It may be last week's news, but media giant Washington Post's (NYSE:WPO) latest quarterly report card is worthy of reporting. Third-quarter net income, released Friday, surged to $82.5 million ($8.57 per share) from $19.9 million the year before. Last year's net income, though, was hurt by $74.6 million in stock compensation expenses, which erased only $5.1 million from this year's bottom line. Revenues rose 16% to $820 million, with reported gains in each of the company's divisions.
Revenues in the newspaper publishing segment rose 6% to $224.9 million, helped by a 4% increase in advertising revenues at the flagship Washington Post. A firming labor market continues to drive help-wanted advertising, as classified recruitment revenues jumped 23% and year to date have risen 21% to $58.7 million. Robust classified spending has been reported elsewhere, as rivals Knight-Ridder (NYSE:KRI) and Gannett (NYSE:GCI) announced increases of 15.6% and 11.9%, respectively.
The broadcasting segment more than carried its weight, posting a 36% jump in operating income on revenues that increased 22% to $91.4 million. Year-over-year comparisons were aided by Olympics-related advertising on NBC affiliated stations (which added $8 million), as well as a prolonged period of advertising-free coverage of the Iraq war last year.
Washington Post's three television stations in Florida -- after a barrage of hurricanes -- are the lucky recipients of heavy political advertising in a key state. The company has reported nearly $17 million in political spending through the end of September, and more is on the way. The two presidential candidates are spending money at a record pace and committed $57 million to television commercials in the last week alone.
Washington Post's three other divisions also posted stronger results for the quarter. Revenues in the magazine publishing segment rose 7% to $85.2 million, driven by a 13% increase in advertising at Newsweek. Operating income in the cable division rose 9%, on 8% growth in revenues to $124.9 million. A modest decrease in both the number of basic and digital cable subscribers was offset by a $2 monthly rate increase and a 36% jump in the number of cable Internet users.
It is the education segment, though, that continues to lead the way. With a broad array of services -- ranging from test preparation to learning centers to graduate degree programs -- the Kaplan subsidiary helped the division post a 31% improvement in revenues to $293.6 million. This follows back-to-back gains of 41% and 45% over the past two quarters.
The only figures that declined were in circulation, where Washington Post has plenty of company. Of the 841 daily papers that recently reported circulation data, two-thirds were either flat or declining, with an average weekday drop of 0.9%. Some of the largest, though, such as Gannett's USA Today and Dow Jones' (NYSE:DJ) Wall Street Journal, bucked the trend.
Many readers are increasingly turning to the Internet for their news, which is reflected in the predominantly weak tabulation of the nation's circulation figures and soaring online revenues that are handily outpacing traditional print advertising revenues. For the year, WashingtonPost.com reported a 33% increase in revenues, with local/national advertising up 59% and classified advertising up 36%. This is in line with similar gains of 39% at Knight Ridder and 32% at TheNew York Times (NYSE:NYT).
Washington Post is gaining traction in each of its business segments, but with an uneven advertising recovery that could capriciously decide to stall, a price-to-earnings ratio of 35 (based on trailing earnings) may be too steep of a cover price.
Like to catch up on some older news? Try these:
- The Post's Educational Advantage, by Seth Jayson
- More Than a Newspaper, by Selena Maranjian
- Dow Jones Toughs It Out, by Brian Gorman
- Hard Times?, by Alyce Lomax
Fool contributor Nathan Slaughter owns none of the companies mentioned.
