DC, metropolitan area with The Washington Times, a newspaper
that has published weekday editions since 1982. The Post also encounters competition for advertising revenue and
audience in varying degrees from other newspapers and specialized publications distributed in the Post’s circulation area
(including newspapers published in suburban and outlying areas and nationally circulated newspapers), and from
websites, television, radio, magazines and other advertising media, including direct-mail advertising. Express similarly
competes with various other advertising media in its service area, including both daily and weekly free-distribution
newspapers.
Washingtonpost.com,Newsweek.com and the websites produced by The Slate Group face competition from many
Internet sites that provide news and information, sites that cover niche content, sites that aggregate content and sites
where users generate content. The Company’s websites compete for advertising revenue with these types of websites, as
well as with a wide variety of other print publications and online services, plus other forms of advertising. Display
advertising is a key source of revenue for Company websites. With advertising inventory continuing to increase and
advertising networks becoming more prevalent, the display advertising marketplace is experiencing some pricing
* All references in this report to newsprint tonnage and prices refer to short tons (2,000 pounds) and not to metric tons (2,204.6 pounds), which are often used
in newsprint quotations.
20 THE WASHINGTON POST COMPANY