The Washington Post Co. reported a small drop in its fourth-quarter net income as revenue stayed flat. Declines in its newspaper publishing and education divisions offset growth in television broadcasting.
Growing government scrutiny of for-profit education, including the Post Co.'s Kaplan business, continues to loom over the company. Shares in the company fell 4 percent after the release of results Wednesday.
The Post company said its net income totaled $79 million, or $9.42 per share, in the October-December quarter. That's down 3 percent from $82 million, or $8.71 per share, in the same period a year earlier. The Post Co. had fewer shares out in the recent quarter because of recent buybacks of stock; that increased per-share results in the latest quarter despite the drop in earnings.
Revenue was $1.2 billion, about the same as a year ago.
The company relies heavily on its Kaplan business for growth, particularly as newspapers across the country, including the Post, see reductions in print advertising revenue because of free or cheaper alternatives on the Internet. The Kaplan unit accounted for 59 percent of the company's revenue in the fourth quarter. But that segment faces uncertainty because the government is scrutinizing the recruiting practices of for-profit education companies.
Revenue at Kaplan, which also includes test-preparation services, slid 1 percent to $700 million from $709 million in the fourth quarter.
Under pressure, Kaplan has overhauled its enrollment policy to allow higher-education students a trial period before they commit to paying. The move has been expected to cut into Kaplan's revenue. As of Dec. 31, the company had about 2,200 students in trial enrollments, during which time Kaplan does not recognize tuition revenue. The attrition rate during this trial period has been about 28 percent, according to the company, which said the majority of the students were dismissed by Kaplan because they didn't make enough academic progress.
The company said it is not yet able to estimate whether its offer of a trial period, along with other regulatory and business changes, will decrease student retention or attract more students because they can now try the program "risk-free."
Kaplan's higher-education segment had 96,701 students at the end of 2010, down 8 percent from 104,887 a year earlier. The company said it has made changes to its marketing and student acceptance policies, which has led to more selective admissions.
Thanks in part to political advertising, revenue at the company's TV broadcasting division grew 28 percent to $103 million from $80 million. But this was offset by the decline in the education segment as well as a 3 percent drop in newspaper publishing revenue, to $188 million from $193 million.
Print advertising revenue declined 12 percent to $82 million, because of reductions in general, classified and retail ads. Revenue at the company's online publishing properties — washingtonpost.com and Slate — grew 13 percent to $35.5 million in the fourth quarter.
The company sold Newsweek magazine before the quarter began.
For the full year, the Post Co. earned $277 million, or $31.04 per share, up from $91.8 million, or $9.78 per share, a year earlier. The results for both years included various unusual charges. For 2010, that included charges for restructuring, severance and the withdrawal from a multiemployer pension plan at The Washington Post.
Revenue grew 8 percent to $4.7 billion from $4.4 billion.
Separately, The Washington Post said it has named Patrick Pexton as the news organization's ombudsman, responsible for overseeing the Post's journalistic integrity, accuracy and ethics, and responding to readers' concerns. The two-year position was previously held by Andrew Alexander. Pexton was formerly deputy editor for National Journal. He starts his new post on March 1.
Shares fell $19.07, or 4.3 percent, to $421.31 in midday trading Wednesday. The stock has traded in the 52-week range of $295.56 and $547.58.
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