The Washington Post Company (NYSE:WPO), the group part-owned by CEO of Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B), Warren Buffett, reported a decline in its net earnings for the second quarter, as slowing revenues at its education unit and the print advertising business took a toll on its operations.
Net earnings from continuing operations were $34 million ($4.48 a share), compared to $47.6 million ($6 a share) in the year ago quarter. However, profit, attributable to common shareholders, rose 13.6 percent to $51.8 million ($6.84 a share) from $45.6 million ($5.74 a share) last year. Revenues were down 5 percent, to $1.01 billion.
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Like the rest of the for-profit industry, the company’s Kaplan unit reported falling student enrollments, after showing a rising trend for the previous two quarters. This division accounts for almost half of the company’s business, and revenues here fell 9 percent to $558.4 million. Operating income was down almost 84 percent, and the company warned that “Kaplan will likely incur additional restructuring costs in the second half of 2012.” During the second quarter the unit spent $5 million on severance and restructuring, to compensate for falling enrollments.
The falling admissions are a reflection of the impact of tougher government regulations, which made admission standards more rigorous. The performance of the division echoes the slowing statistics, reported at rival and education bellwether Apollo Group Inc. (NASDAQ:APOL) in its recent quarterly result.
At the newspaper unit, print advertising fell almost 15 percent, along with a falling circulation. Online advertising was up, but could not take up the slack of the print ads. The newspaper unit reported an operating loss of $15.9 million, much larger than the $2.9 million loss last year. According to Ken Doctor, a Santa Cruz, California-based analyst at Outsell Inc., a research firm focused on the publishing industry, and cited by Bloomberg, “Print circulation is on a rapid decline at the Post,” Doctor said before today’s earnings report. “They need to become less of a newspaper company and much more of a digital news company and a digital advertising company.”
The company announced recently that it had disposed of Avenue 100 Media, a digital marketing company.
The one bright spot in WaPo’s operations was its profitable cable television unit and the broadcast television unit, which saw earnings zooming up 34 percent on the plank of heavy political advertising.