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10-K
GRAHAM HOLDINGS CO filed this Form 10-K on 03/29/1994
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                      SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON,  D.C.  20549
                                       
                             --------------------
                                       
                                   FORM 10-K

             ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

                   For the fiscal year ended January 2, 1994

                         Commission file number 1-6714

                          The Washington Post Company
            (Exact name of registrant as specified in its charter)

           Delaware                                          53-0182885
(STATE OR OTHER JURISDICTION OF                           (I.R.S. EMPLOYER
 INCORPORATION OR ORGANIZATION)                          IDENTIFICATION NO.)

  1150 15th St., N.W., Washington, D.C.                          20071
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                       (ZIP CODE)

      REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:  (202) 334-6000

          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

                                              NAME OF EACH EXCHANGE ON
      TITLE OF EACH CLASS                         WHICH REGISTERED
      -------------------                     ------------------------ 
Class B Common Stock, par value               New York Stock Exchange
        $1.00 per share               
                                  

         Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.  Yes   X     No      .
                                               -----      -----
         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  /X/

         Aggregate market value of the Company's voting stock held by
non-affiliates on February 28, 1994, based on the closing price for the
Company's Class B Common Stock on the New York Stock Exchange on such date:
approximately $1,539,000,000.

         Shares outstanding at February 28, 1994:

                   Class A Common Stock -  1,843,250 shares
                   Class B Common Stock -  9,870,115 shares
                               
         Documents partially incorporated by reference:

              Definitive Proxy Statement for the Company's 1994 Annual Meeting
         of Stockholders  (incorporated in Part III to the extent provided in

         Items 10, 11, 12 and 13 hereof).

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<PAGE>   2

                                     PART I


ITEM 1.   BUSINESS.

     The principal business activities of The Washington Post Company (the
"Company") consist of newspaper publishing (principally The Washington Post),
television broadcasting (through the ownership and operation of four
network-affiliated stations), the ownership and operation of cable television
systems, and magazine publishing (Newsweek magazine).

     Information concerning the consolidated operating revenues, consolidated
income from operations and identifiable assets attributable to the principal
segments of the Company's business for the last three fiscal years is contained
in Note M to the Company's Consolidated Financial Statements appearing
elsewhere in this Annual Report on Form 10-K.  (Revenues for each segment are
shown in such Note M net of intersegment sales, which did not exceed .2% of
consolidated operating revenues.)

     During each of the last three years the Company's operations in geographic
areas outside the United States, consisting primarily of the publication of the
international editions of Newsweek and cable television operations in the
United Kingdom, accounted for less than 7% of the Company's consolidated
revenues and less than 1% of its consolidated income from operations, and the
identifiable assets attributable to such operations represented less than 7% of
the Company's consolidated assets.

                              NEWSPAPER PUBLISHING
THE WASHINGTON POST

     The Washington Post is a morning and Sunday newspaper primarily
distributed by home delivery in the Washington, D.C.  metropolitan area,
including large portions of Virginia and Maryland.

     The following table shows the average paid daily (including Saturday) and
Sunday circulation of The Post for the twelve-month periods ended September 30
in each of the last five years, as reported by the Audit Bureau of Circulations
("ABC") for the years 1989-1992 and as estimated by The Post for the
twelve-month period ended September 30, 1993 (for which period ABC had not
completed its audit as of the date of this report) from the semi-annual
publisher's statements submitted to ABC for the six-month periods ended March
31, 1993 and September 30, 1993:

<TABLE>
<CAPTION>                                                    
                                                                AVERAGE PAID CIRCULATION
                                                                ------------------------
                                                                 DAILY            SUNDAY
                                                                 -----            ------
        <S>                                                      <C>            <C>
        1989.................................................    785,076        1,137,515
        1990.................................................    794,822        1,145,393
        1991.................................................    807,129        1,154,138
        1992.................................................    815,225        1,158,329
        1993.................................................    825,339        1,153,705
</TABLE>


     The rate charged to subscribers for home-delivered copies of
the daily and Sunday newspaper for each four-week period has been $9.20 since
1988.  A price increase for Sunday-only home-delivered copies of the newspaper
went into effect on January 20, 1991, raising the rate per four-week period
from $5.00 (which had been the rate since 1983) to $6.00.  On April 6, 1992,
the newsstand price for the Sunday newspaper was increased from $1.25 (which
price had been in effect since 1986) to $1.50.  The newsstand price for the
daily newspaper has been $0.25 since 1981.





                                       1

<PAGE>   3
     General advertising rates were increased by approximately 4.3% on February
3, 1993, and approximately another 3.7% on January 1, 1994.  Rates for most
categories of classified and retail advertising were increased by approximately
4.3% on February 1, 1993, and approximately an additional 4.1% on February 1,
1994.

     The following table sets forth The Post's advertising inches (excluding
preprints) and number of preprints for the past five years:

<TABLE>
<CAPTION>                                            
                                              1989        1990      1991        1992          1993
                                             -----        ----      ----        ----          ----
<S>                                           <C>         <C>        <C>         <C>          <C>
Total Inches (in thousands)..............     4,679       4,125      3,571       3,435        3,394
    Full-Run Inches .....................     4,492       3,938      3,376       3,215        3,165
    Part-Run Inches .....................       187         187        195         220          229
Preprints (in millions)..................       921         987        993       1,135        1,142
</TABLE>
                                             

    The Post also publishes The Washington Post National Weekly Edition, a
tabloid which contains selected articles and features from The Washington Post
edited for a national audience.  The National Weekly Edition has a basic
subscription price of $48.00 per year and is delivered by second class mail to
approximately 114,000 subscribers.

    The Post has about 520 full-time editors, correspondents, reporters and
photographers on its staff, draws upon the news reporting facilities of the
major wire services and maintains correspondents in 18 news centers abroad and
in New York City, Los Angeles, Chicago, Miami, Richmond, Baltimore, Annapolis
and Austin, Texas.

THE HERALD

    The Company owns The Daily Herald Company, publisher of The Herald in
Everett, Washington, about 30 miles north of Seattle.  The Herald is published
mornings seven days a week and is primarily distributed by home delivery in
Snohomish County.

    The Herald's average paid circulation as reported to ABC for the twelve
months ended September 30, 1993, was 52,356 daily (including Saturday) and
63,732 Sunday (up .3% and down .5%, respectively, from the twelve months ended
September 30, 1992).  Full- run advertising inches (excluding preprints)
decreased 4.0% in 1993 to 888,952 inches, while zoned part-run advertising
increased 11.8% to 107,667 inches. The number of preprints distributed
increased 3.9% to 100,128,775.

    The Herald employs approximately 57 editors, reporters and photographers.

THE GAZETTE NEWSPAPERS

    In June 1993 the Company acquired the 16% of the common stock of The
Gaithersburg Gazette, Inc. it did not already own.  This subsidiary (the name
of which has been changed to The Gazette Newspapers, Inc.) publishes one
paid-circulation and 13 controlled- circulation weekly community newspapers
(collectively known as The Gazette Newspapers) in Montgomery County and limited
parts of Frederick and Carroll Counties, Maryland.  During 1993 The Gazette
Newspapers had an aggregate average weekly circulation of more than 230,000
copies.

    The Gazette Newspapers have approximately 60 editors, reporters and
photographers on their combined staffs.





                                       2

<PAGE>   4
                            TELEVISION BROADCASTING

    Through wholly owned subsidiaries the Company owns four VHF television
stations located in Detroit, Michigan; Miami, Florida; Hartford, Connecticut;
and Jacksonville, Florida; which are respectively the 9th, 16th, 25th and 54th
largest broadcasting markets in the United States.  Each of the Company's
stations is affiliated with a national network.  Although network affiliation
agreements generally have limited terms, such agreements typically are renewed
and each of the Company's television stations has maintained its network
affiliation continuously for at least twenty years.

    The Company's 1993 net operating revenues from television advertising, by
category, were as follows:


<TABLE>
     <S>                                               <C>
     National   ...................................    $ 85,804,000
     Local      ...................................      80,557,000
     Network    ...................................       7,808,000
                                                       ------------
         Total  ...................................    $174,169,000
</TABLE>
                                           

     The following table sets forth certain information with
respect to each of the Company's television stations:


<TABLE>
<CAPTION>
     
           
     TATION 
     OCATION                                                                          TOTAL COMMERCIAL
     ND YEAR                 NATIONAL                  EXPIRATION   EXPIRATION        STATIONS IN DMA(B)   
     OMMERCIAL               MARKET                    DATE OF       DATE OF       ------------------------
     PERATION                RANKING     NETWORK         FCC         NETWORK
     OMMENCED                  (A)     AFFILIATION     LICENSE      AGREEMENT      ALLOCATED      OPERATING
     --------                --------  -----------     -------      ---------      ---------      ---------
      <S>                     <C>        <C>            <C>        <C>               <C>           <C>
      WDIV                      9th        NBC           Oct. 1,     June 30,         VHF-4         VHF-4
      Detroit, Mich.                                       1997         1994          UHF-6         UHF-5
      1947                                                                          
                                                                                    
      WPLG                     16th        ABC           Feb. 1,     April 2,         VHF-5         VHF-4
      Miami, Fla.                                          1997       1995(c)         UHF-8         UHF-7
      1961                                                                          
                                                                                    
      WFSB                     25th        CBS          April 1,    April 10,         VHF-2         VHF-2
      Hartford, Conn.                                      1994       2002            UHF-6         UHF-4
      1957                                                                          
                                                                                    
      WJXT                     54th        CBS           Feb. 1,     July 10,         VHF-2         VHF-2
      Jacksonville, Fla.                                   1997       2001            UHF-7         UHF-4
      1947                                                                          
</TABLE>

      -------------
          (a) Source: 1993/94 DMA Market Rankings, Nielsen Media
       Research, Fall 1993, based on television homes in DMA (see
       note (b) below).
      
          (b) Designated Market Area ("DMA") is a market
       designation of A.C. Nielsen which defines each television
       market exclusive of another, based on measured viewing
       patterns.

          (c) Agreement may be terminated at any time by either
       party on six months' prior notice.
      




                                       3

<PAGE>   5
      In January 1994 subsidiaries of the Company entered into a definitive
agreement to acquire the assets of television station KPRC-TV, an NBC affiliate
in Houston, Texas, and television station KSAT-TV, an ABC affiliate in San
Antonio, Texas, for an aggregate cash purchase price of approximately $250
million.  Houston and San Antonio are respectively the 10th and 40th largest
broadcasting markets in the United States.

REGULATION OF BROADCASTING AND RELATED MATTERS

      The Company's television broadcasting operations are subject to the
jurisdiction of the FCC under the Communications Act of 1934, as amended.
Under authority of such Act the FCC, among other things, assigns frequency
bands for broadcast and other uses; issues, revokes, modifies and renews
broadcasting licenses for particular frequencies; determines the location and
power of stations and establishes areas to be served; regulates equipment used
by stations; and adopts and implements regulations and policies which directly
or indirectly affect the ownership, operations and profitability of
broadcasting stations.

      Each of the Company's television stations holds a license valid for a
period of five years which is renewable upon application for a similar period.

      The FCC is conducting proceedings dealing with such matters as the
standards to be applied to broadcast renewal applications, various broadcast
network regulations, multiple ownership restrictions, regulations pertaining to
cable television operations (discussed below under "Cable Television Division
Regulation of Cable Television and Related Matters"), whether to allocate
additional radio spectrum to existing broadcasting stations to enable them to
implement advanced television ("ATV") technologies, whether to adopt a uniform
ATV broadcast transmission standard for television and impose requirements on
existing television stations to activate ATV channels and ultimately to turn
back to the FCC their existing conventional television channels, and various
proposals to further the development of alternative video delivery systems that
would compete in varying degrees with both cable television and television
broadcasting operations.  The Company cannot predict the resolution of these
and various other matters although, depending upon their outcome, they could
affect the Company's television broadcasting interests either adversely or
favorably.

      Various of the foregoing questions as well as other important substantive
and policy issues (including changes in the law governing what broadcasters may
charge political candidates) will also likely be considered by Congress.

                           CABLE TELEVISION DIVISION

      As of the end of 1993 the Company (through subsidiaries) provided basic
cable service to approximately 482,000 subscribers (representing about 70% of
the 692,000 homes passed by the systems) and had in force more than 301,000
subscriptions to premium program services.  The Company's cable systems are
located in 15 Midwestern, Southern and Western states and typically serve
smaller communities; thus 30 of the Company's systems pass fewer than 10,000
dwelling units, 14 pass 10,000-25,000 dwelling units, and only eight pass more
than 25,000 dwelling units, of which the two largest are in Modesto and Santa
Rosa, California, each serving more than 45,000 basic subscribers.





                                       4

<PAGE>   6
REGULATION OF CABLE TELEVISION AND RELATED MATTERS

      The Company's cable operations are subject to various requirements
imposed by local, state and federal governmental authorities.  The franchises
granted by local governmental authorities are typically nonexclusive and
limited in time and generally contain various conditions and limitations
relating to payment of fees to the local authority, determined generally as a
percentage of revenues.  Additionally, franchises often regulate the conditions
of service and technical performance, and contain various types of restrictions
on transferability.  Failure to comply with such conditions and limitations may
give rise to rights of termination by the franchising authority.

      The Cable Television Consumer Protection and Competition Act of 1992 (the
"1992 Cable Act"), requires or authorizes the imposition of a wide range of
regulations on cable television operations.  The three major areas of
regulation are (i) the rates charged for certain cable television services,
(ii) required carriage ("must carry") of some local broadcast stations, and
(iii) retransmission consent rights for commercial broadcast stations.

      Except in relatively rare instances of "effective competition" (defined
in the 1992 Cable Act as the presence of another cable operator or another
multichannel video service serving specified levels of customers in the same
community), monthly subscription rates for the basic tier of cable service may
be regulated by municipalities, subject to procedures and criteria established
by the FCC, and the FCC may regulate the rates charged for optional tiers of
service.  Rates charged by cable television systems for pay- per-view service,
for per-channel premium program services and for advertising are all exempt
from regulation under the 1992 Cable Act.  In April 1993 the FCC announced a
"freeze" on rate increases for regulated services (i.e. the basic and optional
tiers), which currently is due to expire on May 15, 1994, and promulgated
benchmarks for determining the reasonableness of rates for such services.  The
FCC expected that its benchmarks, which took effect on September 1, 1993, would
produce an overall average reduction of 10% in the rates charged for regulated
services.  The Company estimates that the combined effect of compliance with
the benchmarks and the rate freeze reduced its 1993 revenue from cable
operations by approximately $3 million.  The FCC's benchmarks were widely
criticized by some for being too stringent and by others for being too
permissive.  On February 22, 1994, acting on petitions to reconsider the
original benchmarks, the FCC adopted revisions designed to reduce overall rates
for regulated services by, on average, an additional 7%.  Although the Company
anticipates some further negative impact from these revisions, it is unable to
estimate the amount of that impact since the details of the rules implementing
the latest FCC action are not yet available.  Under the FCC's approach, cable
operators may exceed the benchmarks if they can show in a cost-of-service
proceeding that higher rates are needed to earn a reasonable return on
investment.  Also on February 22, 1994, the FCC announced the adoption of rules
to implement the cost-of-service standard; among other things the new rules
establish an interim industry-wide rate of return of 11.25%.  Various parties
have indicated they will seek judicial review of the FCC's rate regulation
decisions.

      Pursuant to the "must-carry" rules a commercial television broadcast
station may, under certain circumstances, insist on carriage of its signal on
cable systems located within the station's market area, while a noncommercial
public station may insist on carriage of its signal on cable systems located
within either the station's predicted Grade B contour or 50 miles of the
station's transmitter.  As a result of these obligations (the constitutionality
of which is presently under review in the United States Supreme Court) certain
of the Company's cable systems have had to add broadcast stations that they
might not otherwise have elected to carry, and the freedom the Company's
systems would otherwise have to drop signals previously carried has been
reduced.





                                       5

<PAGE>   7
      Beginning in October 1993 and at three-year intervals thereafter
commercial broadcasters may elect to forego must-carry rights and insist
instead that their signals not be carried without the prior consent of the
stations.  Prior to October 1993 some of the broadcast stations carried by the
Company's cable television systems opted for retransmission consent and
initially took the position that they would not grant consent without
commitments by the Company's systems to make cash payments.  As a result of
case- by-case negotiations, the Company's cable systems were able to continue
carrying virtually all of the stations insisting on retransmission consent
without having to agree to pay any stations for the privilege of carrying their
signals.  However some commitments were made to carry other program services
offered by a station or an affiliated company, to provide advertising
availabilities on cable for sale by a station and to distribute promotional
announcements with respect to a station.

      Various other matters addressed in the 1992 Cable Act may significantly
affect the costs or profits of cable television systems.  These matters include
a prohibition on exclusive franchises, restrictions on the ownership of
competing video delivery services, restrictions on transfers of cable
television ownership, new consumer protection measures, new technical and
signal quality standards, and various regulations intended to facilitate the
development of competing video delivery services.

      In contrast to the 1992 Cable Act, the Cable Communications Policy Act of
1984 (the "1984 Cable Act") restricted regulation of cable television in many
important respects.  Important provisions of the 1984 Cable Act that remain in
effect after the 1992 Cable Act include a requirement that franchises be
granted for reasonable periods of time, various remedies and safeguards to
protect cable operators against arbitrary refusals to renew franchises, and a
limitation on franchise fees to 5% of revenues.

      Apart from its new authority under the 1992 Cable Act, the FCC regulates
various other aspects of cable television operations.  Since 1990 cable systems
have been required to black out from the distant broadcast stations they carry
syndicated programs for which local stations have purchased exclusive rights
and request exclusivity.  Other long-standing FCC rules require cable systems
to delete under certain circumstances duplicative network programs broadcast by
distant stations.  The FCC also imposes certain technical standards on cable
television operators, exercises the power to license various microwave and
other radio facilities frequently used in cable television operations,
regulates the assignment and transfer of control of such licenses, and oversees
compliance with certain affirmative action and equal employment opportunity
obligations applicable to cable systems.  In addition, pursuant to the Pole
Attachment Act the FCC exercises authority to disapprove unreasonable rates
charged to cable operators by telephone and power utilities for utilizing space
on utility poles or in underground conduits.

      The Copyright Act of 1976 grants to cable television systems, under
certain terms and conditions, the right to retransmit the signals of television
stations pursuant to a compulsory copyright license.  Those terms and
conditions include the payment of certain license fees set forth in the statute
or established by subsequent administrative regulations.  The compulsory
license fees have been increased on several occasions since this Act went into
effect.  Some pending legislative proposals would modify or eliminate the
compulsory copyright licensing scheme, and the FCC and others have urged that
the compulsory license be phased out for local or distant broadcast signals or
both.  Still other proposals would extend the compulsory license to "wireless
cable," direct- broadcast satellite and other competitive media.





                                       6

<PAGE>   8
      Currently telephone companies are generally prohibited by the 1984 Cable
Act and certain FCC rules from operating cable systems in areas in which they
provide telephone service.  However Congress, the FCC and the courts are in
varying degrees revisiting this question.  The FCC has recommended changes in
the 1984 Cable Act to permit telephone company ownership of co-located cable
systems, and the agency has authorized, subject to judicial review, a
"video-dial-tone" service in which telephone companies would provide video
programming supplied by others.  A court decree that prohibited the former Bell
regional operating companies from offering certain information services,
including acting as cable television system operators, has been modified to
eliminate those restrictions, although the modification is being appealed.
This decree modification will have the effect of permitting the former Bell
regional operating companies to provide cable television services out of their
home regions, but the 1984 Cable Act continues to prohibit all telephone
companies from providing cable service in their home regions.

      Litigation is pending in various courts in which prohibitions on cable
television operations without a franchise and various franchise requirements
are being challenged as unlawful under the First Amendment, the antitrust laws
and on other grounds.  If successful, such litigation could foster the
development and operation of duplicative cable facilities that would compete
with existing cable systems.

      During the last three years the FCC has adopted several rule changes
intended to facilitate the development of so-called "wireless cable," a video
service capable of distributing as many as 30 television channels in a local
area by over-the-air microwave transmission.

      The regulation of certain cable television rates pursuant to the 1992
Cable Act has negatively impacted the revenues of the Company's cable systems
as discussed above.  The Company cannot predict whether the FCC's rate
regulation decisions will in fact be appealed and, if so, whether those
decisions will ultimately be upheld.  In addition, the Company is unable to
predict the outcome of the various other matters discussed above or what effect
such matters may ultimately have on its cable television business.

U.K. CABLE TELEVISION OPERATIONS

      In September 1993 the Company sold its entire interest in companies
constructing and operating cable television systems in the United Kingdom.

                              MAGAZINE PUBLISHING

      Newsweek is a weekly news magazine published both domestically and
internationally.  In gathering, reporting and writing news and other material
for publication, Newsweek maintains news bureaus in 10 U.S. and 16 foreign
cities.  Worldwide there are approximately 285 full-time editorial staff
members, 216 of whom are in New York.

      The domestic edition of Newsweek is comprised of over 100 different
geographic or demographic editions which carry substantially identical news and
feature material but enable advertisers to direct messages to specific market
areas or demographic groups.  Domestically, Newsweek ranks second in
circulation among the three leading weekly news magazines (Newsweek, Time and
U.S. News & World Report).  Its average weekly domestic circulation rate base
and its percentage of the total weekly





                                       7

<PAGE>   9
domestic circulation rate base of the three leading weekly news magazines for
the past five years are  set forth in the following table:

<TABLE>
<CAPTION>
                                                NEWSWEEK
                                              AVERAGE WEEKLY   PERCENTAGE OF
                                               CIRCULATION     THREE LEADING
                                                RATE BASE      NEWS MAGAZINES
                                                ---------      --------------
     <S>                                        <C>                  <C>
     1989  ................................     3,100,000            32.6%
     1990  ................................     3,100,000            32.9%
     1991  ................................     3,100,000            34.1%
     1992  ................................     3,100,000            33.2%
     1993  ................................     3,100,000            32.7%
</TABLE>
                                        

     Newsweek is sold on newsstands and through subscription mail order sales
derived from a number of sources, principally direct mail promotion.  The basic
one-year subscription price is $41.08.  During 1993 most subscriptions were
sold at a discount from the basic price.  Since January 1992 Newsweek's
newsstand price has been $2.95 per copy.

     The total number of Newsweek's domestic advertising pages and gross
domestic advertising revenues as reported by Publishers' Information Bureau,
Inc., together with Newsweek's percentages of the total number of advertising
pages and total advertising revenues of the three leading weekly news
magazines, for the past five years have been as follows:


<TABLE>
<CAPTION>
                                                                                NEWSWEEK
                                           NEWSWEEK     PERCENTAGE OF            GROSS      PERCENTAGE OF
                                          ADVERTISING   THREE LEADING         ADVERTISING   THREE LEADING
                                            PAGES*      NEWS MAGAZINES         REVENUES*    NEWS MAGAZINES
                                            ------      --------------         ---------    --------------
     <S>                                     <C>            <C>             <C>                 <C>
     1989   ..............................   2,490          34.8%           $ 255,395,000       33.3%
     1990   ..............................   2,294          33.4%             252,447,000       32.5%
     1991   ..............................   1,948          32.5%             233,601,000       32.7%
     1992   ..............................   2,109          33.2%             258,396,000       32.4%
     1993   ..............................   2,102          33.3%             260,396,000       32.3%
                                          
     ------------
</TABLE>

         * Advertising pages and gross advertising revenues are
     those reported by Publishers' Information Bureau, Inc.  PIB
     computes gross advertising revenues from basic one-time rates
     and the number of advertising pages carried.  PIB figures
     therefore exceed actual gross advertising revenues, which
     reflect lower rates for multiple insertions.  Net revenues as
     reported in the Company's Consolidated Statements of Income
     also exclude agency fees and cash discounts, which are
     included in the gross advertising revenues shown above.  Page
     and revenue figures exclude affiliated advertising.
     
     Newsweek's advertising rates are based on its average weekly circulation
rate base and are competitive with the other weekly news magazines.  Effective
with the January 4, 1993 issue, national advertising rates were increased by an
average of 5.5%.  Beginning with the issue dated January 3, 1994, national
advertising rates were increased again by an average of 4.9%.

     Newsweek Business, which is published 39 times a year, is a demographic
edition of Newsweek distributed to subscribers qualified by a professional or
managerial job title and a minimum income level.  Advertising rates for this
edition, which has a circulation rate base of 750,000, were last increased in
January 1993 with that increase averaging 5.5%.





                                       8

<PAGE>   10
     Newsweek's other demographic edition, Newsweek Woman, which was published
ten times during 1993, has a circulation rate base of 700,000 selected female
subscribers.  At the beginning of 1993 advertising rates for this edition were
increased by an average of 15.0%, with an additional average increase of 4.9%
instituted early in 1994.

     Internationally, Newsweek is published in an Atlantic edition covering the
British Isles, Europe, the Middle East and Africa, a Pacific edition covering
Japan, Korea and Southeast Asia, and a Latin America edition, all of which are
in the English language.  Editorial copy solely of domestic interest is
eliminated in the international editions and is replaced by other
international, business or national coverage primarily of interest abroad.
Since 1984 a 24-page section of Newsweek has been included in The Bulletin, an
Australian weekly news magazine which also circulates in New Zealand.  In 1986
a Japanese-language edition of Newsweek, Nihon Ban, began publication in Tokyo
pursuant to an arrangement with a Japanese publishing company which translates
editorial copy, sells advertising in Japan and prints and distributes the
edition.  In November 1991 a Korean-language edition of Newsweek, Hankuk Pan,
began publication pursuant to a similar arrangement with a Korean publishing
company.

     The average weekly circulation rate base, advertising pages and gross
advertising revenues of Newsweek's international editions (including The
Bulletin insertions but not including the Japanese- or Korean-language editions
of Newsweek) for the past five years have been as follows:

<TABLE>
<CAPTION>
                                         AVERAGE WEEKLY                    GROSS
                                          CIRCULATION     ADVERTISING   ADVERTISING
                                            RATE BASE        PAGES*      REVENUES*
                                            ---------        ------      ---------
      <S>                                    <C>             <C>       <C>
      1989  ...........................      665,000         2,352     $60,187,000
      1990  ...........................      673,000         2,466      67,131,000
      1991  ...........................      705,000         2,296      68,405,000
      1992  ...........................      730,000         2,549      76,765,000
      1993  ...........................      745,000         2,128      68,053,000
                                       
     ------------
</TABLE>

           * Advertising pages and gross advertising revenues are those
     reported by LNA International.  LNA computes gross advertising revenues
     from basic one-time rates and the number of advertising pages carried.
     LNA figures therefore exceed actual gross advertising revenues, which
     reflect lower rates for multiple insertions.  Net revenues as reported in
     the Company's Consolidated Statements of Income also exclude agency fees
     and cash discounts, which are included in the gross advertising revenues
     shown above.  Page and revenue figures exclude affiliated advertising.

     For 1994 the average weekly circulation rate base for Newsweek's English
language international editions (including The Bulletin insertions) will be
748,000.  The average weekly circulation rate bases for the Japanese-language
and Korean-language editions for 1994 will be 160,000 and 100,000,
respectively.

     In April 1993 Newsweek introduced the first CD-ROM version of a major
magazine -- Newsweek InterActive.  Combining text, photos, audio and video,
Newsweek InterActive, which is available by subscription as well as through
retail outlets, is the first regularly published general interest multimedia
magazine.  Newsweek InterActive is also the first multimedia magazine to
provide a platform which allows readers to interact with digitally stored
advertising information.





                                       9

<PAGE>   11
                                OTHER ACTIVITIES

STANLEY H. KAPLAN EDUCATIONAL CENTERS

     A subsidiary of the Company owns the Stanley H. Kaplan Educational
Centers, which are engaged in preparing students for a broad range of
admissions tests and licensing examinations including SAT's, LSAT's, GMAT's and
GRE's, nursing and medical boards, and the uniform certified public accountant
examination.  In 1993 the Kaplan Centers had more than 149,000 enrollments and
provided courses through more than 150 permanent educational centers located
throughout the United States and in Canada, Puerto Rico and London.

LEGI-SLATE

     Legi-Slate, Inc., another subsidiary of the Company, provides its
customers with access to a computerized data base containing detailed
information on the legislative and regulatory activities of the United States
government.  The Legi-Slate data base includes both abstracts and the full text
of every bill and resolution introduced in Congress, the entire Congressional
Record and every document published in the Federal Register, as well as the
schedule of each Congressional committee and the voting record of each member
of Congress.  Legi-Slate also offers the Current USC(TM) and Daily CFR(TM)
services, which provide online access to the current full text of the United
States Code and the Code of Federal Regulations.

PRO AM SPORTS SYSTEM

      Pro Am Sports System, Inc. ("PASS") is a Detroit-based regional cable
sports network that provides programming to approximately 788,000 cable
television subscribers in Michigan and northwest Ohio.  PASS programming
includes games of the Detroit Tigers baseball team, the Detroit Pistons
basketball team and the Detroit Red Wings hockey team.

INTERNATIONAL HERALD TRIBUNE

     The Company beneficially owns 50% of the outstanding common stock of the
International Herald Tribune, S.A., a French company which publishes the
International Herald Tribune in Paris, France.  This English-language newspaper
has an average daily paid circulation of almost 200,000 copies and is
distributed in over 160 countries.  

COWLES MEDIA COMPANY

     The Company owns approximately 28% of the outstanding common stock of
Cowles Media Company, most of which was acquired in 1985.  Cowles owns the
Minneapolis-St. Paul Star Tribune and a number of smaller publications.

DIGITAL INK

     In late 1993 the Company organized a new subsidiary, Digital Ink Co., to
develop news and information products for distribution by computers, fax and
telephone.  

PERSONAL COMMUNICATIONS SERVICES

     In 1994 the FCC is expected to begin awarding licenses to operate systems
using new wireless telephone technologies (generally referred to as personal
communications services or "PCS").  It is contemplated PCS systems will use
transmitters which are smaller and closer together than those of conventional
cellular systems and other techniques to reduce the size and cost of portable
telephones.





                                       10

<PAGE>   12
     In September 1990 the Company formed a limited partnership with American
Personal Communications, Inc. ("APC"), a private company owned by individuals
with substantial prior experience in the cellular telephone industry, to
develop experimental PCS systems in the Washington, D.C./Baltimore area.  APC
currently is the sole general partner (although the Company has the right,
subject to prior FCC consent, eventually to convert its interest into that of a
general partner); the Company holds a majority of the partnership interests and
provides most of the partnership's financing.  The partnership was awarded two
FCC experimental licenses (subsequently consolidated into a single license) and
began experimental PCS operations in the fall of 1991.

     On December 23, 1993, the FCC finalized the award of a "pioneer's
preference" to the partnership, in recognition of its efforts to develop PCS.
The preference is for 30 MHz of spectrum in the "Block A" set of frequencies
(as described below) and covers the Washington/Baltimore Major Trading Area,
which consists of the District of Columbia and 65 counties in Maryland,
northern Virginia, West Virginia and southern Pennsylvania with an aggregate
population of nearly 8 million people.  The preference entitles the partnership
to apply for a license subject only to meeting basic licensing qualifications.
Accordingly, the partnership filed its application for a PCS authorization on
January 18, 1994.  Petitions for reconsideration and judicial appeals may be
filed with respect to the partnership's preference grant and its scope, and
petitions to deny may be filed with respect to its application.

     The partners may also bid on PCS licenses outside the Washington/Baltimore
area.  The Company and APC have agreed that if either party wishes to bid for
licenses covering such areas the other party will have a right to participate.

     The Omnibus Budget Reconciliation Act of 1993 provided that PCS licenses
would be awarded by auctions, subject to the FCC's power to except holders of a
pioneer's preference.  By mid-1994 the FCC is expected to adopt rules for
conducting these auctions.  For the PCS frequencies for which the partnership
might be interested in applying, auctions are likely to begin late in 1994.

     The FCC also has issued rules for the licensing and operation of PCS
services.  Those rules are the subject of petitions for reconsideration on
which the FCC is expected to act by the summer of 1994.  The present rules
allocate seven different frequency blocks for broadband, licensed PCS
(narrowband PCS uses much narrower bandwidths in other frequencies to provide
more specialized services; and unlicensed PCS, to be implemented on still other
frequencies, also would not generally be competitive with broadband PCS):
Block A--1850-1865 and 1930-1945 MHz, Block B--1865-1880 and 1945-1960 MHz,
Block C--1880-1890 and 1960-1970 MHz, Block D--2130-2135 and 2180-2185 MHz,
Block E--2135-2140 and 2185-2190 MHz, Block F--2140-2145 and 2190-2195 MHz,
and Block G--2145-2150 and 2195-2200 MHz.  The first two sets of frequencies
would be licensed for each of 51 Major Trading Areas ("MTA's") as designated by
Rand McNally and adopted by the FCC.  The remaining five frequency blocks would
be licensed for 492 Basic Trading Areas ("BTA's"), also as designated by Rand
McNally and adopted by the FCC.  Companies with substantial cellular holdings
in these areas would be eligible to bid only for Blocks E, F and G, and could
hold only one such license.  Block C and D frequencies would be reserved for
designated entities   women, minorities, small businesses and rural telephone
companies.

     PCS will compete with established cellular providers which generally use
analog technology but which can convert to digital technologies.  Their
eligibility for Block E, F or G spectrum, combined with their current access to
25 MHz of spectrum unencumbered by incumbent microwave users, would potentially
provide them with advantages compared to PCS providers.  Enhanced Specialized
Mobile





                                       11

<PAGE>   13
Radio ("ESMR") is another service already licensed by the FCC that will provide
competition to PCS.  Even more than cellular, ESMR has consolidated
geographically and in many markets ESMR operators are co-owned or affiliated
with other systems which in aggregate will cover geographic areas that are
substantially larger than MTA's.  PCS will also compete with paging,
conventional wireline telephone services and other new services that are in
various stages of development.

     It is expected that PCS will be regulated, like cellular, at both the
state and federal levels (although the FCC has precluded a substantial amount
of state regulation).  PCS operators will have to negotiate interconnection
arrangements with local telephone companies pursuant to general guidelines set
by the FCC.  Roaming arrangements among PCS operators may also be subject to
FCC oversight.  PCS licensees also will be subject to certain build-out
requirements (e.g., they must make service available to one- third of the
population in five years, two-thirds in seven years, and 90% in nine years),
and the term of their licensees will be ten years, subject to renewal.

                          PRODUCTION AND RAW MATERIALS

     The Washington Post is produced at the newspaper's principal place of
business and plant in downtown Washington, D.C., and at its satellite printing
plants in Fairfax County, Virginia, and Southeast Washington, D.C.  All
editions of The Herald are produced at its plant in Everett, Washington.  The
Gazette Newspapers are produced by three independent contract printers.
Newsweek's domestic edition is produced in five independent printing plants;
advertising inserts and photo-offset films for the domestic edition are also
produced by independent contractors.  The international editions of Newsweek
are printed in England, Hong Kong, Singapore, Switzerland and Hollywood,
Florida; insertions for The Bulletin are printed in Australia.

     In 1993 The Washington Post consumed about 250,000 tons* of newsprint
purchased from a number of suppliers, including Bowater Incorporated, which
supplied approximately 30% of The Post's 1993 newsprint requirements.  About
half of the newsprint The Post purchases from Bowater Incorporated is provided
by Bowater Mersey Paper Company Limited, 49% of the common stock of which is
owned by the Company (the majority interest being held by a subsidiary of
Bowater Incorporated).  Bowater Mersey owns and operates a newsprint mill near
Halifax, Nova Scotia, and owns extensive woodlands that provide much of the
mill's wood requirements.  In 1993 Bowater Mersey produced about 260,000 tons
of newsprint.

     The Company, through a subsidiary, has a 35% limited partnership interest
in Bear Island Paper Company, which owns and operates a newsprint mill in
Doswell, Virginia, about 85 miles south of Washington, D.C.  The general
partner, which has a 30% interest and manages the mill, is Brant-Allen
Industries, Inc., a firm experienced in the construction and operation of
similar mills; the other limited partner, also with a 35% interest, is a
subsidiary of Dow Jones & Company, Inc. The Paper Company and  Bear Island
Timberlands Company, in which a subsidiary of the Company also has a 35%
limited partnership interest, own an aggregate of approximately 150,000 acres
of Virginia woodlands.  These woodlands supply a portion of the wood
requirements of the Paper Company's mill.  That mill produced about 220,000
tons of newsprint in 1993, and during that year The Washington Post purchased
about 20% of its newsprint requirements from Bear Island Paper Company.  In
March 1994 Bear Island




- ---------------
     * All references in this report to newsprint tonnage and prices refer to
short tons (2,000 pounds) and not to metric tons (2,204.6 pounds) which are
often used in newsprint price quotations.





                                       12

<PAGE>   14
Paper Company expects to complete construction of a recycling plant that is
designed to provide at least 20% of the pulp used by the mill.

     The announced price of newsprint (excluding discounts which decreased
before rising during the second half of the year) was approximately $620 per
ton throughout 1993.  The Post believes it has adequate newsprint available
through contracts with its various suppliers.  About 50% of The Post's current
newsprint consumption consists of newsprint with some recycled content, and the
use of recycled newsprint by The Post is expected to increase in the future.
During 1990 the Company acquired 90% of the stock of Capitol Fiber Inc., which
handles and sells to recycling industries old newspapers and other paper
collected in Washington, D.C, Maryland and northern Virginia.

     In 1993 The Herald consumed approximately 5,900 tons of newsprint supplied
by four different suppliers, the largest of which furnished about 35% of the
newspaper's total requirements.  Approximately 70% of the newsprint used by The
Herald includes some recycled content.

     The domestic edition of Newsweek consumed 31,480 tons of paper in 1993,
the bulk of which was purchased from eight major suppliers under long-term
contracts at prevailing market prices.  The current cost of body paper (the
principal paper component of the magazine) is approximately $870 per ton.

     Over 90% of the aggregate domestic circulation of Newsweek is delivered by
second class mail, and most subscriptions are solicited by either first or
third class mail.  Thus substantial increases in postal rates for these classes
of mail may have a significant negative impact on Newsweek's operating income.
On March 8, 1994, the U.S. Postal Service proposed a rate increase for all
classes of mail averaging 10.3%.  This proposal, which would take effect in
January 1995 at the earliest, is subject to review by the Postal Rate
Commission and then to approval by the Board of Governors of the U.S. Postal
Service.  If approved, this proposal would increase Newsweek's annual postage
costs by approximately $4 million.  On the other hand, since advertising
distributed by third class mail competes to some degree with newspaper
advertising, the Company believes the increases in third class rates included
in this proposal could have a positive impact on the advertising revenues of
The Washington Post, The Herald and The Gazette Newspapers, although the
Company is unable to quantify the amount of such impact.

                                  COMPETITION

     The Washington Times, a newspaper published since 1982 in Washington,
D.C., began publishing Saturday and Sunday editions in competition with The
Washington Post in September 1991.  The Washington Times previously published
only on weekdays.  The Post also encounters competition in varying degrees from
newspapers published in suburban and outlying areas, other nationally
circulated newspapers and from television, radio, magazines and other
advertising media, including direct mail advertising.

     The Herald circulates principally in Snohomish County, Washington; its
chief competitors are the Seattle Times and the Seattle Post-Intelligencer,
which are daily and Sunday newspapers published in Seattle and whose Snohomish
County circulation is principally in the southwest portion of the county.
Since 1983 the two Seattle newspapers have consolidated their business and
production operations and combined their Sunday editions pursuant to a joint
operating agreement, although they continue to publish separate daily
newspapers.  Although The Herald's principal circulation is in Snohomish
County, it is also distributed in two other nearby counties (including King
County where Seattle is located) in





                                       13

<PAGE>   15
which its circulation is less than that of the Seattle newspapers.  Numerous
weekly and semi-weekly newspapers and shoppers are distributed in The Herald's
principal circulation area.

     The circulation of The Gazette Newspapers is limited to Montgomery County
and parts of Frederick and Carroll Counties, Maryland (areas where The
Washington Post also circulates).  The Gazette Newspapers compete in varying
degrees with many advertising vehicles available in their service areas,
including The Potomac and Bethesda/Chevy Chase Almanacs, The Free Press and The
Western Montgomery Bulletin, weekly controlled-circulation community
newspapers, The Montgomery County Sentinel, a weekly paid-circulation community
newspaper, and The Montgomery County Journal, a daily paid-circulation
community newspaper (which also publishes two controlled- circulation weekly
editions).

     The Company's television stations compete for audiences and advertising
revenues with television and radio stations and cable television systems
serving the same or nearby areas and to a lesser degree with other media such
as newspapers and magazines.  Both independent stations and stations affiliated
with the Fox Broadcasting Network are becoming increasingly competitive, and
cable television systems are expanding their operations in the Company's
broadcast markets where they compete for television viewing in varying degrees
by importing out-of-market television signals and by distributing pay-cable,
advertiser-supported and other programming that is originated for cable
systems.  Some cable television programming services also compete with
television stations for exhibition rights to various syndicated programs and
sports events.  In addition, telephone companies have shown increasing interest
in providing cable television and other video services, such as the
video-dial-tone service recently authorized by the FCC, and Congress is
considering legislation to eliminate or scale back the prohibition on in-region
telephone company provision of cable television services.  With or without this
or other legislative changes, the Company's television stations may also become
subject to increased competition from low power television stations, wireless
cable services, direct home reception of satellite program services, satellite
master antenna systems (which can carry pay-cable and similar program
material), and prerecorded video programming.  Further, high definition and
other improved television technologies are being developed which in the future
may enhance the ability of some of these other video providers to compete for
viewers with the local television broadcasting stations owned by the Company.

     Cable television systems operate in a highly competitive environment.  In
addition to competing with the direct reception of television broadcast signals
by the viewer's own antenna, such systems (like existing television stations)
are subject to competition from other forms of television program delivery such
as low power television stations, direct home reception of satellite program
services, wireless cable services, satellite master antenna systems and
prerecorded video programming.  Various legislative and regulatory proposals
may also increase the competition faced by existing cable television systems
by, among other things, authorizing the provision of competing services by
local telephone companies.

     According to figures compiled by Publishers' Information Bureau, Inc., of
the 181 magazines reported on by the Bureau, Newsweek ranked fifth in total
advertising revenues in 1993, when it received approximately 3.4% of all
advertising revenues of the magazines included in the report.  The magazine
industry is highly competitive both within itself and with other advertising
media which compete for audience and advertising revenue.

     The Company's publications and television broadcasting and cable
operations also compete for readers' and viewers' time with various other
leisure-time activities.

     The future of the Company's various business activities depends on a
number of factors, including the general strength of the economy, population
growth, technological innovations and new entertain-



                                       14

<PAGE>   16

ment, news and information dissemination systems, overall advertising
revenues, the relative efficiency of publishing and broadcasting compared to 
other forms of advertising and, particularly in the case of television
broadcasting and cable operations, the extent and nature of government
regulations.

                               EXECUTIVE OFFICERS

     The executive officers of the Company, each of whom is elected for a
one-year term at the meeting of the Board of Directors immediately following
the Annual Meeting of Stockholders held in May of each year, are as follows:

     Donald E. Graham, age 48, has been Chairman of the Board of the Company
since September 1993 and Chief Executive Officer of the Company since May 1991.
Mr. Graham served as President of the Company from May 1991 until September
1993 and prior to that had been a Vice President of the Company for more than
five years.  Mr. Graham also is Publisher of The Washington Post, having
occupied that position since 1979.

     Alan G. Spoon, age 42, is President and Chief Operating Officer of the
Company.  Mr. Spoon served as Executive Vice President and Chief Operating
Officer of the Company from May 1991 until September 1993 and had previously
been a Vice President of the Company since July 1987.  Mr. Spoon also served as
the Company's Vice President-Finance from July 1987 until November 1989, and as
President of Newsweek, Inc. from September 1989 until May 1991.

     Katharine Graham, age 76, is Chairman of the Executive Committee of the
Company's Board of Directors.  Mrs. Graham previously served as Chairman of the
Board of the Company from 1973 until September 1993 and as the Company's Chief
Executive Officer from 1973 until May 1991.

     Martin Cohen, age 62, is a Vice President of the Company; from 1975 to
July 1987 he served as Vice President-Finance and Treasurer of the Company.

     Diana M. Daniels, age 44, has been Vice President and General Counsel of
the Company since November 1988 and Secretary of the Company since September
1991.  Ms. Daniels served as General Counsel of the Company from January 1988
to November 1988 and prior to that had been Vice President and General Counsel
of Newsweek, Inc. since 1979.

     Beverly R. Keil, age 47, has been Vice President-Human Resources of the
Company since 1986; from 1982 through 1985 she was the Company's Director of
Human Resources.

     John B. Morse, Jr., age 47, has been Vice President-Finance of the Company
since November 1989.  He joined the Company as Vice President and Controller in
July 1989, and prior to that had been a partner of Price Waterhouse for more
than five years.

     G. William Ryan, age 53, is a Vice President of the Company and since
March 1988 has been President of Post-Newsweek Stations, Inc.

     Richard M. Smith, age 48, is a Vice President of the Company; he has
served as Editor-in-Chief of Newsweek since 1984 and in May 1991 also became
President of Newsweek, Inc.

     Howard E. Wall, age 64, has been a Vice President of the Company since
1982; he served as President of the Company's Cable Television Division from
1986 until January 1993 when he became Chairman of that Division.


                                      15

<PAGE>   17
                                   EMPLOYEES

     The Company and its subsidiaries employ approximately 6,600 persons on a
full-time basis.

     The Washington Post has approximately 2,950 full-time employees.  About
2,050 of The Post's full-time employees and about 450 part-time employees are
represented by one or another of nine unions.  Collective bargaining agreements
are currently in effect with locals of the following unions covering the
full-time and part-time employees and expiring on the dates indicated:  1,332
employees in the editorial, newsroom and commercial departments represented by
the Washington-Baltimore Newspaper Guild (July 9, 1995); 33 electricians
represented by the International Brotherhood of Electrical Workers (August 14,
1994); 141 paperhandlers and general workers represented by the Printing
Specialty and Paper Products Union (March 31, 1995); 47 machinists represented
by the International Association of Machinists (January 13, 1996); 57
photoengravers-platemakers represented by the Graphic Arts International Union
(February 19, 1996); 153 building service employees represented by the Service
Employees International Union (April 30, 1996); 38 engineers, carpenters and
painters represented by the International Union of Operating Engineers (March
1, 1997); 390 mailers and 195 mailroom helpers represented by the Washington
Mailers' Union (June 15, 1997); and 187 typographers represented by the
Columbia Typographical Union (October 2, 2000).

     Of the approximately 210 full-time and 95 part-time employees at The
Herald, about 57 full-time and 13 part-time employees are represented by one or
another of three unions.  The newspaper's collective bargaining agreement with
the Graphic Communications International Union, which represents press
operators, will expire on January 15, 1995; its agreement with the
International Brotherhood of Teamsters, which represents part-time bundle
haulers, will expire on May 31, 1998; and its agreement with the Communications
Workers of America, which represents printers and mailers, will expire on
October 31, 1998.

     The Gazette Newspapers have approximately 135 full-time and 55 part-time
employees, none of whom is represented by a union.

     Newsweek has approximately 965 full-time employees (including 216
full-time editorial staff members in New York, most of whom are represented by
the New York Newspaper Guild under a collective bargaining agreement which
expires in December 1995).  Newsweek has never experienced a strike, although
there have been occasional work stoppages by employees of some of its former
independent printers which did not materially interfere with the publication of
Newsweek.

     The Company's broadcasting operations have approximately 635 full-time
employees, of whom about 240 are union-represented.  Of the 11 collective
bargaining agreements covering union-represented employees, four have expired
and are being renegotiated.  Three other collective bargaining agreements will
expire in 1994.

     The Company's Cable Television Division has approximately 800 full-time
employees, none of whom are represented by a union.

     During the first quarter of 1993 Stanley H. Kaplan Educational Center Ltd.
implemented a restructuring plan pursuant to which it replaced independent
center administrators and certain of their employees with Kaplan employees.  As
a result of this action the number of full-time employees at Kaplan has
increased from approximately 225 persons to approximately 750 persons (which
number does not include substantial numbers of part-time employees who serve in
instructional and clerical capacities).  Robinson Terminal Warehouse
Corporation (the Company's newsprint warehousing and





                                       16

<PAGE>   18
distribution subsidiary) and Legi-Slate each has fewer than 125 employees.
None of these units' employees is represented by a union.


I
TEM 2.  PROPERTIES.

     The Company owns the publishing plant and principal offices of The
Washington Post in downtown Washington, D.C., including both a seven-story
building in use since 1950 and a connected nine-story office building on
contiguous property completed in 1972 in which are located the Company's
principal executive offices.  In 1980 the Company completed construction of a
satellite printing plant on 13 acres of land owned by the Company in Fairfax
County, Virginia, and in September 1981 purchased the printing plant of the
defunct Washington Star located in Southeast Washington, D.C.  The Company owns
a 34-acre tract of undeveloped land in Prince George's County, Maryland, and a
39-acre tract of undeveloped land near Dulles Airport in Fairfax County,
Virginia, both of which are suitable for the construction of facilities for the
printing and distribution of copies of The Post to suburban locations.  The
Company also owns 10 acres of undeveloped land in Montgomery County, Maryland.

     Additionally, the Company owns land on the corner of 15th and L Streets,
N.W., in Washington, D.C., adjacent to The Washington Post plant and office
building.  The Company has leased this property under a long-term ground lease
to The Prudential Insurance Company of America, which in 1982 completed
construction of a new multi-story office building on the site.  The Company
rents a number of floors in this building.   The Company also owns and occupies
a small office building on L Street which is next to The Post's downtown plant.

     The Herald owns its plant and office building in Everett, Washington; it
also owns two warehouses adjacent to its plant and a small office building in
Lynnwood, Washington, from which it manages its south Snohomish County
operations.  During 1993 The Herald completed installation of a new offset
press.

     The Gazette Newspapers, Inc. owns the one-story brick building in
Gaithersburg, Maryland, that serves as headquarters for The Gazette Newspapers.
Satellite editorial and sales offices are located in leased premises.

     The principal offices of Newsweek are currently located in the Newsweek
Building at 444 Madison Avenue in New York City, where Newsweek rents space on
18 floors.  Newsweek will relocate its New York City offices to 251 West 57th
Street during the first quarter of 1994.  The lease on the space in the new
location will expire in 2009, but is renewable for a 15-year period at
Newsweek's option at rentals to be negotiated or arbitrated.  Newsweek's
accounting, production and distribution depart- ments, and its subscription
service and computer operations, are located in a facility Newsweek built in
1987 on a 16-acre tract in Mountain Lakes, New Jersey.

     The headquarters offices of the Company's broadcasting operations are
located in the same facilities in downtown Washington that house the Company's
principal executive offices.  Each of the Company's television stations
operates in facilities owned by the Company.

     The headquarters offices of the Cable Television Division are located in
leased premises in Phoenix, Arizona.  The majority of the offices and head-end
facilities of the Division's individual cable systems are located in buildings
owned by the Company.  Substantially all the tower sites used by the Division
are leased.

     Robinson Terminal Warehouse Corporation owns two wharves and several
warehouses in Alexandria, Virginia.  These facilities are adjacent to the
business district and occupy approximately





                                       17

<PAGE>   19
seven acres of land.  Robinson also owns two partially developed tracts of land
in Fairfax County, Virginia, aggregating about 22 acres.  These tracts are near
The Washington Post's satellite printing plant and include several warehouses.
In 1992 Robinson purchased approximately 23 acres of undeveloped land on the
Potomac River in Charles County, Maryland, for the possible construction of
additional warehouse capacity.

     Stanley H. Kaplan Educational Center Ltd. owns a six-story building
located at 131 West 56th Street in New York City, which serves as the Manhattan
Educational Center, and a one-story building in Brooklyn, New York, which
houses Kaplan's printing and production facilities.  Kaplan's headquarters
offices are located at 810 Seventh Avenue in New York City, where Kaplan rents
space on two floors under leases which expire between 1994 and 1998.  All
Kaplan educational centers outside of Manhattan occupy leased premises.

     Legi-Slate's offices are located in leased premises in Washington, D.C.


ITEM 3.  LEGAL PROCEEDINGS.

     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.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     Not applicable.


                                    PART II



ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.

     The Company's Class B Common Stock is traded on the New York Stock
Exchange under the symbol "WPO." The Company's Class A Common Stock is not
publicly traded.

     The high and low sales prices of the Company's Class B Common Stock during
the last two years were:


<TABLE>
<CAPTION>
                                        1993                            1992
                                        ----                            ----
  Quarter                           High     Low                  High         Low
  -------                           ----   -----                  ----         ---
  <S>                              <C>                           <C>         <C>
  January - March . . . . . . .   $ 242   $ 228                 $ 242       $ 193
  April - June  . . . . . . . .     244     227                   246         214
  July - September  . . . . . .     230     212                   244         214
  October - December. . . . . .     257     219                   241         215
</TABLE>
 

     During 1993 the Company repurchased 99,800 shares of Class B
Common Stock in unsolicited transactions at prices no higher than the last sale
price on the New York Stock Exchange.  Of the total shares repurchased in 1993,
36,800 shares were included in trading volume reported on that year's
consolidated tape and accounted for less than one percent of such volume.





                                       18

<PAGE>   20
     At February 17, 1994, there were 23 holders of record of the
Company's Class A Common Stock and 1,549 holders of record of the Company's
Class B Common Stock
     
     Both classes of the Company's Common Stock participate
equally as to dividends.  Quarterly dividends were paid at the rate of $1.05
during 1993 and 1992.


ITEM 6.  SELECTED FINANCIAL DATA.

     See the information for the years 1989 through 1993 contained
in the table titled "Ten-Year Summary of Selected Historic Financial Data"
which is included in this Annual Report on Form 10-K and listed in the index to
financial information on page 23 hereof (with only the information for such
years to be deemed filed as part of this Annual Report on Form 10-K).  


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 
OF OPERATIONS.

     See the information contained under the heading "Management's
Discussion and Analysis of Results of Operations and Financial Condition" which
is included in this Annual Report on Form 10-K and listed in the index to
financial information on page 23 hereof.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     See the Company's Consolidated Financial Statements at
January 2, 1994, and for the periods then ended, together with the report of
Price Waterhouse thereon and the information contained in Note N to said
Consolidated Financial Statements titled "Summary of Quarterly Operating
Results (Unaudited)," which are included in this Annual Report on Form 10-K and
listed in the index to financial information on page 23 hereof.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

     Not applicable.


                                    PART III



ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     The information contained under the heading "Executive
Officers" in Item 1 hereof, the information contained under the headings
"Nominees for Election by Class A Stockholders" and "Nominees for Election by
Class B Stockholders," and the information contained in the last two paragraphs
under the heading "Stock Holdings of Certain Beneficial Owners and Management"
in the definitive Proxy Statement for the Company's 1994 Annual Meeting of
Stockholders is incorporated herein by reference thereto.


ITEM 11.  EXECUTIVE COMPENSATION.

     The information contained in the first paragraph after the
list of nominees under the heading "Nominees for Election by Class B
Stockholders" and under the headings "Executive Compensation," "Retirement
Plans" and "Compensation Committee Report on Executive Compensation" in the
definitive Proxy Statement for the Company's 1994 Annual Meeting of
Stockholders is incorporated herein by reference thereto.





                                       19

<PAGE>   21

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The information contained under the heading "Stock Holdings of Certain
Beneficial Owners and Management" in the definitive Proxy Statement for the
Company's 1994 Annual Meeting of Stockholders is incorporated herein by
reference thereto.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The information contained under the heading "Certain Transactions" in the
definitive Proxy Statement for the Company's 1994 Annual Meeting of
Stockholders is incorporated herein by reference thereto.


                                    PART IV



ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

   (A) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT:

         (i) Financial Statements and Financial Statement Schedules

               As listed in the index to financial information on page 23 
hereof.

         (ii) Exhibits

               As listed in the index to exhibits on page 52 hereof.

   (B) REPORTS ON FORM 8-K.

         No reports on Form 8-K were filed during the last quarter of the 
period covered by this report.





                                       20

<PAGE>   22

                                   SIGNATURES

     PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON MARCH 28, 1994.


                                     THE WASHINGTON POST COMPANY
                                            (Registrant)
                                      
                                                John B. Morse, Jr.
                                         By---------------------------------
                                                John B. Morse, Jr.
                                              Vice President-Finance
                                      
     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES INDICATED ON MARCH 28, 1994:


<TABLE>
                  <S>                            <C>
        Donald E. Graham                  Chairman of the Board and Chief
                                           Executive Officer (Principal
                                         Executive Officer) and Director

        Alan G. Spoon                   President, Chief Operating Officer
                                                    and Director

        Katharine Graham                    Chairman of the Executive
                                       Committee of the Board and Director

        John B. Morse, Jr.               Vice President-Finance (Principal
                                        Financial and Accounting Officer)

        Benjamin C. Bradlee                          Director

        James E. Burke                               Director

        Martin Cohen                                 Director

        George J. Gillespie, III                     Director

        Ralph E. Gomory                              Director

        Nicholas deB. Katzenbach                     Director

        Donald R. Keough                             Director

        Anthony J. F. O'Reilly                       Director

        Barbara Scott Preiskel                       Director

        William J. Ruane                             Director

        Richard D. Simmons                           Director

        George W. Wilson                             Director
</TABLE>



                                                  John B. Morse, Jr.
                                        By---------------------------------
                                                  John B. Morse, Jr.
                                                   Attorney-in-Fact
                                    




                                       21

<PAGE>   23
     An original power of attorney authorizing Donald E. Graham, Alan G. Spoon,
Katharine Graham and John B. Morse, Jr., and each of them, to sign all reports
required to be filed by the Registrant pursuant to the Securities Exchange Act
of 1934 on behalf of the above-named directors and officers has been filed with
the Securities and Exchange Commission.





                                       22

<PAGE>   24


<TABLE>
<CAPTION>
                                                    INDEX TO FINANCIAL INFORMATION
                                                                             
                                                        ---------------------

                                                     THE WASHINGTON POST COMPANY


                                                                                                                             PAGE
                                                                                                                             ----

<S>                                                                                                                           <C>
Financial Statements and Schedules:
         Report of Independent Accountants  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     24
         Consolidated Statements of Income for the Three Fiscal Years
            Ended January 2, 1994     . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     25
         Consolidated Balance Sheets at January 2, 1994 and January 3, 1993   . . . . . . . . . . . . . . . . . . . . . .     26
         Consolidated Statements of Cash Flows for the Three Fiscal Years
            Ended January 2, 1994     . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     28
         Consolidated Statements of Changes in Shareholders' Equity for the Three Fiscal
            Years Ended January 2, 1994   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     29
         Notes to Consolidated Financial Statements   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     30
         Financial Statement Schedules for the Three Fiscal Years Ended January 2, 1994   . . . . . . . . . . . . . . . .     40
                     V   --  Property, Plant and Equipment
                    VI   --  Accumulated Depreciation and Amortization of Property, Plant and
                                 Equipment
                  VIII   --  Valuation Accounts and Reserves
                     X   --  Supplementary Income Statement Information
Management's Discussion and Analysis of Results of Operations and Financial
         Condition (Unaudited)        . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     45
Ten-Year Summary of Selected Historical Financial Data (Unaudited)  . . . . . . . . . . . . . . . . . . . . . . . . . . .     50
</TABLE>


                             ---------------------

         All other schedules have been omitted either because they are not
applicable or because the required information is included in the consolidated
financial statements or the notes thereto referred to above.





                                       23

<PAGE>   25

                       REPORT OF INDEPENDENT ACCOUNTANTS


To The Board of Directors and Shareholders of
The Washington Post Company

In our opinion, the consolidated financial statements, including the financial
statement schedules, referred to under Item 14(a)(i) on page 20 and listed in
the index on page 23 present fairly, in all material respects, the financial
position of The Washington Post Company and its subsidiaries at January 2, 1994
and January 3, 1993, and the results of their operations and their cash flows
for each of the three fiscal years in the period ended January 2, 1994, in
conformity with generally accepted accounting principles.  These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits.  We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement.  An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis for the
opinion expressed above.

As discussed in Note E to the financial statements, the Company adopted,
effective at the beginning of 1993, Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes."


PRICE WATERHOUSE


Washington, D.C.
February 1, 1994






                                       24

<PAGE>   26

                          THE WASHINGTON POST COMPANY
                          ---------------------------


<TABLE>
<CAPTION>
                                                       CONSOLIDATED STATEMENTS
                                                              OF INCOME
                                                       =======================

- --------------------------------------------------------------------------------------------------------------------
                                                                               Fiscal year ended
                                                           ---------------------------------------------------------
                                                            January 2,              January 3,           December 29,
(in thousands, except share amounts)                           1994                    1993                  1991
- --------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>                     <C>                    <C>
OPERATING REVENUES
  Advertising . . . . . . . . . . . . . . . . . . . .      $   913,529             $  895,645             $  852,438
  Circulation and subscriber  . . . . . . . . . . . .          444,385                436,193                412,937
  Other . . . . . . . . . . . . . . . . . . . . . . .          140,277                119,029                114,886
                                                           -----------             ----------             ----------
                                                             1,498,191              1,450,867              1,380,261
                                                           -----------             ----------             ----------
OPERATING COSTS AND EXPENSES
  Operating . . . . . . . . . . . . . . . . . . . . .          790,256                787,256                775,936
  Selling, general and administrative . . . . . . . .          393,196                356,799                337,492
  Depreciation and amortization of property, plant
    and equipment . . . . . . . . . . . . . . . . . .           59,543                 59,222                 58,695
  Amortization of goodwill and other intangibles  . .           16,216                 15,478                 15,272
                                                           -----------             ----------             ----------
                                                             1,259,211              1,218,755              1,187,395
                                                           -----------             ----------             ----------
INCOME FROM OPERATIONS  . . . . . . . . . . . . . . .          238,980                232,112                192,866
  Equity in losses of affiliates  . . . . . . . . . .           (1,994)               (11,730)                (1,856)
  Interest income . . . . . . . . . . . . . . . . . .           11,085                 11,854                 17,382
  Interest expense  . . . . . . . . . . . . . . . . .           (4,983)                (6,385)               (17,759)
  Other income (expense), net . . . . . . . . . . . .           20,379                 (1,655)                  (412)
                                                           -----------             ----------             ----------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
  EFFECT OF CHANGES IN ACCOUNTING PRINCIPLE . . . . .          263,467                224,196                190,221

PROVISION FOR INCOME TAXES  . . . . . . . . . . . . .          109,650                 96,400                 71,500
                                                           -----------             ----------             ----------

INCOME BEFORE CUMULATIVE EFFECT OF CHANGES
  IN ACCOUNTING PRINCIPLE . . . . . . . . . . . . . .          153,817                127,796                118,721

CUMULATIVE EFFECT OF CHANGE IN METHOD
  OF ACCOUNTING FOR:
   INCOME TAXES . . . . . . . . . . . . . . . . . . .           11,600                     --                     --
   OTHER POSTRETIREMENT BENEFITS
    (NET OF TAXES OF $30,311) . . . . . . . . . . . .               --                     --                (47,897)
                                                           -----------             ----------             ----------
NET INCOME  . . . . . . . . . . . . . . . . . . . . .      $   165,417             $  127,796             $   70,824
                                                           ===========             ==========             ==========
EARNINGS PER SHARE:
  BEFORE CUMULATIVE EFFECT OF CHANGES IN
   ACCOUNTING PRINCIPLE . . . . . . . . . . . . . . .      $     13.10             $    10.80             $    10.00
  CUMULATIVE EFFECT OF CHANGES IN
   ACCOUNTING PRINCIPLE . . . . . . . . . . . . . . .              .98                     --                  (4.04)
                                                           -----------             ----------             ----------
  NET INCOME  . . . . . . . . . . . . . . . . . . . .      $     14.08             $    10.80             $     5.96
                                                           ===========             ==========             ==========
</TABLE>



The information on pages 30 through 39 is an integral part of the financial
statements.

                                       25

<PAGE>   27
                          THE WASHINGTON POST COMPANY
                          ---------------------------


<TABLE>
<CAPTION>
                                                             CONSOLIDATED
                                                            BALANCE SHEETS
                                                            ==============

- --------------------------------------------------------------------------------------------------------------------
                                                                                 January 2,                January 3,
(in thousands, except share amounts)                                                1994                      1993
- --------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                       <C>
ASSETS

CURRENT ASSETS
  Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . .       $   171,512               $   86,840
  Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . .           258,412                  241,429
  Accounts receivable, net  . . . . . . . . . . . . . . . . . . . . . . .           140,518                  128,368
  Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            16,419                   20,258
  Program rights  . . . . . . . . . . . . . . . . . . . . . . . . . . . .            15,460                   17,842
  Other current assets  . . . . . . . . . . . . . . . . . . . . . . . . .            23,253                   30,238
                                                                                -----------               ----------
                                                                                    625,574                  524,975

INVESTMENTS IN AFFILIATES . . . . . . . . . . . . . . . . . . . . . . . .           155,251                  162,410

PROPERTY, PLANT AND EQUIPMENT
  Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           166,433                  161,048
  Machinery, equipment and fixtures . . . . . . . . . . . . . . . . . . .           579,423                  571,312
  Leasehold improvements  . . . . . . . . . . . . . . . . . . . . . . . .            29,287                   29,644
                                                                                -----------               ----------
                                                                                    775,143                  762,004
  Less accumulated depreciation and amortization  . . . . . . . . . . . .          (469,359)                (422,236)
                                                                                -----------               ----------
                                                                                    305,784                  339,768
  Land  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            28,799                   28,176
  Construction in progress  . . . . . . . . . . . . . . . . . . . . . . .            29,135                   22,860
                                                                                -----------               ----------
                                                                                    363,718                  390,804

GOODWILL AND OTHER INTANGIBLES, LESS ACCUMULATED AMORTIZATION OF
  $129,768 and $113,552 . . . . . . . . . . . . . . . . . . . . . . . . .           309,157                  325,420
DEFERRED CHARGES AND OTHER ASSETS . . . . . . . . . . . . . . . . . . . .           168,804                  164,512
                                                                                -----------               ----------
                                                                                $ 1,622,504               $1,568,121
                                                                                ===========               ==========
</TABLE>



The information on pages 30 through 39 is an integral part of the financial
statements.

                                       26

<PAGE>   28
                          THE WASHINGTON POST COMPANY
                          ---------------------------


<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
                                                                                 January 2,                January 3,
(in thousands, except share amounts)                                                1994                      1993
- --------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                       <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable and accrued liabilities  . . . . . . . . . . . . . . .       $   163,553               $  188,525
  Federal and state income taxes  . . . . . . . . . . . . . . . . . . . .            15,726                   12,867
  Deferred subscription revenue . . . . . . . . . . . . . . . . . . . . .            79,254                   80,956
                                                                                -----------               ----------
                                                                                    258,533                  282,348

OTHER LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . .           191,088                  194,114

LONG-TERM DEBT  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            51,768                   51,842

DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . .            33,696                   46,812
                                                                                -----------               ----------
                                                                                    535,085                  575,116
                                                                                -----------               ----------
SHAREHOLDERS' EQUITY
  Preferred stock, $1 par value, 1,000,000 shares authorized  . . . . . .                --                       --
  Common stock
   Class A common stock, $1 par value, 7,000,000 shares authorized;
    1,843,250 shares issued and outstanding . . . . . . . . . . . . . . .             1,843                    1,843
   Class B common stock, $1 par value, 40,000,000 shares authorized;
    18,156,750 shares issued; 9,870,115 and 9,954,885 shares outstanding             18,157                   18,157
  Capital in excess of par value  . . . . . . . . . . . . . . . . . . . .            21,354                   18,747
  Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . .         1,570,546                1,454,505
  Cumulative foreign currency translation adjustment  . . . . . . . . . .             2,908                    4,939
  Cost of 8,286,635 and 8,201,865 shares of Class B
   common stock held in Treasury  . . . . . . . . . . . . . . . . . . . .          (527,389)                (505,186)
                                                                                -----------               ----------
                                                                                  1,087,419                  993,005
                                                                                -----------               ----------
                                                                                $ 1,622,504               $1,568,121
                                                                                ===========               ==========
</TABLE>


The information on pages 30 through 39 is an integral part of the financial
statements.

                                       27

<PAGE>   29
                          THE WASHINGTON POST COMPANY
                          ---------------------------


<TABLE>
<CAPTION>
                                                       CONSOLIDATED STATEMENTS
                                                            OF CASH FLOWS
                                                       =======================

- --------------------------------------------------------------------------------------------------------------------
                                                                                       Fiscal year ended
                                                                            ----------------------------------------
                                                                            January 2,     January 3,    December 29,
(in thousands)                                                                 1994           1993           1991
- --------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $ 165,417      $ 127,796      $  70,824
  Adjustments to reconcile net income to net cash provided
   by operating activities:
     Cumulative effect of change in accounting principle  . . . . . . .       (11,600)            --         78,208
     Depreciation and amortization of property, plant and equipment . .        59,543         59,222         58,695
     Amortization of goodwill and other intangibles . . . . . . . . . .        16,216         15,478         15,272
     Amortization of program rights . . . . . . . . . . . . . . . . . .        18,927         20,308         28,939
     Provision for doubtful accounts and returns  . . . . . . . . . . .        56,631         57,629         52,920
     Gain from sale of business . . . . . . . . . . . . . . . . . . . .       (13,371)            --             --
     (Decrease) increase in accrued interest and income taxes payable .        (5,141)       (14,162)           391
     Provision for deferred income taxes  . . . . . . . . . . . . . . .        (1,669)        (1,577)       (34,336)
     Change in assets and liabilities:
      (Increase) in accounts receivable . . . . . . . . . . . . . . . .       (68,901)       (47,393)       (59,685)
      Decrease (increase) in inventories  . . . . . . . . . . . . . . .         3,839           (695)         5,639
      (Decrease) increase in accounts payable and accrued liabilities .       (17,054)        16,102           (978)
      (Increase) in other assets and other liabilities, net . . . . . .        (9,628)       (14,347)        (2,388)
     Other  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         9,440         23,886         16,400
                                                                            ---------      ---------      ---------
       Net cash provided by operating activities  . . . . . . . . . . .       202,649        242,247        229,901
                                                                            ---------      ---------      ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Net proceeds from sale of business  . . . . . . . . . . . . . . . . .        64,947             --             --
  Purchases of property, plant and equipment  . . . . . . . . . . . . .       (79,139)       (58,889)       (55,657)
  Purchases of marketable securities  . . . . . . . . . . . . . . . . .      (520,114)      (533,082)      (249,057)
  Proceeds from sales of marketable securities  . . . . . . . . . . . .       509,937        465,891        180,203
  Investments in certain businesses . . . . . . . . . . . . . . . . . .        (1,591)       (32,353)       (19,301)
  Payments for program rights . . . . . . . . . . . . . . . . . . . . .       (20,232)       (22,013)       (19,917)
  Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           663            978            969
                                                                            ---------      ---------      ---------
       Net cash (used) by investing activities  . . . . . . . . . . . .       (45,529)      (179,468)      (162,760)
                                                                            ---------      ---------      ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on debt  . . . . . . . . . . . . . . . . . . . . .            --        (25,000)       (75,000)
  Dividends paid  . . . . . . . . . . . . . . . . . . . . . . . . . . .       (49,376)       (49,699)       (49,872)
  Common shares repurchased . . . . . . . . . . . . . . . . . . . . . .       (23,133)        (7,484)        (7,430)
  Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            61            122            150
                                                                            ---------      ---------      ---------
       Net cash (used) by financing activities  . . . . . . . . . . . .       (72,448)       (82,061)      (132,152)
                                                                            ---------      ---------      ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS  . . . . . . . . .        84,672        (19,282)       (65,011)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR  . . . . . . . . . . . .        86,840        106,122        171,133
                                                                            ---------      ---------      ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR  . . . . . . . . . . . . . . .     $ 171,512      $  86,840      $ 106,122
                                                                            =========      =========      =========

SUPPLEMENTAL CASH FLOW INFORMATION:
  Cash paid during the year for:
    Income taxes  . . . . . . . . . . . . . . . . . . . . . . . . . . .     $ 110,300      $ 110,700      $  72,300
    Interest  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $   5,600      $   7,200      $  19,500

NONCASH INVESTING ACTIVITIES:
  Program rights acquired . . . . . . . . . . . . . . . . . . . . . . .     $   5,800      $  25,200      $  19,800
</TABLE>


The information on pages 30 through 39 is an integral part of the financial
statements.

                                       28

<PAGE>   30
                          THE WASHINGTON POST COMPANY
                          ---------------------------


<TABLE>
<CAPTION>
                                                       CONSOLIDATED STATEMENTS
                                                 OF CHANGES IN SHAREHOLDERS' EQUITY
                                                 ==================================

- -----------------------------------------------------------------------------------------------------------------------------
                                                                                                      Cumulative
                                                                                                        Foreign
                                                 Class A     Class B     Capital in                    Currency
                                                 Common      Common       Excess of      Retained     Translation    Treasury
(in thousands, except share amounts)              Stock       Stock       Par Value      Earnings     Adjustment      Stock
- -----------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>         <C>           <C>          <C>              <C>         <C>
BALANCE DECEMBER 30, 1990 . . . . . . . . .     $1,852      $ 18,148      $ 16,641     $ 1,355,456      $ 4,170     $(491,155)
  Net income for the year . . . . . . . . .                                                 70,824
  Dividends -- $4.20 per share  . . . . . .                                                (49,872)
  Repurchase of 42,900 shares of
   Class B common stock . . . . . . . . . .                                                                            (7,430)
  Issuance of 13,611 shares of Class B
   common stock, net of restricted stock
   award forfeitures  . . . . . . . . . . .                                  1,833                                        867
  Conversion of 9,128 shares of
   Class A common stock to Class B
   common stock . . . . . . . . . . . . . .         (9)            9
  Change in foreign currency translation
   adjustment . . . . . . . . . . . . . . .                                                               2,700
  Other . . . . . . . . . . . . . . . . . .                                    251
                                                ------      --------      --------     -----------      -------     ---------
BALANCE DECEMBER 29, 1991 . . . . . . . . .      1,843        18,157        18,725       1,376,408        6,870      (497,718)
  Net income for the year . . . . . . . . .                                                127,796
  Dividends -- $4.20 per share  . . . . . .                                                (49,699)
  Repurchase of 33,949 shares of
   Class B common stock . . . . . . . . . .                                                                            (7,484)
  Issuance of 304 shares of Class B
   common stock, net of restricted stock
   award forfeitures  . . . . . . . . . . .                                    (52)                                        16
  Change in foreign currency translation
   adjustment . . . . . . . . . . . . . . .                                                              (1,931)
  Other . . . . . . . . . . . . . . . . . .                                     74
                                                ------      --------      --------     -----------      -------     ---------
BALANCE JANUARY 3, 1993 . . . . . . . . . .      1,843        18,157        18,747       1,454,505        4,939      (505,186)
  Net income for the year . . . . . . . . .                                                165,417
  Dividends -- $4.20 per share  . . . . . .                                                (49,376)
  Repurchase of 99,800 shares of
   Class B common stock . . . . . . . . . .                                                                           (23,133)
  Issuance of 15,030 shares of Class B
   common stock, net of restricted stock
   award forfeitures  . . . . . . . . . . .                                  2,480                                        930
  Change in foreign currency translation
   adjustment . . . . . . . . . . . . . . .                                                              (2,031)
  Other . . . . . . . . . . . . . . . . . .                                    127
                                                ------      --------      --------     -----------      -------     ---------
BALANCE JANUARY 2, 1994 . . . . . . . . . .     $1,843      $ 18,157      $ 21,354     $ 1,570,546      $ 2,908     $(527,389)
                                                ======      ========      ========     ===========      =======     =========
</TABLE>


The information on pages 30 through 39 is an integral part of the financial
statements.

                                       29

<PAGE>   31
                          THE WASHINGTON POST COMPANY
                          ---------------------------

                             NOTES TO CONSOLIDATED
                              FINANCIAL STATEMENTS
                             =====================


A.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Washington Post Company ("the company") operates principally in four areas
of the media business: newspaper publishing, television broadcasting, magazine
publishing and cable television. Segment data is set forth in Note M.

FISCAL YEAR. The company reports on a 52-53 week fiscal year ending on the
Sunday nearest December 31. The fiscal year 1993, which ended on January 2,
1994, included 52 weeks, while 1992 included 53 weeks and 1991 included 52
weeks. With the exception of the newspaper publishing operations, subsidiaries
of the company report on a calendar-year basis.

PRINCIPLES OF CONSOLIDATION. The accompanying financial statements include the
accounts of the company and its subsidiaries; significant intercompany
transactions have been eliminated.

CASH EQUIVALENTS. Short-term investments with maturities of 90 days or less are
considered cash equivalents. The carrying amount approximates fair value.

MARKETABLE SECURITIES. Marketable securities consist of debt instruments that
mature over 90 days from the purchase date and are stated at cost plus accrued
interest, which approximates fair value.

INVENTORIES. Inventories are valued at the lower of cost or market. Cost of
newsprint is determined by the first-in, first-out method, and cost of magazine
paper is determined by the specific-cost method.

INVESTMENTS IN AFFILIATES. The company uses the equity method of accounting for
its investments in and earnings and losses of affiliates.

PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment is recorded at
cost and includes interest capitalized in connection with major long-term
construction projects. Replacements and major improvements are capitalized;
maintenance and repairs are charged to operations as incurred.
    Depreciation is calculated using the straight-line method over the
estimated useful lives of the property, plant and equipment: 3 to 12 years for
machinery and equipment, 20 to 50 years for buildings and 5 to 20 years for
land improvements. The costs of leasehold improvements are amortized over the
lesser of the useful lives or the terms of the respective leases.

GOODWILL AND OTHER INTANGIBLES. Goodwill and other intangibles represent the
unamortized excess of the cost of acquiring subsidiary companies over the fair
values of such companies' net tangible assets at the dates of acquisition.
Goodwill and other intangibles acquired prior to October 30, 1970, the
effective date of Accounting Principles Board Opinion No. 17, are not being
amortized because in the opinion of the company there has been no diminution of
the value of such assets. Goodwill and other intangibles acquired subsequently
are being amortized by use of the straight-line method over various periods up
to 40 years.

DEFERRED PROGRAM RIGHTS. The broadcast subsidiaries are parties to agreements
that entitle them to show motion pictures and syndicated programs on
television. The unamortized cost of these rights and the liability for future
payments under these agreements are included in the Consolidated Balance
Sheets. The unamortized cost is charged to operations using accelerated
amortization rates for motion pictures and accelerated or straight-line rates
for syndicated programs.

DEFERRED SUBSCRIPTION REVENUE AND MAGAZINE SUBSCRIPTION PROCUREMENT COSTS.
Deferred subscription revenue, which primarily represents amounts received from
customers in advance of magazine and newspaper deliveries, is included in
revenues over the subscription term.  Deferred subscription revenue to be
earned after one year is included in "Other liabilities" in the Consolidated
Balance Sheets.  Subscription procurement costs are charged to operations as
incurred.

INCOME TAXES. The 1993 provision for income taxes has been determined under
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" (SFAS No. 109), which requires the use of the asset and liability
approach. Under this approach, deferred taxes represent the expected future tax
consequences of temporary differences between the carrying amount and tax basis
of assets and liabilities.
    Prior to 1993, the provision for income taxes was determined under
Accounting Principles Board (APB) Opinion No. 11, which required use of the
deferred method. Under that method, the provision for income taxes was based on
pretax financial income, which differed from taxable income because certain
elements of income and expense were reflected in different periods for

                                       30

<PAGE>   32
                          THE WASHINGTON POST COMPANY
                          ---------------------------

financial accounting and tax purposes. Deferred taxes were provided on these
timing differences using the tax rate in effect when the timing differences
originated, and the effects of reversing timing differences were reflected at
those historical tax rates.

FOREIGN CURRENCY TRANSLATION. Gains and losses on foreign currency transactions
and the translation of the accounts of the company's foreign operations where
the U.S. dollar is the functional currency are recognized currently in the
Consolidated Statements of Income. Gains and losses on translation of the
accounts of the company's foreign operations where the local currency is the
functional currency and the company's equity investments in its foreign
affiliates are accumulated and reported separately in the "Cumulative foreign
currency translation adjustment" in the Consolidated Balance Sheets.

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS. The company provides certain
health care and life insurance benefits for retired employees. The expected
cost of providing these postretirement benefits is accrued over the years that
employees render the necessary service.

B.  MARKETABLE SECURITIES

The company's marketable securities at January 2, 1994, and January 3, 1993,
include the following (in thousands):


<TABLE>
<CAPTION>
- --------------------------------------------------------
                                      1993        1992
- --------------------------------------------------------
<S>                                 <C>         <C>
U.S. Government and Government
  agency obligations                $237,655    $221,398
Commercial paper                      20,757      20,031
                                    --------    --------
                                    $258,412    $241,429
                                    ========    ========
</TABLE>


C.  ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE
    AND ACCRUED LIABILITIES

Accounts receivable at January 2, 1994, and January 3, 1993, consist of the 
following (in thousands):


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
                                                      1993                 1992
- ---------------------------------------------------------------------------------
<S>                                                <C>                 <C>
Accounts receivable, less estimated
  returns, doubtful accounts and
  allowances of $38,602 and $35,300 . . . . .      $  129,976          $  120,531
Other . . . . . . . . . . . . . . . . . . . .          10,542               7,837
                                                   ----------          ----------
                                                   $  140,518          $  128,368
                                                   ==========          ==========
</TABLE>


    Accounts payable and accrued liabilities at January 2, 1994, and January 3,
1993, consist of the following (in thousands):


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
                                                       1993               1992
- ---------------------------------------------------------------------------------
<S>                                                <C>                 <C>
Accounts payable and accrued
  expenses  . . . . . . . . . . . . . . . .        $   91,831            $113,841
Accrued payroll and related benefits  . . .            31,747              28,459
Accrued interest expense  . . . . . . . . .             4,437               5,693
Deferred tuition revenue  . . . . . . . . .            12,564              11,400
Film contracts payable  . . . . . . . . . .            14,978              19,824
Due to affiliates (newsprint) . . . . . . .             7,996               9,308
                                                   ----------          ----------
                                                   $  163,553          $  188,525
                                                   ==========          ==========
</TABLE>


D.  INVESTMENTS IN AFFILIATES

The company's investments in affiliates at January 2, 1994, and January 3,
1993, include the following (in thousands):


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
                                                       1993                1992
- ---------------------------------------------------------------------------------
<S>                                                <C>                 <C>
Cowles Media Company  . . . . . . . . . . .        $   80,786          $   80,415
Newsprint mills . . . . . . . . . . . . . .            50,172              55,829
Other . . . . . . . . . . . . . . . . . . .            24,293              26,166
                                                   ----------          ----------
                                                   $  155,251          $  162,410
                                                   ==========          ==========
</TABLE>


    The company's investments in affiliates includes a  28 percent interest in
the stock of Cowles Media Company, which owns and operates the Minneapolis Star
Tribune and several other smaller properties.
    The company's interest in newsprint mills includes a 49 percent interest in
the common stock of Bowater Mersey Paper Company Limited, which owns and
operates a newsprint mill in Nova Scotia; a one-third limited partnership
interest in Bear Island Paper Company, which owns and operates a newsprint mill
near Richmond, Virginia; and a one-third limited partnership interest in Bear
Island Timberlands Company, which owns timberland and supplies Bear Island
Paper Company with a major portion of its wood requirements. In early 1994 the
company increased its investments in both Bear Island Paper Company and Bear
Island Timberlands Company to 35 percent. Operating costs and expenses of the
company include newsprint supplied by Bowater, Inc. (parent of Bowater Mersey
Paper Company), and Bear Island Paper Company and used in operations, the cost
of which was $52,500,000 in 1993, $51,000,000 in 1992 and $59,200,000 in 1991.
    The company's other investments represent a 50 percent common stock
interest in the International Herald Tribune newspaper, published near Paris,
and a 50 percent common stock interest in the Los Angeles Times-Washington Post
News Service, Inc. In 1991 investments also included a 30 percent common stock
interest in The Gazette Newspapers, Inc. This investment

                                       31

<PAGE>   33
                          THE WASHINGTON POST COMPANY
                          ---------------------------

increased in 1992 to a majority interest and, accordingly, it is included as a
fully consolidated subsidiary (see Note K on acquisitions).
    Summarized financial data for the affiliates' operations is as follows (in
thousands):


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
                                  1993                1992                 1991
- ---------------------------------------------------------------------------------
<S>                            <C>                 <C>                 <C>
FINANCIAL POSITION
Working capital . . . .        $  (67,923)         $(119,505)          $  (93,737)
Property, plant and
  equipment . . . . . .           422,606            436,620              478,502
Total assets  . . . . .           732,940            718,352              759,850
Long-term debt  . . . .           200,105            197,203              212,923
Net equity  . . . . . .           172,332            175,618              203,997

RESULTS OF OPERATIONS
Operating revenues  . .        $  610,617          $ 650,194           $  644,814
Operating income  . . .            43,569             20,500               30,509
Net income (loss) . . .             7,218            (13,175)               6,543
</TABLE>


    The following table summarizes the status and results of the company's
investments in affiliates (in thousands):


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
                                                       1993                1992
- ---------------------------------------------------------------------------------
<S>                                                <C>                <C>
Beginning investment  . . . . . . . . . . .        $  162,410         $   181,764
Equity in losses  . . . . . . . . . . . . .            (1,994)            (11,730)
Dividends and distributions received  . . .            (2,743)             (2,575)
Foreign currency translation  . . . . . . .            (2,422)             (1,611)
Other . . . . . . . . . . . . . . . . . . .                --              (3,438)
                                                   ----------         -----------
Ending investment . . . . . . . . . . . . .        $  155,251         $   162,410
                                                   ==========         ===========
</TABLE>



    At January 2, 1994, the unamortized excess of the company's investments
over its equity in the underlying net assets of its affiliates at the date of
acquisition was approximately $89,700,000. Amortization included in "Equity in
losses of affiliates" was $2,600,000 for the years ended January 2, 1994, and
January 3, 1993, and $2,550,000 for the year ended December 29, 1991.

E.  INCOME TAXES

In 1993 the company adopted the provisions of SFAS No. 109, "Accounting for
Income Taxes," which requires the use of the asset and liability method of
accounting for deferred income taxes. The cumulative effect of this adoption
was an increase in 1993 net income of $11,600,000 and is shown on the
Consolidated Statements of Income as the cumulative effect of a change in
accounting principle.  Financial statements for years prior to 1993 were not
restated. Information shown below for those prior years was determined under
the provisions of APB Opinion No. 11.
    The provision for income taxes consists of the following (in thousands):


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
                                                     Current             Deferred
- ---------------------------------------------------------------------------------
<S>                                                <C>                 <C>
1993
U.S. Federal  . . . . . . . . . . . . . . . .      $  85,082           $     (535)
Foreign . . . . . . . . . . . . . . . . . . .          6,913                 (657)
State and local . . . . . . . . . . . . . . .         19,324                 (477)
                                                   ---------           ----------
                                                   $ 111,319           $   (1,669)
                                                   =========           ==========

1992
U.S. Federal  . . . . . . . . . . . . . . . .      $  79,380           $     (295)
Foreign . . . . . . . . . . . . . . . . . . .            488               (1,219)
State and local . . . . . . . . . . . . . . .         18,109                  (63)
                                                   ---------           ----------
                                                   $  97,977           $   (1,577)
                                                   =========           ==========

1991
U.S. Federal  . . . . . . . . . . . . . . . .      $  60,732           $   (3,195)
Foreign . . . . . . . . . . . . . . . . . . .            567                 (528)
State and local . . . . . . . . . . . . . . .         14,226                 (302)
                                                   ---------           ----------
                                                   $  75,525           $   (4,025)
                                                   =========           ==========
</TABLE>


    During 1993 the company sold its cable franchises in the United Kingdom.
This transaction increased foreign taxes by approximately $6,800,000.
    In 1992 and 1991 deferred tax benefit resulted principally from the excess
of financial statement depreciation over tax depreciation, the tax effect of
which amounted to $1,783,000 in 1992 and $2,437,000 in 1991, and accrued
postretirement benefit expense, the effect of which amounted to $4,138,000 in
1992 and $3,163,000 in 1991. These amounts were offset by the tax effect of
$7,469,000 in 1992 and $5,335,000 in 1991 of net pension credits in excess of
contributions.
    The provision for income taxes exceeds the amount of income tax determined
by applying the U.S. Federal statutory rate of 35 percent in 1993 and 34
percent in 1992 and 1991 to income before taxes as a result of the following
(in thousands):


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
                                   1993                1992                1991
- ---------------------------------------------------------------------------------
<S>                           <C>                 <C>                  <C>
U.S. Federal statutory
  taxes . . . . . . . . .     $    92,213         $    76,226          $   64,675
State and local taxes
  net of U.S. Federal income
  tax benefit . . . . . .          12,251              11,911               9,190
Amortization of goodwill
  not deductible for income
  tax purposes  . . . . .           2,433               2,922               2,805
Prior period tax
  adjustments . . . . . .              --                  --             (10,013)
Other . . . . . . . . . .           2,753               5,341               4,843
                              -----------         -----------          ----------
Provision for income          
  taxes . . . . . . . . .     $   109,650         $    96,400          $   71,500
                              ===========         ===========          ==========
</TABLE>


                                       32

<PAGE>   34
                          THE WASHINGTON POST COMPANY
                          ---------------------------


    Deferred income taxes at January 2, 1994, consist of the following (in
thousands):


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
                                                                           1993
- ---------------------------------------------------------------------------------
<S>                                                                    <C>
Accrued postretirement benefits . . . . . . . . . . . . . . . .        $   42,336
Other benefit obligations . . . . . . . . . . . . . . . . . . .            17,760
Accounts receivable . . . . . . . . . . . . . . . . . . . . . .             6,368
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             3,855
                                                                       ----------
Deferred tax asset  . . . . . . . . . . . . . . . . . . . . . .        $   70,319
                                                                       ----------

Property, plant and equipment . . . . . . . . . . . . . . . . .        $   48,275
Prepaid pension cost  . . . . . . . . . . . . . . . . . . . . .            39,769
Affiliate operations  . . . . . . . . . . . . . . . . . . . . .            12,211
Investment tax credit . . . . . . . . . . . . . . . . . . . . .             3,760
                                                                       ----------
Deferred tax liability  . . . . . . . . . . . . . . . . . . . .           104,015
                                                                       ----------
Deferred income taxes . . . . . . . . . . . . . . . . . . . . .        $   33,696
                                                                       ==========
</TABLE>


F.  DEBT

Long-term debt of the company as of January 2, 1994, and January 3, 1993, is
summarized as follows (in thousands):


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
                                                       1993                1992
- ---------------------------------------------------------------------------------
<S>                                               <C>                  <C>
10.1 percent unsecured European
  Currency Unit notes, $50,000,000
  face amount due in 1996 . . . . . . . . . .     $    50,368          $   50,442
10.875 percent unsecured
  Eurodollar notes, $1,400,000
  face amount due in 1995 . . . . . . . . . .           1,400               1,400
                                                  -----------          ----------
                                                  $    51,768          $   51,842
                                                  ===========          ==========
</TABLE>


G.  CAPITAL STOCK, STOCK OPTIONS AND STOCK AWARDS

CAPITAL STOCK. Each share of Class A common stock and Class B common stock
participates equally in dividends. The Class B stock has limited voting rights
and as a class has the right to elect 30 percent of the Board of Directors; the
Class A stock has unlimited voting rights including the right to elect a
majority of the Board of Directors. In 1991, 9,128 shares of the company's
Class A common stock were converted into an equal number of shares of the
company's Class B common stock.
    During 1993 and 1992 the company purchased a total of 99,800 and 33,949
shares, respectively, of its Class B common stock at a cost of approximately
$23,133,000 and $7,484,000.

STOCK OPTIONS. In May 1993 the Stock Option Plan was amended to increase to
1,900,000 the number of shares of the company's Class B common stock to be
reserved for options to be granted under the Plan. The purchase price of the
shares covered by an option cannot be less than the fair value on the granting
date. At January 2, 1994, there were 662,950 shares reserved for issuance under
the Stock Option Plan, of which 155,000 shares were subject to options
outstanding and 507,950 shares were available for future grants.  Changes in
options outstanding for the years ended January 2, 1994, and January 3, 1993,
were as follows:


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
                                        1993                          1992
                                  -----------------------------------------------
                                  Number   Average              Number   Average
                                    Of      Option                Of      Option
                                  Shares    Price               Shares    Price
- ---------------------------------------------------------------------------------
<S>                               <C>       <C>                <C>        <C>
Beginning of
  year  . . . . . . . .           143,000   $256.88            125,000    $260.49
  Granted . . . . . . .            12,500    239.88             19,000     226.00
  Exercised . . . . . .              (500)   121.50             (1,000)    121.50
                                  -------                      -------
End of year . . . . . .           155,000    255.95            143,000     256.88
                                  =======                      =======
</TABLE>


    Of the shares covered by options outstanding at the end of 1993, 65,375 are
now exercisable, 14,875 will become exercisable in 1994, 13,750 will become
exercisable in 1995, 7,875 will become exercisable in 1996, 3,125 will become
exercisable in 1997, and 50,000 will become exercisable in 1999.

STOCK AWARDS. In 1982 the company adopted a Long-Term Incentive Compensation
Plan that, among other provisions, authorizes the awarding of stock to key
employees. Stock awards made under the Incentive Compensation Plan are subject
to the general restriction that stock awarded to a participant will be
forfeited and revert to company ownership if the participant's employment
terminates before the end of a specified period of service to the company. At
January 2, 1994, there were 140,164 shares reserved for issuance under the
Incentive Compensation Plan. Of this number, 27,955 shares were subject to
awards outstanding, and 112,209 shares were available for future awards.
Activity related to stock awards for the years ended January 2, 1994, and
January 3, 1993, was as follows:


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
                                       1993                           1992
                                  -----------------------------------------------
                                  Number   Average              Number   Average
                                    Of      Award                 Of      Award
                                  Shares    Price               Shares    Price
- ---------------------------------------------------------------------------------
<S>                               <C>       <C>                 <C>       <C>
Awards Outstanding
Beginning of
  year  . . . . . . . .            24,765   $202.99             25,461    $202.62
  Awarded . . . . . . .            15,437    228.67                192     228.58
  Vested  . . . . . . .           (11,340)   209.05                 --         --
  Forfeited . . . . . .              (907)   206.35               (888)    197.83
                                  -------                       ------
End of year . . . . . .            27,955    214.61             24,765     202.99
                                  =======                       ======
</TABLE>


    For the share awards outstanding at January 2, 1994, the aforementioned
restriction will lapse in January 1995 for 12,809 shares and in January 1997
for 15,146 shares.

                                       33

<PAGE>   35
                          THE WASHINGTON POST COMPANY
                          ---------------------------


AVERAGE NUMBER OF SHARES OUTSTANDING. Earnings per share are based on the
weighted average number of shares of common stock outstanding during each year,
adjusted for the dilutive effect of shares issuable under outstanding stock
options and awards made under the Incentive Compensation Plan. The average
number of shares outstanding was 11,750,000 for 1993, 11,830,000 for 1992 and
11,876,000 for 1991.

H.  RETIREMENT PLANS

The company and its subsidiaries have various funded and unfunded pension and
incentive savings plans and in addition contribute to several multi-employer
plans on behalf of certain union-represented employee groups. Substantially all
of the company's employees, including some located in foreign countries, are
covered by these plans. Pension (benefit) cost for all retirement plans
combined was $(2,300,000) in 1993, $5,200,000 in 1992 and $3,000,000 in 1991.
Included in 1992 are costs of $8,300,000 related to a new deferred compensation
arrangement at The Washington Post newspaper. Included in 1991 are costs of
$4,900,000 associated with the voluntary reduction of staff at The Washington
Post newspaper.
    The costs for the company's defined benefit pension plans are actuarially
determined and include amortization of prior service costs over various
periods, generally not exceeding 20 years. The company's policy is to fund the
costs accrued for its defined benefit plans.
    The following table sets forth the funded status of the defined benefit
plans and amounts recognized in the Consolidated Balance Sheets at January 2,
1994, and January 3, 1993 (in thousands):


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
                                                       1993                1992
- ---------------------------------------------------------------------------------
<S>                                                 <C>                <C>
Actuarial present value of accumulated
  plan benefits, including vested
  benefits of $142,706 and $129,144 . . . .         $ 151,200          $  139,980
                                                    =========          ==========

Plan assets at fair value, primarily
  listed securities . . . . . . . . . . . .         $ 454,741          $  425,422
Projected benefit obligation for
  service rendered to date  . . . . . . . .          (187,490)           (173,133)
                                                    ---------          ----------
Plan assets in excess of projected
  benefit obligation  . . . . . . . . . . .           267,251             252,289
Prior service cost not yet recognized in
  periodic pension cost . . . . . . . . . .            15,697              16,855
Less unrecognized net gain from past
  experience different from that
  assumed . . . . . . . . . . . . . . . . .          (114,212)           (112,653)
Less unrecognized net asset
  (transition amount) being recognized
  over approximately 17 years . . . . . . .           (68,933)            (76,599)
                                                    ---------          ----------
Prepaid pension cost  . . . . . . . . . . .         $  99,803          $   79,892
                                                    =========          ==========
</TABLE>


    The net pension credit for the years ended January 2, 1994, January 3,
1993, and December 29, 1991, includes the following components (in thousands):


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
                                   1993               1992                 1991
- ---------------------------------------------------------------------------------
<S>                              <C>                 <C>                 <C>
Service cost for benefits
  earned during the period  .    $  8,805            $  8,312            $  7,200
Interest cost on projected
  benefit obligation  . . . .      12,683              11,700              10,327
Actual return on plan
  assets  . . . . . . . . . .     (35,086)            (29,388)            (84,880)
Net amortization and
  deferral  . . . . . . . . .      (5,839)             (8,185)             50,471
Cost of voluntary reduction
  in staff  . . . . . . . . .          --                  --               4,916
                                 --------            --------            --------
Net pension credit  . . . . .    $(19,437)           $(17,561)           $(11,966)
                                 ========            ========            ========
</TABLE>


    The weighted average discount rate and rate of increase in future
compensation levels used for 1993, 1992 and 1991 in determining the actuarial
present value of the projected benefit obligation were 7.5 percent and 4
percent, respectively. The expected long-term rate of return on assets was 9
percent in 1993, 1992 and 1991.
    Contributions to multi-employer pension plans, which are generally based on
hours worked, amounted to $1,900,000 in 1993, $1,500,000 in 1992 and $1,300,000
in 1991.
    The costs of unfunded retirement plans are charged to expense when accrued.
The company's liability for such plans, which is included in "Other
Liabilities" in the Consolidated Balance Sheets, was $45,000,000 at January 2,
1994, and $41,500,000 at January 3, 1993.

I.  POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The company and its subsidiaries provide health care and life insurance
benefits to certain retired employees. These employees become eligible for
benefits after meeting minimum age and service requirements.
    In 1991 the company adopted the provisions of SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." As permitted by
SFAS No. 106, the company elected to recognize in 1991 the accumulated benefit
obligation related to prior service costs. This obligation of $78,208,000,
after income taxes of $30,311,000, is shown on the Consolidated Statements of
Income as the cumulative effect of a change in accounting principle.

                                       34

<PAGE>   36
                          THE WASHINGTON POST COMPANY
                          ---------------------------


    The following table sets forth the amounts included in "Other liabilities"
in the Consolidated Balance Sheets at January 2, 1994, and January 3, 1993 (in
thousands):


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
                                                      1993                 1992
- ---------------------------------------------------------------------------------
<S>                                                <C>                 <C>
Accumulated postretirement benefit
  obligation:
    Retirees  . . . . . . . . . . . . . . . .      $   46,988          $   46,329
    Fully eligible active plan
      participants  . . . . . . . . . . . . .           6,423               5,880
    Other active plan participants  . . . . .          40,926              35,184
                                                   ----------          ----------
                                                       94,337              87,393
Unrecognized prior service costs
  arising from plan amendments  . . . . . . .           2,357               2,571
Unrecognized net gain from past
  experience different from
  that assumed. . . . . . . . . . . . . . . .             739                 739
                                                   ----------          ----------
Accrued postretirement benefit cost . . . . .      $   97,433          $   90,703
                                                   ==========          ==========
</TABLE>


    Net periodic postretirement benefit cost for the years ended January 2,
1994, January 3, 1993, and December 29, 1991, includes the following components
(in thousands):


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
                                   1993               1992                 1991
- ---------------------------------------------------------------------------------
<S>                               <C>                 <C>                 <C>
Service cost for benefits
  earned during the
  period  . . . . . . . . . .     $ 2,894             $3,029              $ 2,948
Interest cost on
  accumulated post-
  retirement benefit
  obligation  . . . . . . . .       6,880              6,853                6,404
Amortization of prior
  service costs . . . . . . .        (214)               (61)
Curtailment gain  . . . . . .          --             (5,963)                  --
                                  -------             ------              -------
Net periodic postretirement
  benefit cost  . . . . . . .     $ 9,560             $3,858              $ 9,352
                                  =======             ======              =======
</TABLE>


    The curtailment gain of $6,000,000 relates to the termination in December
1992 of one of the company's health care plans at The Washington Post
newspaper. The terminated plan has been replaced by a deferred payment
arrangement and a related expense of $8,300,000 was recognized as a result of
this change (see Note H).
    For 1993, 1992 and 1991 the accumulated postretirement benefit obligation
was determined using a discount rate of 8 percent and a health care cost trend
rate of approximately 14 percent for pre-age-65 benefits, decreasing to 6.5
percent in the year 2022 and thereafter; and rates of approximately 11 to 14
percent for post-age-65 benefits, decreasing to 6.5 percent in the year 2022
and thereafter.
    The company's policy is to fund the above-mentioned benefits as claims and
premiums are paid.  The effect on the accumulated postretirement benefit
obligation at January 4, 1993, of a 1 percent increase each year in the
health care cost trend rate used would result in increases of approximately
$16,500,000 in the obligation and $2,000,000 in the aggregate service and
interest components of the 1993 expense.
    The cash expenditures for postretirement benefits were $2,830,000 in 1993,
$2,560,000 in 1992 and $2,222,000 in 1991.

J.  LEASE COMMITMENTS

The company leases primarily real property under operating agreements. Many of
the leases contain renewal options and escalation clauses that require payments
of additional rent to the extent of increases in the related operating costs.
At January 2, 1994, future minimum rental payments under noncancelable
operating leases are as follows (in thousands):


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
<S>                                                                    <C>
1994  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $   18,058
1995  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            17,500
1996  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            14,332
1997  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            11,739
1998  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             8,998
Thereafter  . . . . . . . . . . . . . . . . . . . . . . . . . .            42,844
                                                                       ----------
                                                                       $  113,471
                                                                       ==========
</TABLE>


    Minimum payments have not been reduced by minimum sublease rentals of
$3,000,000 due in the future under noncancelable subleases.
    Rent expense under operating leases included in operating costs and
expenses was approximately $22,200,000 in 1993, $21,500,000 in 1992 and
$20,000,000 in 1991. Sublease income was approximately $1,300,000 in 1993, 1992
and 1991.
    In 1993 the company entered into a lease agreement under which certain
costs are paid for through a restricted funding mechanism. At January 2, 1994,
$6,900,000 included in "Cash and cash equivalents" is restricted under the
provisions of this funding arrangement.

                                       35

<PAGE>   37
                          THE WASHINGTON POST COMPANY
                          ---------------------------


K.  ACQUISITIONS AND DISPOSITIONS

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.

L.  CONTINGENCIES

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.

M.  BUSINESS SEGMENTS

The company operates principally in four areas of the communications industry:
newspaper publishing, television broadcasting, magazine publishing and cable
television.
    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
services.
    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.

                                       36

<PAGE>   38
                          THE WASHINGTON POST COMPANY
                          ---------------------------




<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
                                        Newspaper   Television     Magazine        Cable        Other
(in thousands)                         Publishing  Broadcasting   Publishing    Television    Businesses  Consolidated
- ----------------------------------------------------------------------------------------------------------------------
<S>                                     <C>          <C>           <C>           <C>           <C>        <C>
1993
  Operating revenues  . . . . . . .     $692,287     $ 177,415     $332,506      $185,721      $110,262   $1,498,191
                                                                                                          ==========
  Income (loss) from operations . .     $123,151     $  65,306     $ 18,011      $ 41,618      $ (9,106)  $  238,980
  Equity in losses of affiliates  .                                                                           (1,994)
  Interest expense  . . . . . . . .                                                                           (4,983)
  Other income, net . . . . . . . .                                                                           31,464
                                                                                                          ----------
  Income before income taxes  . . .                                                                       $  263,467
                                                                                                          ==========
  Identifiable assets . . . . . . .     $329,799     $ 144,622     $152,462      $416,589      $ 71,059    1,114,531
                                                                                                                    
  Investments in affiliates . . . .                                                                          155,251
  Corporate assets  . . . . . . . .                                                                          352,722
                                                                                                          ----------
    Total assets  . . . . . . . . .                                                                        1,622,504
                                                                                                          ==========
  Depreciation and amortization of
    property, plant and equipment .     $ 16,768     $   5,276     $  6,266      $ 28,052      $  3,181   $   59,543
  Amortization of goodwill and
    other intangibles . . . . . . .     $    800     $     670                   $ 12,247      $  2,499   $   16,216
  Capital expenditures  . . . . . .     $ 24,422     $   6,599     $  4,472      $ 38,802      $  4,844   $   79,139

1992
  Operating revenues  . . . . . . .     $677,645     $ 162,154     $347,067      $174,098      $ 89,903   $1,450,867
                                                                                                          ==========
  Income (loss) from operations . .     $120,794     $  54,568     $ 23,882      $ 38,967      $ (6,099)  $  232,112
  Equity in losses of affiliates  .                                                                          (11,730)
  Interest expense  . . . . . . . .                                                                           (6,385)
  Other income, net . . . . . . . .                                                                           10,199
                                                                                                          ----------
  Income before income taxes  . . .                                                                       $  224,196
                                                                                                          ==========
  Identifiable assets . . . . . . .     $315,522     $ 143,357     $141,008      $397,504      $ 77,365   $1,074,756
                                                                                                                    
  Investments in affiliates . . . .                                                                          162,410
  Corporate assets  . . . . . . . .                                                                          330,955
                                                                                                          ----------
    Total assets  . . . . . . . . .                                                                       $1,568,121
                                                                                                          ==========
  Depreciation and amortization of
    property, plant and equipment .     $ 16,724     $   6,289     $  6,252      $ 26,994      $  2,963   $   59,222
  Amortization of goodwill and
    other intangibles . . . . . . .     $    745     $     664                   $ 11,574      $  2,495   $   15,478
  Capital expenditures  . . . . . .     $ 13,653     $   2,844     $  2,732      $ 36,900      $  2,760   $   58,889

1991
  Operating revenues  . . . . . . .     $642,694     $ 163,471     $326,475      $159,503      $ 88,118   $1,380,261
                                                                                                          ==========
  Income from operations  . . . . .     $ 89,488     $  49,074     $  9,085      $ 35,011      $ 10,208   $  192,866
  Equity in losses of affiliates  .                                                                           (1,856)
  Interest expense  . . . . . . . .                                                                          (17,759)
  Other income, net . . . . . . . .                                                                           16,970
                                                                                                          ----------
  Income before income taxes  . . .                                                                       $  190,221
                                                                                                          ==========
  Identifiable assets . . . . . . .     $307,897     $ 144,232     $131,510      $386,527      $ 52,779   $1,022,945
                                                                                                                    
  Investments in affiliates . . . .                                                                          181,764
  Corporate assets  . . . . . . . .                                                                          282,952
                                                                                                          ----------
    Total assets  . . . . . . . . .                                                                       $1,487,661
                                                                                                          ==========
  Depreciation and amortization of
    property, plant and equipment .     $ 18,119     $   7,174     $  6,548      $ 24,651      $  2,203   $   58,695
  Amortization of goodwill and
    other intangibles . . . . . . .     $    533     $     664                   $ 11,553      $  2,522   $   15,272
  Capital expenditures  . . . . . .     $ 19,215     $   3,158     $  2,762      $ 25,363      $  5,159   $   55,657
</TABLE>


                                       37

<PAGE>   39
                          THE WASHINGTON POST COMPANY
                          ---------------------------


N.  SUMMARY OF QUARTERLY OPERATING RESULTS
    (UNAUDITED)

Quarterly results of operations for the years ended January 2, 1994, and
January 3, 1993, are as follows (in thousands, except per share amounts):


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
                                                             First           Second           Third          Fourth
                                                            Quarter         Quarter         Quarter         Quarter
- ---------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>             <C>             <C>             <C>
1993
  Operating revenues
    Advertising . . . . . . . . . . . . . . . . . . . .     $214,602        $ 233,078       $ 208,972       $ 256,877
    Circulation and subscriber  . . . . . . . . . . . .      113,428          112,779         110,091         108,087
    Other . . . . . . . . . . . . . . . . . . . . . . .       33,676           30,848          45,059          30,694
                                                            --------        ---------       ---------       ---------
                                                             361,706          376,705         364,122         395,658
                                                            --------        ---------       ---------       ---------
  Operating costs and expenses
    Operating . . . . . . . . . . . . . . . . . . . . .      195,083          193,597         199,287         202,289
    Selling, general and administrative . . . . . . . .       97,783           99,949          92,224         103,240
    Depreciation and amortization of
      property, plant and equipment . . . . . . . . . .       14,982           15,100          14,773          14,688
    Amortization of goodwill and other intangibles  . .        4,067            4,058           4,058           4,033
                                                            --------        ---------       ---------       ---------
                                                             311,915          312,704         310,342         324,250
                                                            --------        ---------       ---------       ---------
  Income from operations  . . . . . . . . . . . . . . .       49,791           64,001          53,780          71,408
  Other income (expense)
    Equity in (losses) earnings of affiliates . . . . .       (1,795)            (591)            (11)            403
    Interest income . . . . . . . . . . . . . . . . . .        2,606            2,488           2,653           3,338
    Interest expense  . . . . . . . . . . . . . . . . .       (1,446)            (985)         (1,029)         (1,523)
    Other . . . . . . . . . . . . . . . . . . . . . . .          (51)             638          20,500            (708)
                                                            --------        ---------       ---------       ---------
  Income before income taxes and cumulative effect of
    change in accounting principle  . . . . . . . . . .       49,105           65,551          75,893          72,918
  Provision for income taxes  . . . . . . . . . . . . .       20,600           27,560          31,050          30,440
                                                            --------        ---------       ---------       ---------
  Income before cumulative effect of change in
    accounting principle  . . . . . . . . . . . . . . .       28,505           37,991          44,843          42,478
  Cumulative effect of change in method of accounting
    for income taxes  . . . . . . . . . . . . . . . . .       11,600               --              --              --
                                                            --------        ---------       ---------       ---------
  Net income  . . . . . . . . . . . . . . . . . . . . .     $ 40,105        $  37,991       $  44,843       $  42,478
                                                            ========        =========       =========       =========
  Earnings per share:
    Before cumulative effect of change
      in accounting principle . . . . . . . . . . . . .     $   2.42        $    3.23       $    3.82       $    3.63
    Cumulative effect of change in accounting principle          .98               --              --              --
                                                            --------        ---------       ---------       ---------
    Net income  . . . . . . . . . . . . . . . . . . . .     $   3.40        $    3.23       $    3.82       $    3.63
                                                            ========        =========       =========       =========
  Average number of shares outstanding  . . . . . . . .       11,796           11,755          11,731          11,718
</TABLE>


                                       38

<PAGE>   40
                          THE WASHINGTON POST COMPANY
                          ---------------------------


<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
                                                             First           Second           Third          Fourth
                                                            Quarter         Quarter         Quarter         Quarter
- --------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>             <C>             <C>             <C>
1992
  Operating revenues
    Advertising . . . . . . . . . . . . . . . . . . .      $ 195,668       $  242,929      $  203,348      $ 253,700
    Circulation and subscriber  . . . . . . . . . . .        105,480          107,989         109,045        113,679
    Other . . . . . . . . . . . . . . . . . . . . . .         27,923           26,015          38,628         26,463
                                                           ---------       ----------      ----------      ---------
                                                             329,071          376,933         351,021        393,842
                                                           ---------       ----------      ----------      ---------
  Operating costs and expenses
    Operating . . . . . . . . . . . . . . . . . . . .        187,115          186,461         197,675        216,005
    Selling, general and administrative . . . . . . .         85,655           90,726          84,293         96,125
    Depreciation and amortization of
      property, plant and equipment . . . . . . . . .         14,709           14,850          14,711         14,952
    Amortization of goodwill and other intangibles  .          3,798            3,842           3,941          3,897
                                                           ---------       ----------      ----------      ---------
                                                             291,277          295,879         300,620        330,979
                                                           ---------       ----------      ----------      ---------
  Income from operations  . . . . . . . . . . . . . .         37,794           81,054          50,401         62,863
  Other income (expense)
    Equity in (losses) of affiliates  . . . . . . . .         (4,848)          (1,709)         (2,411)        (2,762)
    Interest income . . . . . . . . . . . . . . . . .          3,030            2,820           2,944          3,060
    Interest expense  . . . . . . . . . . . . . . . .         (1,535)          (1,780)         (1,671)        (1,399)
    Other . . . . . . . . . . . . . . . . . . . . . .             89             (108)            (66)        (1,570)
                                                           ---------       ----------      ----------      ---------
  Income before income taxes  . . . . . . . . . . . .         34,530           80,277          49,197         60,192
  Provision for income taxes  . . . . . . . . . . . .         14,850           34,525          21,650         25,375
                                                           ---------       ----------      ----------      ---------
  Net income  . . . . . . . . . . . . . . . . . . . .      $  19,680       $   45,752      $   27,547      $  34,817
                                                           =========       ==========      ==========      =========
  Earnings per share  . . . . . . . . . . . . . . . .      $    1.66       $     3.87      $     2.33      $    2.94
                                                           =========       ==========      ==========      =========
  Average number of shares outstanding  . . . . . . .         11,835           11,835          11,835         11,816
</TABLE>


                                       39

<PAGE>   41

                                                                      SCHEDULE V



<TABLE>
<CAPTION>
                                                     THE WASHINGTON POST COMPANY
                                              SCHEDULE V--PROPERTY,  PLANT AND EQUIPMENT



===================================================================================================================================
               COLUMN A                          COLUMN B         COLUMN C      COLUMN D           COLUMN E              COLUMN F
- -----------------------------------------------------------------------------------------------------------------------------------
                                                BALANCE AT                                                              BALANCE AT
                                               BEGINNING OF      ADDITIONS                       OTHER CHANGES            END OF
            CLASSIFICATION                        PERIOD           AT COST    RETIREMENTS        ADD (DEDUCT)             PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>             <C>             <C>             <C>                    <C>
Year Ended December 29, 1991
   Plant Assets
       Machinery, equipment and fixtures  . .   $495,511,000     $14,213,000    $15,093,000     $ 42,575,000  (A)      $537,206,000
       Leasehold improvements   . . . . . . .     29,047,000         765,000        767,000         (284,000) (B)        28,761,000
       Buildings  . . . . . . . . . . . . . .    139,875,000          23,000      1,623,000       17,922,000  (C)       156,197,000
       Construction in progress   . . . . . .     36,094,000      40,615,000                     (61,017,000) (D)        15,692,000
       Land   . . . . . . . . . . . . . . . .     26,143,000          41,000         38,000          758,000  (A)        26,904,000
                                                 -----------     -----------    -----------     ------------           ------------
                                                 726,670,000      55,657,000     17,521,000          (46,000)           764,760,000
                                                 -----------     -----------    -----------     ------------           ------------
   Other Assets
       Buildings  . . . . . . . . . . . . . .      1,803,000                                                              1,803,000
       Land   . . . . . . . . . . . . . . . .     25,509,000           3,000                                             25,512,000
                                                ------------     -----------    -----------     ------------           ------------
                                                  27,312,000           3,000                                             27,315,000
                                                ------------     -----------    -----------     ------------           ------------
                                                $753,982,000     $55,660,000    $17,521,000     $    (46,000)          $792,075,000
                                                ============     ===========    ===========     ============           ============
Year Ended January 3, 1993
   Plant Assets
       Machinery, equipment and fixtures  . .   $537,206,000     $20,027,000    $14,654,000     $ 28,733,000  (E)      $571,312,000
       Leasehold improvements   . . . . . . .     28,761,000         643,000        493,000          733,000  (F)        29,644,000
       Buildings  . . . . . . . . . . . . . .    156,197,000       1,269,000         76,000        3,658,000  (G)       161,048,000
       Construction in progress   . . . . . .     15,692,000      36,373,000                     (29,205,000) (H)        22,860,000
       Land   . . . . . . . . . . . . . . . .     26,904,000         577,000         15,000          710,000  (I)        28,176,000
                                                ------------     -----------    -----------     ------------           ------------
                                                 764,760,000      58,889,000     15,238,000        4,629,000            813,040,000
                                                ------------     -----------    -----------     ------------           ------------
   Other Assets
       Buildings  . . . . . . . . . . . . . .      1,803,000                                                              1,803,000
       Land   . . . . . . . . . . . . . . . .     25,512,000          50,000         22,000                              25,540,000
                                                ------------     -----------    -----------     ------------           ------------
                                                  27,315,000          50,000         22,000                              27,343,000
                                                ------------     -----------    -----------     ------------           ------------
                                                $792,075,000     $58,939,000    $15,260,000     $  4,629,000           $840,383,000
                                                ============     ===========    ===========     ============           ============

Year Ended January 2, 1994
   Plant Assets
       Machinery, equipment and fixtures  . .   $571,312,000     $20,834,000     $7,854,000      $  (759,000) (J)      $583,533,000
       Leasehold improvements   . . . . . . .     29,644,000         610,000        760,000         (207,000) (K)        29,287,000
       Buildings  . . . . . . . . . . . . . .    161,048,000         658,000        233,000        4,960,000  (L)       166,433,000
       Construction in progress   . . . . . .     22,860,000      56,796,000                     (54,631,000) (M)        25,025,000
       Land   . . . . . . . . . . . . . . . .     28,176,000         241,000         13,000          395,000  (N)        28,799,000
                                                ------------     -----------     ----------     ------------           ------------
                                                 813,040,000      79,139,000      8,860,000      (50,242,000)           833,077,000
                                                ------------     -----------     ----------     ------------           ------------
   Other Assets
       Machinery, equipment and fixtures  . .                                                      1,700,000  (O)         1,700,000
       Buildings  . . . . . . . . . . . . . .      1,803,000                                                              1,803,000
       Land   . . . . . . . . . . . . . . . .     25,540,000         626,000         93,000                              26,073,000
                                                ------------    ------------    -----------     ------------           ------------
                                                  27,343,000         626,000         93,000        1,700,000             29,576,000
                                                ------------    ------------    -----------     ------------           ------------
                                                $840,383,000    $ 79,765,000    $ 8,953,000     $(48,542,000)          $862,653,000
                                                ============    ============    ===========     ============           ============
</TABLE>


- ----------
    (A)   Consists of completed construction transferred from construction in
progress.
    (B)   Includes $407,000 of completed construction transferred from
construction in progress and $691,000 reclassified to buildings.
    (C)   Includes $17,231,000 of completed construction transferred from
construction in progress and $691,000 reclassified from leasehold improvements.
    (D)   Consists of completed construction transferred to related accounts.
    (E)   Includes $25,620,000 of completed construction transferred from
related accounts and $3,113,000 of assets of subsidiaries acquired.



                                       40

<PAGE>   42
                                                                      SCHEDULE V
                                                                     (CONTINUED)


    (F)   Includes $538,000 of completed construction transferred from related
accounts and $195,000 of assets of subsidiaries acquired.
    (G)   Includes $2,455,000 of completed construction transferred from
related accounts, $1,113,000 of assets of subsidiaries acquired, and $90,000
reclassified from land.
    (H)   Includes $28,626,000 of completed construction transferred to related
accounts, $872,000 transferred to other assets, and $293,000 of assets of
subsidiaries acquired.
    (I)   Includes $800,000 of assets of subsidiaries acquired and $90,000
reclassified to buildings.
    (J)   Includes $32,591,000 of completed construction transferred from
construction in progress net of $31,650,000 of assets of cable subsidiary sold
and $1,700,000 transferred to non-operating property.
    (K)   Includes $277,000 of completed construction transferred from
construction in progress net of $484,000 of assets of cable subsidiary sold.
    (L)   Includes $5,301,000 of completed construction transferred from
construction in progress net of $341,000 of assets of cable subsidiary sold.
    (M)   Includes $38,307,000 of completed construction transferred to related
accounts, $16,280,000 of assets of cable subsidiary sold, and $44,000
transferred to other assets.
    (N)   Includes $138,000 of completed construction transferred from
construction in progress, and $257,000 reclassified from other assets.
    (O)   Consists of non-operating property transferred from machinery,
equipment and fixtures.





                                       41

<PAGE>   43
                                                                     SCHEDULE VI



<TABLE>
<CAPTION>
                                                     THE WASHINGTON POST COMPANY
                                              SCHEDULE VI--ACCUMULATED DEPRECIATION AND
                                            AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT


- -----------------------------------------------------------------------------------------------------------------------------------
               COLUMN A                          COLUMN B         COLUMN C      COLUMN D           COLUMN E              COLUMN F
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                 ADDITIONS
                                                                 ---------

                                                BALANCE AT       CHARGED TO                                             BALANCE AT
                                               BEGINNING OF       COSTS AND                          OTHER                END OF
              DESCRIPTION                         PERIOD          EXPENSES    RETIREMENTS           CHANGES               PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>              <C>            <C>              <C>                   <C>
Year Ended December 29, 1991
   Plant Assets
       Machinery, equipment and fixtures  . . . $270,822,000     $49,013,000    $13,902,000                            $305,933,000
       Leasehold improvements   . . . . . . .     12,479,000       4,270,000        768,000                              15,981,000
       Buildings  . . . . . . . . . . . . . .     48,390,000       5,412,000      1,269,000                              52,533,000
                                                ------------     -----------    -----------    -------------           ------------
            . . . . . . . . . . . . . . . . .    331,691,000      58,695,000     15,939,000                             374,447,000
                                                ------------     -----------    -----------    -------------           ------------
   Other Assets
       Buildings  . . . . . . . . . . . . . .        583,000          93,000                                                676,000
                                                ------------     -----------    -----------    -------------           ------------
                                                $332,274,000     $58,788,000    $15,939,000                            $375,123,000
                                                ============     ===========    ===========    =============           ============
Year Ended January 3, 1993
   Plant Assets
       Machinery, equipment and fixtures  . .   $305,933,000     $48,382,000    $13,408,000       $  684,000  (A)      $341,591,000
       Leasehold improvements   . . . . . . .     15,981,000       4,080,000        410,000          966,000  (B)        20,617,000
       Buildings  . . . . . . . . . . . . . .     52,533,000       6,760,000         67,000          802,000  (C)        60,028,000
                                                ------------     -----------    -----------      -----------           ------------
            . . . . . . . . . . . . . . . . .    374,447,000      59,222,000     13,885,000        2,452,000            422,236,000
                                                ------------     -----------    -----------      -----------           ------------
   Other Assets
       Buildings  . . . . . . . . . . . . . .        676,000         142,000                                                818,000
                                                ------------     -----------    -----------      -----------           ------------
                                                $375,123,000     $59,364,000    $13,885,000      $ 2,452,000           $423,054,000
                                                ============     ===========    ===========      ===========           ============
Year Ended January 2, 1994
   Plant Assets
       Machinery, equipment and fixtures  . .   $341,591,000     $49,103,000     $7,127,000      $(5,356,000) (D)      $378,211,000
       Leasehold improvements   . . . . . . .     20,617,000       4,122,000        387,000          587,000  (E)        24,939,000
       Buildings  . . . . . . . . . . . . . .     60,028,000       6,318,000        167,000           30,000  (F)        66,209,000
                                                ------------     -----------    -----------      -----------            -----------
                                                 422,236,000      59,543,000      7,681,000       (4,739,000)           469,359,000
                                                ------------     -----------    -----------      -----------            -----------
   Other Assets
       Machinery, equipment and fixtures  . .                                                     $1,700,000  (G)        $1,700,000
       Buildings  . . . . . . . . . . . . . .        818,000          93,000                                                911,000
                                                ------------     -----------    -----------      -----------           ------------
                                                     818,000          93,000                       1,700,000              2,611,000
                                                ------------     -----------    -----------      -----------           ------------
                                                $423,054,000     $59,636,000    $ 7,681,000      $(3,039,000)          $471,970,000
- ------------                                    ============     ===========    ===========      ===========           ============
</TABLE>

   (A) Includes $1,139,000 related to assets of subsidiaries acquired net of
$455,000 of reclassifications of prior year additions.
   (B) Includes $97,000 related to assets of subsidiaries acquired and $869,000
of reclassifications.
   (C) Includes $77,000 related to assets of subsidiaries acquired and $725,000
of reclassifications of prior year additions.
   (D) Includes $3,454,000 related to assets of cable subsidiary sold,
$1,700,000 transferred to non-operating property, and $202,000 transferred to
other assets.
   (E) Includes $615,000 related to reclassifications net of $28,000 of assets
of cable subsidiary sold.
   (F) Includes $58,000 related to reclassifications net of $28,000 of assets
of cable subsidiary sold.
   (G) Relates to non-operating property transferred from machinery, equipment
and fixtures.





                                       42

<PAGE>   44
                                                                   SCHEDULE VIII



<TABLE>
<CAPTION>
                                                     THE WASHINGTON POST COMPANY
                                            SCHEDULE VIII--VALUATION ACCOUNTS AND RESERVES


- -----------------------------------------------------------------------------------------------------------------------------------
                COLUMN A                                                 COLUMN B        COLUMN C        COLUMN D        COLUMN E
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                                       ADDITIONS --
                                                                        BALANCE AT      CHARGED TO                      BALANCE AT
                                                                         BEGINNING       COSTS AND                        END OF
               DESCRIPTION                                               OF PERIOD       EXPENSES       DEDUCTIONS        PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>      <C>              <C>             <C>             <C>
Year Ended December 29, 1991
   Allowance for doubtful accounts and returns  . . . . . . . .        $26,600,000      $42,729,000     $41,168,000     $28,161,000
   Allowance for advertising rate adjustments and discounts   .          6,628,000       10,287,000       9,434,000       7,481,000
                                                                       -----------      -----------     -----------     -----------
                                                                       $33,228,000      $53,016,000     $50,602,000     $35,642,000
                                                                       ===========      ===========     ===========     ===========
Year Ended January 3, 1993
   Allowance for doubtful accounts and returns  . . . . . . . .        $28,161,000      $48,140,000     $48,006,000     $28,295,000
   Allowance for advertising rate adjustments and discounts   .          7,481,000        9,493,000       9,969,000       7,005,000
                                                                       -----------      -----------     -----------     -----------
                                                                       $35,642,000      $57,633,000     $57,975,000     $35,300,000
                                                                       ===========      ===========     ===========     ===========
Year Ended January 2, 1994
   Allowance for doubtful accounts and returns  . . . . . . . .        $28,295,000      $47,558,000     $45,005,000     $30,848,000
   Allowance for advertising rate adjustments and discounts   .          7,005,000        9,073,000       8,324,000       7,754,000
                                                                       -----------       ----------     -----------     -----------
                                                                       $35,300,000      $56,631,000     $53,329,000     $38,602,000
                                                                       ===========      ===========     ===========     ===========
</TABLE>






                                       43

<PAGE>   45
                                                                      SCHEDULE X



<TABLE>
<CAPTION>
                                                     THE WASHINGTON POST COMPANY
                                        SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION


- -----------------------------------------------------------------------------------------------------------------------------------
                COLUMN A                                                                                  COLUMN B
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                                          CHARGED TO COSTS AND EXPENSES YEAR ENDED
                                                                                        -------------------------------------------
                                                                                        DECEMBER 29,     JANUARY 3,      JANUARY 2,
               DESCRIPTION                                                                  1991            1993            1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>             <C>             <C>
Maintenance and repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $10,219,000     $11,313,000     $11,166,000
Amortization of goodwill and other intangibles  . . . . . . . . . . . . . . . . . .      15,272,000      15,478,000      16,216,000
Taxes other than payroll and income taxes . . . . . . . . . . . . . . . . . . . . .      16,878,000      16,625,000      15,908,000
Royalties, primarily amortization of film rights  . . . . . . . . . . . . . . . . .      30,626,000      22,086,000      20,871,000
Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      14,289,000      14,617,000      15,714,000
</TABLE>






                                       44

<PAGE>   46

                          THE WASHINGTON POST COMPANY
                          ---------------------------



                          MANAGEMENT'S DISCUSSION AND
                       ANALYSIS OF RESULTS OF OPERATIONS
                            AND FINANCIAL CONDITION
                       =================================

This analysis should be read in conjunction with the consolidated financial
statements and the notes thereto.

RESULTS OF OPERATIONS - 1993 COMPARED TO 1992

Net income in 1993 was $165.4 million, an increase of 29 percent over net
income of $127.8 million last year. Earnings per share rose 30 percent to
$14.08, from $10.80 in 1992. Earnings in 1993 included a one-time credit of
$11.6 million ($.98 per share) related to the adoption of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" and an
after-tax gain of $13.4 million ($1.14 per share) from the sale of the
company's cable franchises in the United Kingdom. Excluding these two items,
1993 net income and earnings per share increased 10 percent and 11 percent,
respectively.
    Revenues for 1993 totaled $1,498 million, an increase of 3 percent from
$1,451 million in 1992. Both advertising revenues and circulation and
subscriber revenues rose 2 percent, while other revenues increased 18 percent.
Full year revenues from businesses acquired at the end of 1992, principally Pro
Am Sports System (PASS), a regional sports cable network, contributed to the
improvement in other revenues in 1993. Results for 1993 included 52 weeks at
The Washington Post and The Herald newspapers; 1992 included 53 weeks.
    Costs and expenses for the year increased 3 percent to $1,259 million, from
$1,219 million in 1992. Approximately 40 percent of the total increase relates
to additional expenses associated with businesses that were acquired at the end
of 1992, while the remainder reflects normal increases in the costs of
operations and the continued investment in personal communications services
(PCS). Nonrecurring charges included in 1992 costs were expenses related to a
restructuring at Kaplan and net costs associated with the termination of one of
the health care plans at The Washington Post newspaper. In 1993 operating
income rose to $239.0 million, a 3 percent increase over $232.1 million in
1992.

NEWSPAPER DIVISION. Results at the newspaper division included 52 weeks in
1993, compared with 53 weeks in 1992 and also included full year results at The
Gazette Newspapers (formerly known as The Gaithersburg Gazette) in 1993,
compared with ten months in 1992.  At the newspaper division revenues increased
2 percent in 1993. Advertising revenue for the division rose 3 percent. At The
Washington Post, advertising revenues increased 2 percent, as rate increases
more than offset a 1 percent decline in advertising linage. Retail linage at
The Post decreased by less than 1 percent, and general volume was down 2
percent. Classified linage was 3 percent below last year, primarily due to the
continued softness in the Washington, D.C., real estate market. Preprint volume
remained strong in 1993. Circulation revenues for the newspaper division
decreased 1 percent, principally due to the inclusion of the 53rd week in 1992.
For the twelve-month period ended September 30, 1993, daily circulation at The
Washington Post rose 1 percent, while Sunday circulation decreased almost 1
percent from 1992 levels, reflecting the introduction of several competing
Sunday newspapers in the Washington, D.C., market. The Post maintained its
share of the market with 51 percent penetration daily, while Sunday penetration
declined to 66 percent.
    Newspaper division operating margin was 18 percent, unchanged from the
prior year. The previously mentioned increases in advertising revenues were
offset by normal increases in payroll and fringe benefit costs. A slight
increase in average newsprint prices accounted for the 3 percent rise in
newsprint expense.

BROADCAST DIVISION. Revenues at the broadcast division increased 9 percent over
last year. National advertising revenues increased 10 percent during the year,
while local advertising revenues rose 8 percent. These increases were primarily
due to a surge in automobile advertising in 1993.
    Viewership remained strong in all four markets in 1993. In the latest
ratings period, all four television stations were ranked number one, sign-on to
sign-off, in their markets.
    Operating margin at the broadcast division increased to 37 percent, from 34
percent in 1992. Results in 1992 included the impact of Hurricane Andrew on
WPLG in Miami and lower revenues from sports programming at WDIV in Detroit,
which were partially offset by higher political advertising revenues.



                                       45

<PAGE>   47
                          THE WASHINGTON POST COMPANY
                          ---------------------------


MAGAZINE DIVISION. Newsweek revenues in 1993 decreased 4 percent, principally
due to an 8 percent decline in advertising revenues at both the domestic and
international editions. Lower rates and fewer pages were responsible for the
decrease. Circulation revenues increased 1 percent at Newsweek, with higher
volume and rates at the international editions being the major contributors to
the increase. In 1993 Newsweek Domestic published the same number of weekly
issues as in 1992 (52), with two special newsstand issues in 1993, compared
with one special issue in 1992. At Newsweek International 51 weekly issues were
published in 1993, the same as in the prior year.
    At Newsweek, the operating margin decreased to  5 percent, from 7 percent
in 1992, principally as a result of the decrease in advertising revenues and
certain costs related to the relocation of the New York City operations
scheduled for 1994.

CABLE DIVISION. Revenues at the cable division in 1993 increased 7 percent over
last year (excluding the operations in the United Kingdom, which were sold in
September 1993, revenues also increased 7 percent). The number of basic
subscribers rose 4 percent, primarily due to the 10,000 subscribers acquired
from Coast TV Cable, Inc., in Long Beach, Mississippi. Also affecting the
change in division revenues were higher advertising revenues at the domestic
systems, an approximately $3 million negative impact of rate reregulation and
the sale of the company's cable operations in the United Kingdom.
    Operating margin in 1993 remained flat at 22 percent, compared to the prior
year. Excluding the operations in the United Kingdom, 1993 operating margin was
25 percent, the same as in 1992. Domestic cable cash flow rose 5 percent to
$85.9 million, from $82.0 million last year. Total costs at the domestic
systems increased 9 percent, reflecting the continued rise in programming costs
and the larger number of subscribers.

OTHER BUSINESSES. In 1993 revenues from other businesses increased 23 percent.
Revenues from PASS, acquired at the end of 1992, were the major contributor to
the increase. Revenues at Stanley H. Kaplan Educational Center rose 3 percent
over last year, and enrollments increased 2 percent, principally in the lower
priced courses.
    The company's other businesses recorded an operating loss of $9.1 million
in 1993, compared with an operating loss of $6.1 million in 1992, principally
due to the expansion of established businesses, the continuing investment in
PCS and lower operating results at Kaplan. This decline at Kaplan was a result
of additional costs related to a change in its operating structure, implemented
at the end of 1992.

EQUITY IN EARNINGS AND LOSSES OF AFFILIATES. The company's equity in earnings
of affiliates for 1993 was a loss of $2.0 million, compared with a loss of
$11.7 million in 1992. Better results at the company's newsprint affiliates,
which included gains on the sale of land in 1993, contributed to the
improvement.

NON-OPERATING ITEMS. Interest income, net of interest expense, was $6.1 million
in 1993, compared with $5.5 million in 1992. This increase was a result of
higher invested cash balances, which were partially offset by lower interest
rates.
    Other income in 1993 was $20.4 million, compared with other expense of $1.7
million in 1992. In 1993 other income included a $20.2 million gain on the sale
of the company's cable franchises in the United Kingdom. In 1992 other expense
included the recognition of unrealized losses on the company's forward foreign
currency contracts, in addition to the costs associated with the disposition of
certain plant, property and equipment.

INCOME TAXES. The effective tax rate decreased to 41.6 percent in 1993, from 43
percent in 1992, exclusive of the cumulative effect of the change in accounting
principle. During 1993 the company adjusted the provision for income taxes to
reflect the increase in the federal income tax rate, which was retroactive to
the beginning of the year. Offsetting the rate increase was the lower effective
rate for foreign taxes recorded on the sale of the company's cable operations
in the United Kingdom.

RESULTS OF OPERATIONS - 1992 COMPARED TO 1991

In 1992 net income increased 80 percent to $127.8 million, from net income of
$70.8 million in 1991. Earnings per share increased 81 percent to $10.80, from
$5.96 in 1991. The company's 1991 earnings included a one-time, after-tax
charge of $47.9 million ($4.04 per share) related to a change in accounting for
certain employee postretirement benefits. Net income in 1991 also included a
credit of $10.0 million ($.84 per share) resulting from a settlement with the
Internal Revenue Service (IRS) and an after-tax charge of $3.5 million ($.30
per share) for severance and related costs resulting from a voluntary reduction
in staff at The Washington Post newspaper. Excluding these nonrecurring charges
and credits from 1991 results, both net income and earnings per share for 1992
increased 14 percent.
    Results for 1992 included 53 weeks at The Washington Post and The Herald
newspapers; 1991 included 52 weeks. Also included in 1992 are the acquisitions
of The Gazette Newspapers and other small businesses.



                                       46

<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
1991.
    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.



                                       47

<PAGE>   49
                          THE WASHINGTON POST COMPANY
                          ---------------------------


OTHER BUSINESSES. In 1992 revenues from other businesses increased 2 percent,
primarily as a result of the newly acquired businesses in 1992. At Stanley H.
Kaplan Educational Center, enrollments increased 2 percent; however, the
improvement resulted from increased registrations for lower priced courses,
while enrollments in higher priced courses decreased.
    Operating income at the company's other businesses decreased from $10.2
million in 1991, to an operating loss of $6.1 million in 1992, due to
continuing investment in PCS and lower operating results at Kaplan. This
decline at Kaplan included a restructuring charge related to the change in its
distribution system to gain more control over its field operations.

EQUITY IN EARNINGS AND LOSSES OF AFFILIATES. The company's equity in earnings
of affiliates for 1992 was a loss of $11.7 million, compared with a loss of
$1.9 million in 1991. Further weaknesses at the company's newsprint
manufacturing affiliates contributed to the loss.

NON-OPERATING ITEMS. Net interest income totaled $5.5 million in 1992, compared
with net interest expense of $.4 million in 1991.  Included in 1991 were a fee
of $2.1 million related to the $50 million prepayment on the company's 10.68
percent promissory notes and interest of $1.6 million related to the tax
settlement with the IRS, mentioned previously.
    Other expense in 1992 and 1991 included the costs related to the
disposition of certain plant, property and equipment. In 1992 other expense
also included the recognition of unrealized losses on the company's forward
foreign currency contracts.

INCOME TAXES. The effective tax rate increased to 43 percent in 1992, from 37.6
percent in 1991, exclusive of the cumulative effect of the change in accounting
for other postretirement benefits. The favorable settlement with the IRS
significantly lowered the effective rate in 1991.

FINANCIAL CONDITION: CAPITAL RESOURCES
AND LIQUIDITY

During the period 1991 through 1993 the company spent approximately $285
million on purchases of additional plant, property and equipment, investments
in new businesses, various other capital programs, and the repurchase of Class
B common stock. In September 1993 the company sold its cable franchises in the
United Kingdom for approximately $65 million. Including this transaction, since
the end of 1992 working capital has increased by approximately $124 million. At
January 2, 1994, the company had $172 million in cash and cash equivalents,
$258 million in marketable securities and $52 million in debt.
    During 1993 and 1992 the company repurchased 99,800 and 33,949 shares,
respectively, of its Class B common stock at a cost of $23.1 million and $7.5
million, respectively. Sixty-three thousand of these shares were purchased from
The Washington Post Company Profit Sharing Plan. The annual dividend rate in
1994 remains at $4.20 per share.
    In December 1993 the Federal Communications Commission (FCC) awarded a
pioneer's preference for personal communications services to American PCS, L.P.
(known as American Personal Communications or APC), a limited partnership in
which The Washington Post Company has a 70 percent interest. In accordance with
that preference, APC has applied at the FCC for a license to operate a PCS
system in most of Maryland, Washington, D.C., northern Virginia and portions of
West Virginia and Pennsylvania. APC has begun to acquire cell sites and specify
PCS equipment, and upon authorization from the FCC, will begin construction of
the system itself. The company estimates that its cost of construction could
approximate $200 million, most of which will be incurred in 1994 and 1995.
    The company has an agreement to purchase the assets of two television
stations in Houston and San Antonio, Texas, for approximately $250 million. The
completion of the transaction is contingent upon approval by the FCC, which the
company received in February 1994.
    Excluding the expansion of PCS and the purchase of the television stations,
the company estimates that in 1994 it will spend approximately $80 million to
$100 million for plant and equipment, principally for the completion of various
projects at the newspaper and magazine divisions and the development of new
media products. It expects to fund all of these expenditures from cash flow
from operations.
    In February 1994 the FCC issued new rules related to pricing and
reregulation of the cable industry. The company is in the process of evaluating
the rules, but does not expect them to have a material effect on consolidated
financial results.
    In management's opinion, the company will have ample liquidity to meet the
various cash needs in 1994 as outlined above.



                                       48

<PAGE>   50









                     [THIS PAGE INTENTIONALLY LEFT BLANK]












                                      49

<PAGE>   51
                         THE WASHINGTON POST COMPANY
                         ---------------------------


                          TEN-YEAR SUMMARY OF SELECTED
                           HISTORICAL FINANCIAL DATA
                          ============================


See Notes to Consolidated Financial Statements for the summary of significant
accounting policies and additional information relative to the years 1991-1993.



<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
(In thousands, except per share amounts)                                    1993              1992             1991    
- ----------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>               <C>              <C>          
RESULTS OF OPERATIONS                                                                                                  
  Operating revenues                                                   $  1,498,191      $ 1,450,867      $  1,380,261 
  Income from operations                                               $    238,980      $   232,112      $    192,866 
  Income before cumulative effect of changes in accounting                                                             
    principle                                                          $    153,817      $   127,796      $    118,721 
  Cumulative effect of change in method of accounting                                                                  
    for income taxes                                                         11,600               --                -- 
  Cumulative effect of change in method of accounting                                                                  
    for postretirement benefits other than pensions                              --               --           (47,897)
                                                                       ------------      -----------      ------------
  Net income                                                           $    165,417      $   127,796      $     70,824 
                                                                       ============      ===========      ============ 
PER SHARE AMOUNTS                                                                                                      
  Earnings per share                                                                                                   
    Income before cumulative effect of changes in accounting                                                           
      principle                                                              $13.10           $10.80            $10.00 
    Cumulative effect of change in method of accounting                                                                
      for income taxes                                                          .98               --                -- 
    Cumulative effect of change in method of accounting                                                                
      for postretirement benefits other than pensions                            --               --             (4.04)
                                                                             ------           ------            ------
    Net income                                                               $14.08           $10.80            $ 5.96 
                                                                             ======           ======            ======
  Cash dividends                                                             $ 4.20           $ 4.20            $ 4.20 
  Shareholders' equity                                                       $92.84           $84.17            $78.12 
                                                                                                                       
AVERAGE NUMBER OF SHARES OUTSTANDING                                         11,750           11,830            11,876 
                                                                                                                       
FINANCIAL POSITION                                                                                                     
  Current assets                                                       $    625,574      $   524,975      $    472,219 
  Working capital                                                           367,041          242,627           183,959 
  Property, plant and equipment                                             363,718          390,804           390,313 
  Total assets                                                            1,622,504        1,568,121         1,487,661 
  Long-term debt                                                             51,768           51,842            51,915 
  Shareholders' equity                                                    1,087,419          993,005           924,285 
</TABLE>



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<PAGE>   52
                         THE WASHINGTON POST COMPANY
                         ---------------------------



<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
     1990               1989             1988              1987             1986              1985             1984
- ------------------------------------------------------------------------------------------------------------------------
<S>               <C>               <C>               <C>              <C>               <C>                 <C>

$  1,438,640      $  1,444,094      $  1,367,613      $  1,315,422     $  1,215,064      $  1,078,650        $   984,303
$    281,768      $    313,691      $    233,290      $    257,073     $    228,986      $    204,186        $   166,295
                                                                                                                        
$    174,576      $    197,893      $    269,117      $    186,743     $    100,173      $    114,261        $    85,886
                                                                                                                        
          --                --                --                --               --                --                 --
                                                                                                                        
          --                --                --                --               --                --                 --
- ------------      ------------      ------------      ------------     ------------      ------------        -----------
$    174,576      $    197,893      $    269,117      $    186,743     $    100,173      $    114,261        $    85,886
============      ============      ============      ============     ============      ============        ===========
                                                                                                                        
                                                                                                                        
                                                                                                                        
      $14.45            $15.50            $20.91            $14.52           $ 7.80            $ 8.66             $ 6.11
                                                                                                                        
          --                --                --                --               --                --                 --
                                                                                                                        
          --                --                --                --               --                --                 --
      ------            ------            ------            ------           ------            ------             ------
      $14.45            $15.50            $20.91            $14.52           $ 7.80            $ 8.66             $ 6.11
      ======            ======            ======            ======           ======            ======             ======
      $ 4.00            $ 1.84            $ 1.56            $ 1.28           $ 1.12            $  .96             $  .80
      $76.31            $75.40            $67.50            $47.80           $34.04            $27.26             $27.17
                                                                                                                        
      12,081            12,768            12,873            12,861           12,842            13,194             14,050
                                                                                                                        
                                                                                                                        
$    471,669      $    553,188      $    493,736      $    226,523     $    219,422      $    359,174        $   218,559
     175,807           283,118           235,698           (50,290)         (22,647)          150,397             56,850
     394,979           370,597           352,113           371,080          343,702           219,310            191,072
   1,496,509         1,532,211         1,422,267         1,194,196        1,145,227           885,079            645,800
     126,988           152,061           154,751           155,791          336,140           222,392              6,250
     905,112           941,522           868,240           614,009          436,590           349,548            380,127
</TABLE>



                                       51

<PAGE>   53

<TABLE>
<CAPTION>

                                                       INDEX TO EXHIBITS

    EXHIBIT
    NUMBER                                                       DESCRIPTION
    ------                                                       -----------

      <S>          <C>    <C>
      3.1          ---    Certificate of Incorporation of the Company as amended through May 12, 1988 (incorporated by reference
                          to Exhibit 3 to the Company's Current Report on Form 8-K dated May 12, 1988).
      3.2          ---    By-Laws of the Company as amended through September 9, 1993 (incorporated by reference to Exhibit 3 to
                          the Company's Quarterly Report on Form 10-Q for the quarter ended October 3, 1993.)
                          In accordance with Item 601(b)(4)(iii)(A) of Regulation S-K, the Company hereby agrees to furnish to
                          the Securities and Exchange Commission upon request a copy of any instrument defining the rights of
                          holders of long-term debt of the Company or any subsidiary which is not required to be filed herewith
                          because the total amount of securities authorized thereunder does not exceed 10 percent of the total
                          consolidated assets of the Company.
      10.1         ---    The Washington Post Company Annual Incentive Compensation Plan (adopted January 9, 1974) as amended
                          through January 4, 1982 (incorporated by reference to Exhibit 10.10 to the Company's Annual Report on
                          Form 10-K for the fiscal year ended January 3, 1982).*
      10.2         ---    The Washington Post Company Long-Term Incentive Compensation Plan (adopted December 11, 1981) as
                          amended through March 13, 1992 (incorporated by reference to Exhibit 10.2 to the Company's Annual
                          Report on Form 10-K for the fiscal year ended December 29, 1991).*
      10.3         ---    The Washington Post Company Stock Option Plan as amended and restated through May 13, 1993
                          (incorporated by reference to Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the quarter
                          ended April 4, 1993).*
      10.4         ---    The Washington Post Company Supplemental Executive Retirement Plan as amended and restated effective
                          December 31, 1993.*
      10.5         ---    Letter Agreement between the Company and Richard D. Simmons dated May 9, 1991 (incorporated by
                          reference to Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
                          1991).*
      11           ---    Calculation of earnings per share of common stock.
      21           ---    List of subsidiaries of the Company.
      23           ---    Consent of independent accountants.
      24           ---    Power of attorney dated March 10, 1994.
</TABLE>

- ------------
    * A management contract or compensatory plan or arrangement required to be
 included as an exhibit hereto pursuant to Item 14(c) of Form 10-K.



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