Washington Post Rebranded
Is a media company a media company?
Is google a media company?. Well, with knol, who knows. Google say not. Other media companies are nor really a media company. For example, The Washington Post Co. Recently, it was rebranded as an “education and media company” at a meeting with Wall Street analysts and shareholders yesterday, reflecting the rise of Kaplan Inc. within the company and the the decline of its flagship newspaper.
Kaplan, which The Post Co. purchased in 1984, now accounts for 50 cents of every dollar of company revenue, by far the top earner, according to the third-quarter earnings report released last month.
The change in description will likely have little short-term effect on the company’s day-to-day operations, how it is viewed on Wall Street or among investors, analysts and company officials say. It simply was time to call the company what it is, Graham said.
According to the company, “n the past 10 years, there has been quite a dramatic change in the composition of our company…. Most people who care about the company know that, but I wanted to make it clear.”
Graham said he was waiting until Kaplan passed the 50 percent threshold to make the change. 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), Newsweek magazine and Arthur Frommer’s Budget Travel magazines (6 cents), the Web magazine Slate and several smaller newspapers and publications.
“In 2008 and going forward, The Washington Post is really going to be an education and media company,” Graham said yesterday at the 35th annual UBS global media and communications conference. “I don’t say this for cosmetic reasons because I don’t care about cosmetics. I do not say it to de-emphasize the importance to me or the importance to our results and to our shareholders of the media properties in the company. And this absolutely does not mean and will not mean in the future that The Washington Post and Newsweek mean less to me or the people running the company than they did.”
The Graham family controls The Post Co. through a dual-class stock system.
Company officials believe The Post Co. will not be viewed differently by Wall Street, partly because Kaplan’s rise within the company has been recognized for some time. Also, The Post Co. is more diversified than other education companies and may not be covered by the same analysts. Graham said yesterday he did not believe the rebranding would hurt the company’s access to money.
Indeed, the long-term purpose of the rebranding is clear: “It is likely that The Washington Post Co. of the future will be more an education company and a little less a media company every year,” Graham said in his speech
Kaplan has grown near in size to its chief rivals in the education sector. The largest, Phoenix-based Apollo Group, has more than 250 campuses and learning centers across the country and reported $2.5 billion in revenue during the past year.
“This is a smart move by The Post, especially given the convergence in new media,” said John G. Sperling, Apollo’s executive chairman of the board. “The Washington Post Co. has discerned the profound link between publishing and education,” a connection Sperling said Apollo also exploits.
Graham said that the company will continue to cut costs at The Post newspaper, but added that it may spend more than similar media companies to improve its news operations.
“I don’t think we or anyone else have produced a kind of definitive 21st-century news site in the sense that Amazon has produced a pretty damned definitive book-buying site,” Graham said. “But that’s our aim.”
Kaplan, which was launched by Stanley Kaplan in 1938 as a tutoring business in Brooklyn, now gets more than two-thirds of its revenue from education services other than test-prep, chiefly higher education. Kaplan courses range from pre-K to professional training and law — the company offers a three-year, online law degree accredited in California. It has about 11,000 full-time and 17,000 part-time employees.
Kaplan has grown on its own and through aggressive acquisition. Over the past two years, Kaplan has purchased, or bought into, education businesses in the United States, Canada, Australia, England, Ireland, Hong Kong and China.
The Washington Post Co.’s flagship property is The Washington Post newspaper, but its most lucrative unit is Kaplan, which provides test-preparation courses and other educational services. The company also owns Cable One, a cable firm mainly in the South and Midwest; six television stations; Newsweek magazine; Washington Post-Newsweek Interactive, the home of washingtonpost.com; and several smaller newspapers, including Express, El Tiempo Latino and the suburban Gazette weeklies.