Washington Post (WPO): Internet Growth Too Slow

Wall Street went bananas about the Washington Post’s earnings today, but analyst Douglas McIntyre at 24/7 Wall St notes that it wasn’t the company’s newspaper business that got people jazzed–it was Kaplan.  Revenue at the SAT-prep-and-other-education provider jumped 23%, to $503 million, and now accounts for nearly half of the Washington Post’s business.

As for the flagship newspaper:  Revenue dropped 7% to $228 million, a quarter of the company.  Magazines did better, up 13% to $73 million, but now we’re in single-digit-percentage-contribution land.  And last but not least…

In Fortune a week ago, McIntyre notes, WaPo CEO Donald Graham said, “If Internet advertising revenues don’t continue to grow fast, I think the future of the newspaper business will be very challenging.  The web site just has to come through.”  We agree (although we think the future of the newspaper business will be very challenging even if Internet advertising zooms–which it has been).  Sadly for Graham and WaPo, the web site is not coming through, at least not enough to save the day.  WaPo’s online revenue (washingtonpost.com, Slate) increased only 11%, to $28 million, less than 3% of the company’s business.  Read Douglas McIntyre’s full post


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