November 4, 2011 / 12:41 PM / 6 years ago

UPDATE 3-Fewer ads, students push Washington Post to loss

* New student sign-ups fall 30 pct at Kaplan

* Newspaper ad sales down 20 pct

* Kaplan profit to continue slide

* Shares fall 4 pct

By A. Ananthalakshmi

Nov 4 (Reuters) - The Washington Post Co reported a quarterly net loss as advertising revenue at its flagship newspaper fell and fewer students signed up at its Kaplan chain of for-profit colleges.

The company warned of a further drop in profit at its Kaplan education unit and said it would incur costs as it restructures its biggest business, reeling under the impact of operational changes forced by new government rules.

Kaplan, which accounts for 60 percent of the company’s revenue, posted its fourth straight quarterly decline in new student sign-ups due to stricter admission standards.

New enrollments fell 30 percent in July-September after Kaplan implemented a program that allowed students to take up a free trial of the degree program they want to enrol into, and decide after a few weeks whether they want to continue or not.

The fall, however, is smaller than Kaplan’s 45-plus percent decline in the last three quarters, reflecting industry trends.

Kaplan was a lifesaver for the Post during the recession when ad sales suffered, as students rushed to its colleges amid a weak job market.

But its fortunes turned quickly after a U.S. government scrutiny unveiled unethical practices, low graduation rates and huge student debt loads at for-profit colleges.

Washington Post said it has started restructuring but did not give any details. The charges include severance payments.

It cut 770 jobs last year citing Kaplan woes.


Things at its publishing business are not getting any better. Print advertising revenue fell 20 percent at the Washington Post.

The newspaper industry has been struggling to lift its ad revenue as other media, like broadcast, enjoy a rebound in marketing spending.

In October, Gannett Co , the largest U.S. newspaper chain by circulation, reported a severe decline in advertising revenue pointing to a pullback in consumer and business spending. [ID: nN1E79D1RV]

Washington Post’s cable and broadcast units also saw revenue declines due to higher costs and lower ad sales.

The company’s third-quarter net loss was $6.2 million, or 82 cents a share, compared with net income of $60.9 million, or $6.84 a share, a year ago.

Revenue fell 13 percent to $1.03 billion. Excluding impairment, restructuring and other charges, earnings were $4.95 a share.

In recent months, shareholders of the Post have pushed the management to consider a spinoff or sell some of its businesses.

CEO Donald Graham is reluctant to do so. He is not looking to sell the company’s flagship newspaper or spin off its lucrative cable business. [ID: nL3E7K92WB]

Washington Post’s shares, which have lost almost a fourth of their value so far this year, fell 4 percent to $323.29 on Friday on the New York Stock Exchange. They were trading at $326.87.

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