Washington Post Hit With 85% Earnings Drop

Times are not good at The Washington Post:

The Washington Post Co. on Friday reported bad news for its newspaper division, with revenue totaling $127.3 million for the first quarter of this year — down four percent from 2012 — and an operating loss of $34.5 million.

Overall, the company posted a profit of just $4.7 million, an 85 percent drop in earnings from the net income of $31 million for the first quarter of last year.

In the newspaper division, daily and Sunday circulation at the Post dropped 7.2 and 7.7 percent, respectively, compared to 2012. Average daily circulation totaled 457,100 copies, with Sundays at 659,500. The report also noted that in January of this year, the Post increased the paper’s price for daily home delivery and daily and Sunday single copies. And print advertising revenue at the Post in the first quarter of 2013 dropped 8 percent to $48.6 million, down from $52.7 million in the first quarter of 2012.

As for online — primarily washingtonpost.com and Slate — the company had better news to report. Revenue generated by the company’s online publishing increased 8 percent to $25.8 million for the first quarter of 2013, compared to $23.9 million for the first quarter of 2012. The company also posted a 16 percent increase i online display advertising, although online classified advertising revenue on washingtonpost.com fell 6 percent for the first quarter of 2013.

(….)

For this year’s first quarter, the company noted much of the $34.5 million in operating losses come from pension, early retirement and severance expenses. In the first quarter of 2012, the company’s newspaper division lost $20.6 million, for comparison.

Overall, the company reported an 85 percent drop in net income for the first quarter, with revenue up slightly compared to last year — $959.1 million to 2012’s first quarter of $955.5 million.

No wonder they’re talking about setting up a paywall

FILED UNDER: Economics and Business, Media, Quick Takes
Doug Mataconis
About Doug Mataconis
Doug Mataconis held a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010 and contributed a staggering 16,483 posts before his retirement in January 2020. He passed for too young in July 2021.

Comments

  1. Brett says:

    They’re still profitable, even if it’s a wafer-thin margin. Being owned by Kaplan no doubt helps with that, since otherwise their profit margins are so low that actually getting capital for the paper would be very difficult (very low ROE).

    But it’s not good, so bring on the paywall. Honestly, I think all the major newspapers ought to be pay-walling their stuff, along with the local ones (I’m waiting for the local paper to come to its sense and put up a paywall/meter).

  2. @Brett:

    The problem with local papers paywalling is that it’s unclear how many people will pay for access. The New York Times, Wall Street Journal, and Washington Post can always count on a set audience willing to pay for access. The Podunck Times? Not so much.

  3. Actually, they’ve pretty much cut off the only money-making entity they had by listening to liberal activists and employees (“Employ-tivists?”) upset about “For-Profit Education” and the Kaplan arm of the company.

    Much of this loss is solely from that decision; including one where the paper was editorializing for more federal regulations (which were passed) regarding student loan debt. If they burn, they’re the ones who started the fire.

    I say let the arsonists die.

  4. Solomon Kleinsmith says:

    They should try freemium… set up some paying members only special sections that go deeper into things, and keep the site that already exists as is. I’d pay for that. The site in general isn’t worth paying for when there are several other sites that do politics roughly as good.

  5. @Doug Mataconis:

    The problem with local papers paywalling is that it’s unclear how many people will pay for access.

    I think very few people will “pay for access.” People will “pay for access” to the WSJ, but that’s a special case and more of a success of the WSJ’s marketing than, say, how the newspaper business should or will operate in the future.

    If newspapers want to return to profitability, that can be accomplished in one easy step. Get off the web.

    Hollywood, for all its faults, was smart on this one. Example: Go to “marvel.com/ironman3” and you can do all kinds of cool stuff, but you still have to go to the theater to see the movie. Iron Man 3 is going to make a lot of money this weekend.

  6. @James Pearce (Formerly Known as Herb):

    Fair point, but we’re long past the point where people are going to pay to have a pile of messy newsprint delivered to their doorstep on a daily basis.

  7. grumpy realist says:

    It’s also because of the competition due to blogs and the fact that very few newspapers do actual reporting any more. I have a subscription to the FT and willingly pay every penny of its (expensive) subscription fee because every single article that I have read there is actual news reporting and good solid writing. (Plus there’s no one better than a British newspaper when it comes to ironic headlines.)

    Most of the fishwrap in the US contains very little actual news and what does exist, is recycled AP releases. Whatever happened to the muckrackers?

  8. Brett says:

    @Doug Mataconis

    With local papers, it can actually be an advantage to paywall most of their stuff and link print subscriptions to digital ones. Their main advantage is having a subscriber base in a particular area, not having the broadest possible subscriber base like with an ostensibly “national” newspaper like the NYT or WSJ.

  9. @Doug Mataconis:

    Fair point, but we’re long past the point where people are going to pay to have a pile of messy newsprint delivered to their doorstep on a daily basis.

    Absolutely true, but even in those gravy days of daily dead-tree delivery , newspapers didn’t really make a whole lot of money from readers and it was almost never that their news divisions were the profit centers.

    If the idea is the make money selling news to readers, well….that’s not going to happen. Especially on the web.

  10. NickTamere says:

    This is like a long island iced tea made out of shitty management decisions instead of liquor.

    -They’re paying good people not to work there. Most people will focus on the “pension” part, but WaPo “noted much of the $34.5 million in operating losses come from pension, early retirement and severance expenses.” People like Dave Weigel and Gene Weingarten are in that early retirement/severance group. Why? Especially when…

    They’re paying terrible people to work there. having grown up with the Post, I’ve inured myself to George Will and can actually enjoy him at times. I like exposing myself to different points of view and understand the desire to hire conservative columnists, but why do they have to be such dishonest hacks?!? Thiessen, Rubin, Krauthammer and their ilk have been so very wrong for so very long that the only reason to glance at their output is to figure out whose agenda their trying to push this week. It’s like they learned nothing from the Ben Domenech debacle. For a supposedly “liberal” paper they employ a large number of people who do nothing but push the GOP line. Get rid of Richard Cohen too. Sally Jenkins doesn’t work there today only because she embarrassed herself out of a job.

    They can’t decide what they want to be and they’re floundering around cluelessly. I want them to cover hard news. What are they doing? Hiring a “social media editor”. Holding stupid American idol-esque competitions for “America’s Next Great Pundit” (she’s not). Getting rid of their (admittedly mediocre) ombudsman and replacing him with a toothless, worthless “reader representative”. (when asked if the Post should have an Ombudsman, the reader representative said “I’m going to duck that one if you don’t mind.” Oy.)

    In light of the steep subscription declines that occurred, did the delivery price increase make sense? If I’m getting the dead tree edition and they tell me “we’re going to raise your rates, but we’re adding a social media editor, ditching the ombuds, and keeping the GOP propaganda you hate” I cancel too.

  11. NickTamere says:

    @Doug Mataconis: I can’t fathom why newspapers don’t take up affiliate programs. I’d be far more likely to pay $x per month if I knew that it got me access to a bunch of other news sites and didn’t have to sign up for 8 memberships in order to read 8 papers.

  12. john personna says:

    Related:

    Ellison began with a little flattery. Teachers, he said, are one of the most important assets of our society. Applause and appreciative murmurs. Not only are teachers important, he said they are also drastically underpaid. Even more appreciative applause and scattered “Here, heres.” In fact, quoth this business giant, I think teachers are so important that they ought to be paid at least a $1 million a year. A standing ovation: who knew that someone from corporate America could be so insightful? Unfortunately, Ellison concluded, I’m only going to need about 100 of you.

  13. Jeremy says:

    @Doug Mataconis:

    *Podunk

  14. Jeremy says:

    Havin majored in journalism in college and having “studied” it “academically,” I think the problem with journalism these days is that they forgot what their job was. At some point, they stopped reporting news and started trying to be entertainment. They went from “information” to “infotainment.” This was especially bad with local TV news, which tried to up ratings, but there was no way they would become more popular than dramas.

    Then there’s corporate management, which loves to cut things in order to get savings. Problem was, they cut so much they probably cut their Achilles’ tendons clean through. (I’ll give you a minute to get over that image.) Cutting is not always a good thing, and unfortunately, it seems that with major papers, they cut so darn much they destroyed what their business was all about.

    Add in social media and blogs that is frequently doing the heavy lifting these days (though I won’t pretend to be one of those bloggers), and paid journalism has it really cut out for it. People don’t want to really pay for their news, because they can get it for free from so many places. Will paywalls help? I doubt it.

  15. Tyrell says:

    This is no surprise. Print journalism is becoming a fossil and is going the way of film stock photography. News channels are next and are already in free fall : CNN, MSNBC, CSPAN, FOX. One reason is that people are smarter than these groups give them credit for. They readily see this
    for what it is: slanted, one sided propaganda. Most people now get their news from internet. I prefer local tv, local neighborhood newspapers, CB radio, and amateur radio.Some of the networks and papers are under control of the government. All are programmed, choreographed, and controlled.

  16. Andre Kenji says:

    @James Pearce (Formerly Known as Herb):

    If newspapers want to return to profitability, that can be accomplished in one easy step. Get off the web.

    They can´t do that. Many people(Including me) will pay the same price that people pays for the print version of the newspaper to read it in a tablet or in the computer. Besides that, if you get out of the web people forgets that you exists and you lose space and influence to websites offering news for free(I saw that happening here in Brazil).

  17. Andre Kenji says:

    A big problem for the Washington Post Co. is that they don´t understand internet operations. Slate is such a strong brand that a group of French journalists created a French version of the website. On the other hand, I see basically the same ads that people living in Alexandria or in Tuscaloosa sees. I imagine that the same thing happens to other foreign readers.

  18. NickTamere says:

    “…CB radio, and amateur radio.”

    Oh come on

    “I get all my news from the radio in Grand Theft Auto…”

  19. @Andre Kenji:

    They can´t do that. Many people(Including me) will pay the same price that people pays for the print version of the newspaper to read it in a tablet or in the computer.

    They can, but they probably won’t. What’s going to be needed is a large well-funded organization that can take the short term hit while setting themselves up for long term viability. (Which means they should have been doing this years ago.)

    Also I want to be clear that when I say “web,” I mean the “web.” I do not mean eliminating digital editions entirely, I’m just talking about digital editions that pull up on a web browser when you type in http://www.washingtonpost.com.