Although there's a very good argument to prefer companies with focus, Washington Post
Third-quarter earnings at Washington Post increased 10% to $73.3 million, or $7.60 per share, including a goodwill impairment charge related to PostNewsweek Tech Media of $0.65 per share, and a gain of $0.29 per share from sales of property and securities, as well as benefits from a lower tax rate. Operating income decreased 3% to $108.6 million. Sales increased 8% to $946.9 million.
Recent circulation data shows that the newspaper industry is still struggling. So it's no surprise that Washington Post's major driver to sales was not newspapers but educational-tools provider Kaplan, which reported a revenue increase of 16% to $420.6 million. The company's broadcast and cable divisions were also strong points, with 11% and 16% increases in sales, respectively.
The core newspaper business was fairly lackluster, in keeping with recent quarterly results from peers such as Dow Jones
The magazine-publishing division, which includes Newsweek magazine, suffered a sales drop of 3% because of a reduction in circulation, although that was offset by a 3% increase in ad revenue caused by an increase in ad pages.
Although the news obviously wasn't all bad across Washington Post's stable of businesses, its third-quarter results still missed analysts' expectations.
I've said before that were I to consider investing in this industry, I'd gravitate toward newspaper companies that have a strong online presence and a stable of strong brands, such as Dow Jones. Of course Washington Post does have a diversified collection of businesses, and Kaplan's notably not even in the news business at all. However, given the continued growth pressures on its newspaper business and a quick glance at Washington Post's double-digit P/E ratio of 22, I don't see any reason to think it's a compelling idea at the moment.
Read more recent news about newspapers:
- Latest circulation data shows there's no new news for newspapers.
- Dow Jones' most recent quarter was a slow news day.
- Newspapers have digital dreams as their print side slows.
Alyce Lomax does not own shares of any of the companies mentioned.