BUZZFLASH EDITOR'S BLOG

Mark Karlin, Editor and Publisher, BuzzFlash.com

December 26, 2007

Could the Washington Post Print Edition Cease Publication?

That’s a startling question, but not an unreasonable one, given recent statements to Wall Street by the Chairperson of the Washington Post Corporation, Donald Graham.

In a lengthy story within the Washington Post itself, [1] Graham confirmed that the Post parent company now no longer saw itself as primarily a news corporation. It is now an "education and media" company, with the emphasis on the first word rising fast.

Why is that?

Because The Washington Post Corporation acquired Kaplan, Inc. (you know, started by good old Stanley in 1938 and responsible for getting tens of thousands of college students into law, medical, and other graduate schools) in 1984 – and the growing Kaplan enterprise now accounts for 50 percent of the WP Corp’s revenue.

We’ll let The Washington Post newspaper drop the other shoe on itself by quoting from their December 6th article: [2]

The newspaper division, primarily The Post, accounts for 21 cents of every dollar.

In recent years, The Post has lost subscribers and revenue as readers have turned to other media -- chiefly, the Internet -- for their news and information and advertisers have followed. Though washingtonpost.com is among the most popular news sites, and is profitable, it generates only about one-fifth of the ad revenue generated by the newspaper.

Kaplan is growing at about a 20 percent annual clip, as the company has diversified far beyond SAT test-preparation. When Graham took over The Post Co. from his mother, Katharine Graham, in 1991, Kaplan reported $78 million in annual revenue. This year, that figure is projected to exceed $2 billion; The Post Co.'s newspaper division revenue is likely to be less than half that. The Post Co. also owns Cable One, a small cable television system with customers primarily in the South and Northwest that generates 15 cents of every dollar of company income; six television stations (8 cents of every dollar), NewsweekArthur Frommer's Budget Travel magazines (6 cents), the Web magazine Slate and several smaller newspapers and publications. magazine and

One stock analyst, Deutsche Bank, "noted that about 80 percent of The Post Co.'s profit-creating businesses -- almost everything but the newspaper -- have not been affected by the economic slowdown." In short, the profitability of the Washington Post Company is primarily outside of the newspaper business.

One newspaper industry analyst, John Morton, went so far as to, ironically, tell a Washington Post reporter, "The company probably ought to be identified as an education company and get The Washington Post name out of the title."

Take note of the recent Washington Post newspaper indicators. They are not the stuff that makes Wall Street happy: "The Post newspaper's average daily circulation peaked at 832,232 in 1993. It now sells an average of 638,800 papers Monday through Saturday. Operating income for the company's newspaper division, primarily The Post, plummeted 50 percent during the third quarter this year, compared with the third quarter of 2006. The paper's income has been ravaged by a sharp drop in real estate advertising and the continued defection of classified and employment advertising to the Internet."

As BuzzFlash has regularly noted, the primary problem with corporate mainstream media news is that the parent corporations are big businesses and everyone in the corporate culture knows who butters the bread of the corporate bottom line, who gives the company tax breaks, who allows media mergers, who provides anti-trust exemptions, etc. And with the decline in value of the media side operations of large parent corporations, the news divisions are cut even further, leading to more press release pro-administration journalism, anything not to offend Republican administrations who can have a positive or disastrous effect on corporate profitability based on legislation and regulatory rulings. And remember, we are talking about how a vengeful White House -- or Republican Party in Congress and Republican judges -- can impact ALL the corporate holdings, not just the media side of the companies.

The WP article revealed, "In 2006, the newspaper division reported $63 million in operating income, and it looks to be on pace to approximate that number this year. By comparison, in 1989, the newspaper division had $176 million in operating income. Kaplan, meanwhile, showed a 21 percent revenue gain through the first nine months of this year, compared with the similar period in 2006."

So, will The Washington Post newspaper shut down anytime soon? That’s highly unlikely in the short-term. Should it be thrown overboard, the Graham family and the corporate board would first, no doubt, try to seek an outside buyer for the media division, which includes Newsweek. There is no doubt a great deal of Graham family pride in the once courageous and venerable newspaper. But the question is who would buy an economically nose diving newspaper at this point? And one that has developed a schizophrenic news and editorial perspective to boot?

It would be hard to imagine that the imprimatur – The Washington Post -- that has come to be equated with reporting on our national government (for better or for worse) might bite the dust as a print entity. In the long term, Rupert Murdoch could possibly pick it up and run it at a loss for its propaganda value in ingratiating himself with the Republican Party (as he does with the New York Post and The Weekly Standard -- not to mention FOX, which is profitable). Wealthy Democrats have never understood the importance of owning the media and would probably pass on the opportunity, because they don’t get the dramatic power of "media framing" at all.

But Donald Graham’s statements to Wall Street and his own paper make it entirely clear that he has embraced a position in regards to the WP print edition -- in the long term -- often stated by Bush in regards to Iran: "All options are on the table," even as he continues to officially stand by the paper.

Could The Washington Post print edition cease publication if it becomes a bigger drag on The Washington Post Company (and they can't find a buyer), as Kaplan Inc and other holdings surge ahead in revenue?

All options are on the table. After all, this is about business, not the public trust.

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