Washington Post 2011 Annual Report Download - page 63

increased programming, technical and sales costs. Operating
margin at the cable television division was 21% in 2011 and 22%
in 2010.
At December 31, 2011, Primary Service Units (PSUs) were up 2%
from the prior year due to growth in high-speed data and telephony
subscribers, offset by a decrease in basic video subscribers. A
summary of PSUs is as follows:
As of December 31,
2011 2010
Basic video ..................... 621,423 648,413
High-speed data ................. 451,082 425,402
Telephony ...................... 179,989 153,044
Total ........................ 1,252,494 1,226,859
PSUs include about 6,300 subscribers who receive free basic cable
service, primarily local governments, schools and other organizations
as required by various franchise agreements.
Below are details of the cable television division’s capital expenditures
for 2011 and 2010 in the NCTA Standard Reporting Categories:
(in thousands) 2011 2010
Customer premise equipment .......... $ 53,087 $ 22,413
Commercial ....................... 3,487 1,338
Scaleable infrastructure ............... 34,748 50,458
Line extensions ..................... 6,318 7,118
Upgrade/rebuild ................... 12,951 7,192
Support capital .................... 32,582 21,059
Total .......................... $143,173 $109,578
Newspaper Publishing Division. Newspaper publishing division
revenue in 2011 declined 5% to $648.0 million, from $680.4
million in 2010. Print advertising revenue at the Post in 2011
declined 11% to $264.5 million, from $297.9 million in 2010. The
decline is largely due to reductions in classified, zoned and general
advertising. Revenue generated by the Company’s newspaper online
publishing activities, primarily washingtonpost.com and Slate,
decreased 8% to $105.8 million, from $114.8 million in 2010.
Display online advertising revenue declined 11% in 2011, and
online classified advertising revenue decreased 2% in 2011. The
revenue declines from print advertising and newspaper online
publishing activities were partially offset by increased revenue from
new lines of business in 2011.
Daily circulation at the Post declined 6.3%, and Sunday circulation
declined 4.0% in 2011. For 2011, average daily circulation at the
Post totaled 516,200 (unaudited) and average Sunday circulation
totaled 732,300 (unaudited).
The newspaper publishing division reported an operating loss of
$18.2 million in 2011, compared to an operating loss of $9.8
million in 2010. As previously disclosed, The Herald recorded a
$2.4 million charge in the fourth quarter of 2011 in connection
with its withdrawal from the CWA-ITU Negotiated Pension Plan
(CWA-ITU Plan); in 2010, the Post recorded a $20.4 million
charge in connection with its withdrawal from the CWA-ITU Plan.
Excluding these charges and a $3.1 million loss recorded on an
office lease in the first quarter of 2010, operating results declined in
2011 due to the revenue reductions discussed above, offset by a
small decrease in overall costs. Newsprint expense was down 7%
in 2011 due to a decline in newsprint consumption.
Television Broadcasting Division. Revenue for the television broad-
casting division declined 7% to $319.2 million in 2011, from
$342.2 million in 2010. Television broadcasting division operating
income for 2011 declined 4% to $117.1 million, from $121.3
million in 2010.
The decline in revenue is due primarily to the absence of $4.7
million in incremental winter Olympics-related advertising in the first
quarter of 2010 and a $32.8 million decrease in political
advertising revenue for 2011. For 2011, operating results declined
as a result of revenue reductions discussed above, offset by expense
reductions from various cost control initiatives. Operating margin at
the television broadcasting division was 37% in 2011 and 35% in
2010.
KSAT in San Antonio ranked number one in the November 2011
ratings period, Monday through Friday, sign-on to sign-off; WPLG in
Miami, WJXT in Jacksonville and WKMG in Orlando ranked
second; and WDIV in Detroit and KPRC in Houston ranked third.
Other Businesses. Other businesses includes the operating results of
Avenue100 Media Solutions, the Company’s digital marketing
business that sources leads for academic institutions and recruiting
organizations, and other small businesses. In 2011, revenues
declined substantially due to volume declines as a result of changes
implemented at Avenue100 Media Solutions to improve lead quality.
Goodwill and other intangible assets impairment charges of $11.9
million and $27.5 million were recorded at Avenue100 Media
Solutions in 2011 and 2010, respectively. Excluding these charges,
operating losses increased in 2011 due to the revenue declines
discussed above and increased costs at other small businesses.
Corporate Office. Corporate office includes the expenses of the
Company’s corporate office as well as the pension credit previously
reported in the magazine publishing division (refer to Discontinued
Operations discussion below). In the fourth quarter of 2010, certain
Kaplan operations moved to the former Newsweek headquarters
facility. In connection with this move, $11.5 million in lease
termination and other charges were recorded by the corporate
office in the fourth quarter of 2010.
Equity in Losses of Affiliates. The Company holds a 49% interest in
Bowater Mersey Paper Company, a 16.5% interest in Classified
Ventures, LLC and interests in several other affiliates. The Company’s
equity in earnings of affiliates for 2011 was $5.9 million,
compared with losses of $4.1 million in 2010. The results for 2011
reflect improved earnings at the Company’s Classified Ventures
affiliate and other affiliates, offset by a $9.2 million impairment
charge recorded in 2011 on the Company’s interest in Bowater
Mersey Paper Company.
Other Non-Operating (Expense) Income. The Company recorded
other non-operating expense, net, of $55.2 million in 2011, compared
to other non-operating income, net, of $7.5 million in 2010.
The 2011 non-operating expense, net, included a $53.8 million
write-down of a marketable equity security (Corinthian Colleges,
Inc.), $3.3 million in unrealized foreign currency losses and other
2011 FORM 10-K 51