Readers who picked up today's copy of The Washington Post's
Kaplan's business, which encompasses everything from SAT study guides to graduate degree programs to professional continuing-education courses, long ago surpassed core newspaper publishing to become the Post's chief revenue producer. The company has quickly learned how to leverage this ancillary business. With revenues surging and costs -- particularly stock option expenses -- declining, operating income in the segment tripled to $33.4 million, and for the year it swung from an $11.7 million loss to a $121.5 million gain.
The Post is not alone in branching out and diversifying advertising revenues beyond the boundaries of traditional newsprint. Newspaper publishing revenues have also fallen from the headlines at E.W. Scripps
Well before The New York Times
The divergence between print and online ad spending was equally obvious at The Washington Post newspaper. Revenues at the flagship daily rose 5% last year, while its Internet-based counterpart, washingtonpost.com, reported a sharp 32% gain in sales. Overall, the newspaper publishing segment closed out the year with a respectable 11% increase in fourth-quarter revenues to $260.3 million.
Meanwhile, each of the Post's other divisions reported progress, ranging from a modest 1% rise in magazine publishing to an 18% improvement in broadcasting. Those gains helped fuel a 21% increase in earnings to $11.03 per share. If that bottom-line figure seems a tad high, keep in mind that the stock trades above $900 per share, reflective of the influence of Warren Buffett, a primary shareholder who eschews stock splits.
Amid declining circulation figures and the growing popularity of alternative news sources, the famed board member has articulated what many already fear: "The economics of newspapers are very, very close to certain to deteriorate over the next 10-20 years." That sobering prognosis underscores the importance of what the newspaper companies once considered just sideline ventures.
Fool contributor Nathan Slaughter owns none of the companies mentioned.