WaPo CEO: Interested in Online Acquisitions, But Pricey Deals

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Don Graham, CEO of the Washington Post Co. told the NAA Mid-Year Media Review conference that he would consider additional online deals that were reasonably priced (The company bought out Slate last year). “Acquisitions in the online space are very pricey…We have some really demanding people on our board,” he said, adding that director Barry Diller, CEO of IAC , “is very, very picky about the prices he pays.”

More of his full speech is here (PDF), and I’m excerpting some of his online-related remarks below (in extended entry)

“As I have said, last year for the first time WPNI reported an operating profit as we measure it internally. And as you see, this year online advertising is up by 29 percent. I
should point out that part of the growth is attributable to Slate and Budget Travel.

The most successful $60 million online site in the world is not big enough to influence greatly the results of a $700 million newspaper. But since you can do the math for
yourself, you will quickly see that if washingtonpost.com continues for a few years to grow at meaningful rates, and even if it slows down in percentage terms from today,
within three or four years it can be an important contributor to the profits of the newspaper division, which collectively generated $143 million in operating income last year.

It is not a foregone conclusion that we’ll be able to continue to achieve those results. I don’t have a clue what the revenue of WPNI will be three years from now. It will take dedication and commitment to make it grow by the kinds of dollars I’m talking about.

I do believe I can say to shareholders – as I’ve said about our other division heads for years –that in Caroline Little we have absolutely the right person running WPNI to maximize the opportunity this business represents for our company.

We do not have the largest, in revenue, online site in the newspaper industry. The New York Times does. I wouldn’t argue that we have the most internet revenue for a company our size. Given the scope of their investments, I suspect Gannett, Tribune or
Knight Ridder does.

But washingtonpost.com is now a big site relative to the size of our market and our newspaper. And we believe it is bigger in revenues than the sites of some newspapers in larger markets, though not all. To my way of thinking, this is an important new fact about our company and the newspaper division, though it certainly doesn’t offset the importance of declining circulation at The Post.”

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