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Investor Relations

SEC Filings

GRAHAM HOLDINGS CO filed this Form 10-K on 03/29/1994
Entire Document
<PAGE>   37
                          THE WASHINGTON POST COMPANY


In September 1993 the company sold its cable franchises in the United Kingdom.
The related gain of $20,175,000 before giving effect to taxes of $6,804,000 is
included in "Other income (expense), net" in the Consolidated Statements of
Income. This transaction increased earnings by $1.14 per share in 1993.
    During 1992 the company expended approximately $32,000,000, including
related expenses, for investments in new businesses. These included a cable
system in Mississippi; Pro Am Sports System, a company that provides sports
programming in the Detroit area; and continued investment in personal
communications services (PCS) technology development. The company also
purchased shares in ACTV, Inc., a company that is involved in interactive
television, and made additional investments in The Gazette Newspapers, Inc.,
which increased the company's ownership to 84 percent in 1992 and 100 percent
in 1993.
    The acquisitions, except for the investment in ACTV, Inc., were accounted
for using the purchase method and, accordingly, the assets and liabilities of
the companies acquired have been recorded at their estimated fair values at the
date of acquisition. The excess of the cost over the fair value of net assets
acquired is being amortized over periods up to 40 years. The investment in
ACTV, Inc., is accounted for under the cost method of accounting.
    In 1994 the company entered into an agreement to purchase the assets of two
television stations from H & C Communications, Inc., for approximately
$250,000,000. The completion of the transaction is contingent upon approval by
the Federal Communications Commission.


The company and its subsidiaries are parties to various civil lawsuits that
have arisen in the ordinary course of their businesses, including actions for
libel and invasion of privacy. Management does not believe that any litigation
pending against the company will have a material adverse effect on its business
or financial condition.


The company operates principally in four areas of the communications industry:
newspaper publishing, television broadcasting, magazine publishing and cable
    Newspaper operations involve the publication of newspapers in the
Washington, D.C., area and Everett, Washington, and newsprint warehousing and
recycling facilities.
    Broadcast operations are conducted primarily through four VHF television
stations. All stations are network-affiliated, with revenues derived primarily
from sales of advertising time.
    Magazine operations consist of the publication of a weekly news magazine,
Newsweek, which has one domestic and three international editions. Revenues
from both newspaper and magazine publishing operations are derived from
advertising and, to a lesser extent, from circulation.
    Cable television operations consist of over 50 cable systems offering basic
cable and pay television services to more than 480,000 subscribers in 15
midwestern, western and southern states. Prior to September 1993 cable
television operations also included services provided in the United Kingdom.
The principal source of revenues is monthly subscription fees charged for
    Other businesses include the operations of a database publishing company, a
regional sports cable system, a wireless telephone system and educational
centers engaged in preparing students for admissions tests and licensing
examinations (including the preparation and publishing of training materials).
    Income from operations is the excess of operating revenues over operating
expenses including corporate expenses, which are allocated to operations of the
segments. In computing income from operations by segment, the effects of equity
in earnings of affiliates, interest income, interest expense, other income and
expense items and income taxes are not included.
    Identifiable assets by segment are those assets used in the company's
operations in each business segment. Investments in affiliates are discussed in
Note D. Corporate assets are principally cash and cash equivalents and
marketable securities.