Washington Post profit falls on valuation hit

NEW YORK - The Washington Post Co. said Friday its third-quarter profit tumbled 86 percent, hurt by reduced revenue at its namesake newspaper and an accounting charge that reflects the declining value of its smaller papers.

The Washington-based company, whose properties also include Newsweek magazine and the Kaplan academic testing service, said earnings slid to $10.1 million, or $1.08 per share, from $72.2 million, or $7.60 per share, in the year-ago quarter.

The company's newspapers have suffered — like all other papers across the country — from declining ad revenue because of the migration of readers to the Internet and a weakening economy that has depressed consumer and ad spending.

Because prospects for cash flow have diminished, the company took a goodwill impairment charge of $4.48 per share to adjust for the reduced value of The Daily Herald of Everett, Wash., and its community newspapers division, which includes The Gazette, other weeklies in Maryland and military publications.

Although the ad decline affects all papers, its effect on the goodwill value depends partly on when a company buys an asset and what it paid. The Post company, for instance, bought The Gazette relatively recently, in the early 90s, giving its accounting books less time to absorb deep swings in revenue.

The company also recorded a charge of 84 cents per share related to a plant closing in College Park, Md., and a charge of $1.39 per share for unrealized foreign currency losses.

Revenue for the period grew 10 percent to $1.13 billion from $1.02 billion, largely on improved revenue from its education and cable television segments.

The Post company gets about 53 percent of its revenue from the Kaplan business and another 16 percent from its Cable One unit, which signed up more customers for its high-speed Internet and telephone services and increased many service rates over the past year.

Revenue at the company's television stations grew slightly because of a boost from the Olympics and political advertising, but ad sales in other categories were generally weak.

Gannett Co. and Media General Inc. earlier reported similar television gains to offset plunging sales among their newspapers.

At the Post newspaper, print advertising revenue fell 14 percent during the quarter. The company did not provide advertising totals for its other papers.

Online revenue companywide grew 13 percent, but that was not enough to offset the declines in print because the Web sites make up a smaller share of overall revenue.

The Post got a big online boost from the elections in the July-September quarter.

According to comScore Inc., visitation picked up in August with the first of the political conventions and grew to nearly 8 million unique visitors in September, up 40 percent from a year ago. The Post also expanded its online offerings with a new section called the Political Browser.

The company's Slate unit also launched a spinoff site for financial news, TheBigMoney.com, just as Wall Street took a tumble from the collapse of the credit market, boosting demand for business news.

For the first nine months of the year, the company earned $45.9 million, or $4.86 a share, a 78 percent drop from $205 million, or $21.48 a share, in the year-ago period. One-time charges earlier this year include $7.13 a share for a voluntary buyout program, which reduced payroll by 231 employees at the Post and 117 at Newsweek.

Revenue for the year-to-date period was $3.3 billion, an 8 percent increase from $3.05 billion a year ago.

Shares in the Post increased $25, or 6.3 percent, to $420 in late morning trading.

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Associated Press Business Writer Michelle Chapman contributed to this story.

(This version CORRECTS percentage for revenue growth to 10 percent, sted 11 percent)

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