Washington Post 2015 Annual Report Download - page 65

$187.8 million in 2014. The decrease in revenue is due to a $27.7 million decrease in political advertising
revenue and $9.5 million in incremental winter Olympics-related advertising revenue at the Company’s NBC
affiliates in 2014, offset by $16.1 million in increased retransmission revenues, revenues from the Super Bowl at
the Company’s NBC affiliates in February 2015 and an increase in advertising revenue in several key sectors.
The decline in operating income is due to the revenue decline and an increase in spending on digital initiatives
and increased network fees.
Operating margin at the television broadcasting division was 46% in 2015 and 52% in 2014.
Competitive market position remained strong for the Company’s television stations. KSAT in San Antonio and
WJXT in Jacksonville ranked number one in the November 2015 ratings period, Monday through Friday, sign-on
to sign-off; KPRC finished in a three-way tie for first place; WDIV in Detroit ranked second; and WKMG in
Orlando ranked third.
Other Businesses. Other businesses includes the following:
• Celtic Healthcare (Celtic) and Residential Healthcare Group, Inc. (Residential, acquired in July 2014),
providers of home health and hospice services;
• Group Dekko, a Garrett, IN, based manufacturer of electrical workspace solutions, architectural
lighting, and electrical components and assemblies (acquired in November 2015); Joyce/Dayton Corp.,
a Dayton, OH, based manufacturer of screw jacks and other linear motion systems (acquired in May
2014); and Forney, a global supplier of products and systems that control and monitor combustion
processes in electric utility and industrial applications; and
• SocialCode, a marketing solutions provider helping companies with marketing on social-media
platforms; and The Slate Group and Foreign Policy Group, which publish online and print magazines
and websites.
In November 2015, the Company announced that Trove, a digital innovation team, would largely be integrated
into SocialCode and that Trove’s existing offerings would be discontinued. In connection with this action, the
Company recorded a $2.8 million goodwill impairment charge at Trove in the fourth quarter of 2015, along with
$0.5 million in severance costs.
The increase in revenues for 2015 is due primarily to the inclusion of revenues from the businesses acquired in
2015 and 2014. The improvement in operating results in 2015 reflects the contribution of the acquired
businesses, as well as improved results at Celtic and SocialCode.
In January 2015, Celtic and Allegheny Health Network formed a joint venture to combine each other’s home
health and hospice assets in the western Pennsylvania region. Celtic manages the operations of the joint venture
for a fee and holds a 40% interest. The pro rata operating results of the joint venture are included in the
Company’s equity in earnings of affiliates. In connection with this transaction, the Company recorded a noncash
pre-tax gain of $6.0 million in the first quarter of 2015 that is included in other non-operating expense. Celtic’s
revenues from the western Pennsylvania region that are now part of the joint venture made up 29% of total Celtic
revenues in 2014.
In the second quarter of 2015, the Company sold The Root, an online magazine; the related gain on disposition is
included in other non-operating expense, net.
Corporate Office. Corporate office includes the expenses of the Company’s corporate office, the pension
credit for the Company’s traditional defined benefit plan and certain continuing obligations related to prior
business dispositions. In the fourth quarter of 2015, the Company recorded $6.0 million in incremental stock
compensation expense due to the modification of restricted stock awards, and implemented a Special Incentive
Program that resulted in expense of $0.9 million, which is being funded from the assets of the Company’s
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