The newspaper profit trend stumbled a bit this past few days, but thanks to the Washington Post Company (NYSE: WPO), the industry can end on a high note. The company swung to profit, posting net income of $11.4 million in Q2 compared to a net loss of $2.7 million last year. But that doesn’t mean there’s much to celebrate for newspapers. The company’s revenues were only up a slight 2 percent to $1.1 billion, mostly due to its education and cable TV holdings. At the newspaper, magazine broadcasting segments, revenues were all down.
Online revenue, mostly from washingtonpost.com, fell 9 percent to $23.5 million in Q2; revs declined by the same 9 percent to $45.6 million during the first six months of 2009. On the bright side, display ad dollars grew 2 percent for both Q2 and H109. But that slight glimmer of hope was dashed by online classified performance, which sank 29 percent and 26 percent in Q2 and H109, respectively.
|2Q 2009||2Q 2008|
— The company’s up, but the newspaper’s down: While there has been some hope that the recent profit swings from publishers like NYTCo (NYSE: NYT), Gannett (NYSE: GCI), McClatchy (NYSE: MNI) and Media General (NYSE: MEG) provides a sign that newspapers have reached the point of return, a closer look at WaPo’s newspaper segment would dash even the most ardent industry optimist. Aside from incurring $87.4 million in charges from the early retirement program expense at the paper, the division’s revenues slid 14 percent to $168.8 million from Q208’s $197.3 million in the second quarter of 2008; for h109, it fell 18 percent to $329.7 million from $403.4 million during the same period last year.
— Newsweek’s pain: During the quarter, WaPo’s Newsweek significantly redesigned its website and reformed the print version to offer more analysis a la The Economist, which has been the envy of most magazines with its ability to maintain fairly high subscription rates. Part of that strategy involves reducing its circulation rate base for its U.S. edition, from 2.6 million to 1.5 million by next January.
So the effect of the changes won’t be immediately known. In the meantime, the first half of this year contained a great deal of pain for the magazine. The numbers tell it all: Newsweek’s ad revenue tumbled 40 percent and 32 percent in Q2 and h109 respectively. Overall, the mag segment’s revenue was down 27 percent decrease from $62.7 million in Q2, while h109 fell 21 percent to $116.1 million.