Poor ad sales, school woes hit Washington Post profit
BANGALORE (Reuters) - The Washington Post Co reported a lower quarterly profit on Wednesday as looming government regulations and lower enrollment hurt its for-profit education business and advertising revenue fell at its flagship newspaper.
The results at The Washington Post and the company's other papers are hardly new. Few who follow the fortunes of the business expect U.S. newspapers to stage sustained rallies. What soured the market were the results of its Kaplan educational test preparation and for-profit college unit.
Enrollment at the Post's Kaplan education unit, which accounts for about two-thirds of the company's revenue, fell 8 percent to 96,701 students as of December 31 from a year ago. New enrollments during the quarter fell a dramatic 47 percent -- the first time that it lost ground in at least two years.
The Post's shares fell as much as 5.8 percent to $415.01 in morning trading on the New York Stock Exchange.
Enrollments at for-profit colleges across the United States have been falling as the schools tighten their admission standards to comply with upcoming rules.
The schools are facing criticism for overcharging students, burdening them with debt and leaving them without good prospects of finding work.
The federal government also has threatened to cut aid to the schools. The Obama administration wants to institute a "gainful employment rule," which would require the schools to graduate a higher percentage of students than many of them do, or risk the substantial amount of federal aid that they receive.
The Post said nothing about the proposed rules beyond repeating its statement in its third-quarter results that they could affect the company's profits. The S&P 1500 Education Services sub-index almost halved in the April-December period last year as investors feared the new rules would dent growth at these colleges. PRINT TAKES A HIT, AGAIN Results at the Washington Post and the company's other newspapers reflected continuing declines that have hurt the journalism business across the country for several years. Newspaper publishing revenue fell 3 percent to $188.4 million, while advertising revenue at The Washington Post fell 12 percent. Other U.S. newspaper publishers, including the New York Times Co and USA Today publisher Gannett, have seen advertising sales recovering, but not in any consistent way. The Post's fourth-quarter net income fell to $79 million from $81.7 million last year. Earnings per share rose to $9.42 from $8.71 a year ago because the company's buybacks resulted in fewer shares outstanding.
Revenue rose to $1.19 billion as its television broadcasting division brought in more advertising. Revenue at that unit rose 28 percent to $102.9 million. It is hard to gauge whether the results were in line with what Wall Street was expecting because few analysts cover the company. One analyst who follows the company was expecting a profit of $8.72 a share on revenue of $1.19 billion. The company has tried various ways to improve its balance sheet, including asset sales. Last year, the Post sold the loss-making weekly magazine Newsweek to audio equipment magnate Sidney Harman for a token price of $1. Separately, the Washington Post newspaper said former National Journal deputy editor Patrick Pexton will become the newspaper's new ombudsman.
(Reporting by A. Ananthalakshmi and Robert MacMillan in Bangalore; Editing by Roshni Menon and Sriraj Kalluvila)
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