NEW YORK — The Washington Post Co. turned a profit in the second quarter, reversing a year-earlier loss as growth in its education and cable TV divisions helped offset declines in newspaper, magazine and broadcast revenue. The company's shares surged.
Friday's report indicated that the decline in newspaper ad sales might be moderating – a trend that other publishers have described in the past two weeks as well.
Although the company offered little comment on the state of the newspaper business and does not hold a conference call to discuss results with analysts, the flagship newspaper booked a 20 percent decline in print ad revenue year-over-year, after a 33 percent drop in the first quarter.
Unlike other newspaper publishers that have reported a similar pattern, such as The New York Times Co., Gannett Co. and McClatchy Co., The Washington Post Co. managed a second-quarter profit that didn't come primarily from cutting costs. Instead it relied on other businesses that continue to grow.
Its Kaplan education services unit now supplies 58 percent of revenue, while cable TV supplies about 17 percent. Newspapers and magazines such as Newsweek contribute 19 percent combined.
The company earned $12.2 million, or $1.30 per share, in the second quarter. That compares with a loss of $2.9 million, or 31 cents per share, in the same quarter of 2008.
Revenue edged up 2 percent to $1.13 billion.
Washington Post Co. shares rose $32.40, or 7.7 percent, to $451.50.
The company said its profit was lowered by $56.8 million in early retirement costs at The Washington Post and a $14.3 million charge to account for the declining value of the newspaper, which continues to put up big losses.
This March, the Post announced its fourth round of buyouts since 2003. On Friday, the company said 220 employees took the offer, helping the Post save an estimated $20 million in annual salary and benefit expenses.
The company also incurred $15.2 million in restructuring charges at Kaplan.
However, profits were boosted $19.8 million by currency fluctuations that raised the dollar value of loans the company made to subsidiaries in Britain and Australia.
The Post Co.'s education revenues grew 13 percent to $649.3 million and cable TV posted a 4 percent gain to $186.7 million.
Meanwhile sales in the newspaper division tumbled 14 percent to $168.8 million. Broadcast TV fell 20 percent to $66.7 million and the magazine division plunged 27 percent to $45.5 million.
Although the Post Co. has other businesses helping to prop up earnings, the company's flagship newspaper is in a difficult spot. The newspaper division, which includes the Post and smaller dailies and weeklies, booked an $89.3 million operating loss in the second quarter, slightly better than a $96.7 million loss in the same period a year ago. It will need to see ad dollars return as the economy improves or keep cutting costs if it hopes to whittle its losses further.
And while the Post's advertising decline shrank in the most recent quarter, it was helped by easier comparisons to last year, when the falloff in ad sales accelerated as the recession deepened.
The newly revamped Newsweek faces operating losses as well – $5 million in the second quarter, compared with $3.7 million a year ago.