Washington Post CompanyWPO

Morningstar Rating

Stock Research and Analysis

by Tom Corbett

Washington Post's media assets span print, broadcast, cable, and online. However, we think its for-profit education business will drive future growth.

The company's Kaplan education unit accounted for more than half of total revenue during 2007. We Read more

Bulls Say

The company's multimedia platform of print, cable, broadcast TV, and online operations provides for a diversified revenue stream, reducing its vulnerability to fluctuations in any single business unit.

The company generates consistent and healthy free cash flow (about 5% of sales), which it can use for capital spending or to pay down debt.

The company recently increased its dividend by 5%, to $8.60 per share.

The rollout of new telephony services to its cable TV subscribers helped drive 15% revenue growth in that business during 2008. Read more

Bears Say

Advertising accounts for about 30% of total revenue, making the company vulnerable to cyclical advertising trends, as well as secular shifts in advertiser and consumer spending patterns.

Its higher education and cable TV divisions together account for 40% of total revenue. Both operate in highly regulated environments, and unfavorable regulatory changes could affect future results.

The flagship Washington Post is weathering the same revenue and circulation declines as its peers. During 2008, the Post's average daily circulation declined 3% versus a year earlier.

Revenue at the magazine division (4% of total sales) declined 13% during 2008, its fourth consecutive year of declining sales.

During 2008, free cash flow declined to 6% of revenue, compared with 7% of revenue during the same period a year earlier. Read more

Strategy

The company seeks to drive growth at its Kaplan education business, which increased sales 11% organically during 2008. Much of the growth at Kaplan has been driven by acquisitions, and we expect this Read more

Management

Chairman and CEO Donald Graham has been in charge since 1991, after serving as publisher of The Washington Post for 21 years. Graham's compensation is extremely reasonable; his annual salary has remained $400,000 for the last several years. The company Read more

Profile

Washington Post is a diversified education and media company, with business units spanning for-profit education, newspaper and magazine publishing, and broadcast and cable Read more

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