The Washington Post Company continues to be battered by a generally weak advertising market and continued troubles at its Kaplan Higher Education Unit, as they reported that profits slid 67% from a year ago.
The Post reported first-quarter net income of $15.2 million, or $1.87 per share. Revenue fell 6.9 percent to $1.06 billion.
Kaplan, which has been the main profit engine of the Post for years, saw operating income fall 73 percent on a 10 percent reduction in revenue. New student enrollment plunged 48 percent and overall enrollment was down 23 percent from the same period a year ago.
The unit, which has come under heavy scrutiny for recruiting techniques and the heavy debt load students carry, started a “Kaplan Commitment” program that allows students to withdraw after one month without paying. But that program has come at a heavy cost to the Post, which estimated that it would reduce revenues by $140 million in 2011.
With Kaplan sinking into oblivion profit-wise, the Post Company may be forced to deal with the ongoing struggles at their flagship paper.
The Post lost almost $13 million in the quarter as circulation at both the daily and Sunday editions continued to drop. Ad revenue also fell, dropping 8 percent from last year’s first quarter.
Yet despite the continued poor performance of the Post, CEO Donald Graham has done little to try and turn around the fortunes of the paper.
Shareholders, who have seen the stock price drop by more than half since 2007, are powerless to force Graham to do something about the struggling print business because his family controls 70 percent of the voting shares for Post directors.
It’s this stranglehold that allowed Graham to ignore a higher bid last year from the conservative news site Newsmax for the Post’s Newsweek magazine, and instead sold the ailing magazine to to Sid Harman who promised to keep it in the liberal fold.
What Graham is witnessing is the continuing decline of printed newspapers like The Washington Post. But rather than take bold, decisive action to compete in a new environment, he continues to cling to the notion that Washington wants and needs a liberal paper of record. The marketplace seems to be saying otherwise.
UPDATE: While the Post was losing money publisher Katharine Weymouth, granddaughter of the late publisher Katharine Graham earned a tidy $537,000 in salary plus another $483,750 in bonuses. Plus starting this year Weymouth’s base salary increases to $625,000.
What is that they say about the rich getting richer?