Print Page  |  Close Window

Investor Relations

SEC Filings

GRAHAM HOLDINGS CO filed this Form 10-K on 03/29/1994
Entire Document
<PAGE>   48
                          THE WASHINGTON POST COMPANY

    Total operating revenues in 1992 were $1,451 million, an increase of 5
percent from $1,380 million in 1991. The improvement was due to a 5 percent
rise in advertising revenues, an increase of 6 percent in circulation and
subscriber revenues and a 4 percent increase in other revenues.
    Total operating costs and expenses were $1,219 million, an increase of 3
percent over $1,187 million in 1991. Included in 1991 operating expenses was a
pretax charge of $6 million for severance and related costs resulting from a
voluntary reduction in staff at The Washington Post newspaper. Also included in
1991 expenses was a write down of the company's programming rights to "The
Cosby Show." Excluding these charges in 1991, total operating costs and
expenses increased approximately 4 percent in 1992. This increase reflects
normal increases in payroll and related fringe benefit costs and other
expenses, partially offset by lower newsprint and magazine paper costs, which
decreased 16 percent. Higher costs related to the expansion of cable operations
in the United Kingdom and continued investment in PCS also contributed to the
increase. Several nonrecurring charges are included in 1992, including charges
related to a restructuring at Kaplan and net expenses related to the
termination of one of the health care plans at The Washington Post newspaper.
Income from operations in 1992 increased 20 percent to $232.1 million, from
$192.9 million in 1991.

NEWSPAPER DIVISION. Revenues at the newspaper division rose 5 percent from 1991
levels, mostly due to a 5 percent increase in advertising revenues. Results at
The Gazette Newspapers also contributed to the increase. Rate increases more
than offset the 4 percent decrease in advertising linage at The Washington
Post, reflecting the slow economic recovery of the Washington, D.C., market.
Retail volume decreased 8 percent, and general volume was down 7 percent, while
classified volume was flat. Preprint volume, on the other hand, rose 14 percent
as a result of increased daily demand for inserts by advertisers, some of which
were formerly users of ROP. Circulation revenues increased 5 percent in 1992,
due to an increase in Sunday rates at The Post, from $1.25 to $1.50.  For the
twelve-month period ended September 30, 1992, daily circulation at The Post was
even with the prior year, while Sunday circulation increased slightly, with
primary market penetration remaining high at 68 percent on Sunday and 51
percent for daily.
    At the newspaper division, operating margin increased to 18 percent, from
14 percent in 1991. Contributing to this increase was the decline in newsprint
prices and effective cost controls; over the past three years The Post has
reduced the number of full-time employees by 7 percent through voluntary
buyouts and early retirement programs.

BROADCAST DIVISION. Broadcast division revenues decreased 1 percent. Local
advertising revenues rebounded from 1991 levels, increasing 6 percent. However,
national and network revenues fell 6 percent and 9 percent, respectively, more
than offsetting the increase in local advertising. Results included the impact
of Hurricane Andrew on WPLG in Miami and lower advertising revenue from sports
programming at WDIV in Detroit. These losses were partially offset by $6.8
million in political advertising.
    Operating margin at the broadcast division increased to 34 percent, from 30
percent in 1991, which included the write down of programming rights to "The
Cosby Show."

MAGAZINE DIVISION. At Newsweek total revenues increased 6 percent in 1992.
Advertising revenues increased 9 percent, bolstered by a combination of volume
and rate increases at both the domestic and international editions. Newsweek
circulation revenues rose 3 percent over 1991 levels. Higher subscription rates
at the domestic edition were principally responsible for the increase. During
the year the domestic edition produced the same number of weekly issues as in
1991 (52); 1992 also included the publication of one special issue, compared to
four in 1991. The international edition published 51 issues in both 1992 and
    Newsweek's operating margin increased to 7 percent, from 3 percent the
prior year. Contributing to this improvement were lower manufacturing and
distribution costs compared with last year, which included the expenses
associated with the four special issues and the special inserts related to the
Persian Gulf War.

CABLE DIVISION. Cable division revenues in 1992 rose 9 percent over the prior
year (7.5 percent excluding the operations in the United Kingdom). Contributing
to the increase were a 3 percent rise in the number of basic subscribers,
higher rates and increased advertising at the domestic systems. On December 31,
1992, the company acquired the assets of Coast TV Cable, Inc., which have not
been included in the 1992 results.
    Operating margin in 1992 remained flat at 22 percent, unchanged from the
prior year. Excluding the operations in the United Kingdom, 1992 operating
margin would have been 25 percent, compared to 23 percent in 1991. Total
operating costs at the domestic systems rose by 6 percent, due to the larger
number of subscribers and higher programming costs, while cash flow increased 9
percent to $82.0 million, from $75.3 million last year.