November 29, 2021

Profit Dives at Washington Post Co., as Its Education Unit Falters

Net income was $4.7 million, or 64 cents a share, an 85 percent drop from $31 million, or $4.07 cents a share, in the same period a year earlier.

The company said the results were influenced by $25 million in costs attributable to early retirement, severance and restructuring. The company also suffered from a $4.6 million foreign currency loss.

Income from continuing operations fell to $6.1 million, compared with $13.4 million in 2012.

The company’s total revenue for the quarter rose slightly to $959 million. But over all, newspaper division revenue declined by 4 percent to $127.3 million. Print advertising at The Washington Post dropped by 8 percent, to $48.6 million, primarily because of decreases in retail and general advertising.

The Washington Post newspaper also suffered from a decline in circulation as the company introduced price increases for its daily home delivery and its newsstand sales. Average daily print circulation declined by 7.2 percent to 457,100 and average Sunday circulation declined 7.7 percent to 659,500.

The figures reported on Friday reflect the steep financial challenges The Washington Post is facing as more readers migrate to digital formats. According to the latest earnings report, The Post started in February to further trim its newsroom staff through incentive programs.

The Post’s digital properties were more promising. Revenue driven mainly by and Slate jumped by 8 percent to $25.8 million. While revenue from online classified advertising on dropped by 6 percent, online display advertising revenue jumped by 16 percent.

The company’s Kaplan education division also contributed to its losses. Its revenue declined by 3 percent in the quarter, to $527.8 million, as it continued to incur restructuring costs. The company expects more restructuring costs in the coming months.

There were a few bright spots in the earnings report. Revenue from the cable television division grew 5 percent in the first quarter to $200.1 million. Television broadcasting revenue also grew by 5 percent, to $85.3 million, because of growth in advertising.

The company also announced during the first quarter its plans to move out of its downtown Washington headquarters to save money. A real estate broker said the company would probably sell the building to a developer that would raze it and rebuild on the location.

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Media Decoder: Advertising Research Foundation Gets Its First Female Leader

The Advertising Research Foundation is naming a longtime research executive at General Mills as its next president and chief executive, making her the first woman to lead the organization.

Gayle Fuguitt, who will join the A.R.F. on April 15, is to be introduced to the organization’s members on Monday morning, during a session of its annual Re:think conference that is focused on marketing research.

Ms. Fuguitt succeeds Robert Barocci, who had been president and chief executive since September 2003. The organization said in December that he would retire once his successor was named and help with the transition through the end of 2013.

Ms. Fuguitt, who is 56, took early retirement last summer from General Mills, where she had worked for 32 years, most recently as vice president for global consumer insights. While at General Mills, the packaged-food giant in Golden Valley, Minn., a Minneapolis suburb, Ms. Fuguitt was instrumental in rethinking its marketing research function and looking at marketing research as a way to gain insight into consumer behavior.

“I really believe in the role of the researcher as the voice of the consumer at the decision table,” Ms. Fuguitt said in a telephone interview on Friday.

And to preserve that role, she added, “the researcher of the future needs to be an entrepreneur, anticipating where consumers are going and providing solutions to respond to business problems.”

The researcher in coming years will have to provide chief executives and chief marketing officers with information that is “more like apps than translating a white paper,” Ms. Fuguitt said, and act as “a bridge from ‘big data’ to one-on-one conversations with consumers on social media.”

As for becoming the first woman to lead the A.R.F., she added, “a lot of consumers are women.”

“I’m humbled and challenged to be the first for any reason,” she said.

Ms. Fuguitt was familiar with the organization because she had served on its board and executive board for five years. She resigned when she left General Mills because, she explained, her serving was based on being an executive at a member company.

After leaving General Mills, Ms. Fuguitt “got on the keynote speaking circuit,” she said, and “those talks made me realize I still have a lot of passion for my role in the industry.”

According to Michael Heitner, senior vice president for member value at the organization, 87 people applied for Mr. Barocci’s post. He called Ms. Fuguitt “the first choice” among them.

Ms. Fuguitt said she planned to move to New York, where the A.R.F. is based, from Minneapolis.

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Europeans Doubt Greece’s Ability to Stick to Budget

But some things are harder to change. Asked if the state had the means, let alone the will, to properly collect taxes, Froso Stavraki, the head of the collectors’ union, took a long drag from a cigarette. “Huge efforts have been made,” she said in an interview in a cafe here last week. “But no, I don’t think people are afraid of us.”

A year ago, Prime Minister George Papandreou hammered out a $155 billion loan agreement with the European Union, European Central Bank and the International Monetary Fund. In return, Athens pledged a range of structural reforms: cracking down on tax evasion, raising the retirement age to 63 and a half from 61 and a half, limiting early retirement and opening the so-called closed professions whose guilds grant limited access to newcomers.

Now, as he comes back to Greece’s foreign creditors asking for the next $16.8 billion installment of aid — predicated on persuading Greeks to accept more tax hikes, wage cuts and the privatization of more than $71 billion in state assets before 2015 — doubts have emerged about the government’s ability to implement and enforce the measures it has already passed.

“The main problem is that he’s only been able to deliver on the parts of the austerity package that are easily enforceable and transparent and irrevocable,” such as cuts to public sector salaries and pensions, said Spyros Economides, a political scientist who co-directs the Hellenic Observatory at the London School of Economics. “Unfortunately, the rest of it is a complete mess.”

“It’s very easy to legislate,” Mr. Economides added. “The problem is to enforce legislation. There’s no enforcement mechanism. It’s all done for the eyes of the public.”

On Sunday, finance ministers from the euro zone will meet in Luxembourg and are expected to approve the next dispersal of aid. But if Mr. Papandreou fails to push through the new austerity measures that Parliament is expected to begin debating next week — with a confidence vote scheduled for Tuesday following a cabinet reshuffle last week — it could jeopardize the second rescue package that Greece needs in order to carry it through next year. A default would send the euro zone and world markets into a tailspin.

In March, Greece fired its top tax official on the grounds that he had not increased tax revenues enough. In 2010, Greece brought in 52.5 billion euros in tax revenue, up only marginally from 50 billion euros in 2009.

The country failed to collect on another 40 billion euros in back taxes owed in 2010, Ms. Stavraki said. “The problem is that most usually pay 20 percent of what they owe, and then they disappear,” she said.

To try to break what Ms. Stavraki described as a “personal, human” rapport that many Greeks have with their tax collectors, the state is reducing the number of collection offices to 72 from more than 200, and introducing a centralized electronic database system. But it has also cut the salaries of tax collectors, a move some say could encourage corruption. “Morale is low,” Ms. Stavraki said.

Adding to the difficulties, as the panic and uncertainty spreads, Greeks continue to take their money out of local banks. According to data from the European Central Bank, Greek banks lost 4 billion euros in deposits in May, following 2.4 billion in losses in April — part of a bank run that has seen an estimated 60 billion euros, a quarter of Greece’s gross domestic product, leave the country since the crisis began.

In February, the government passed a much-publicized law that removed the barriers to some of the so-called “closed professions, which range from truck drivers to pharmacists to engineers.

Powerful guilds essentially control who can get a license to practice in those professions, a system critics say rewards connections over merit.

Niki Kitsantonis contributed reporting from Athens, and Landon Thomas Jr. from London.

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The Media Equation: A Native Son Revitalizes His Paper

It was the only company that Mr. Klingensmith, an M.B.A. from the University of Chicago, had ever worked for. After three decades, including stops at Sports Illustrated and Time, he was on the short list to become the next chief executive. When the job went to Ann Moore, he hung in for a while as executive vice president in charge of strategy and acquisitions. “It was a real job, it just wasn’t a very fun one,” he said.

So in 2008 at the age of 55, he took early retirement. He could have gone to work at any publisher in Manhattan, but instead, after a short time as a consultant, he moved to Minneapolis to become the publisher of The Star Tribune.

It wasn’t a move to Mister Rogers’ Neighborhood. The newspaper had been through years of upheaval, churning through bankruptcy, publishers and lots of layoffs.

But what could have been a quixotic last fling has turned into something far more impressive: The Star Tribune is adding readers — the Sunday circulation grew 5.7 percent in the last audit and will most likely be up again a bit in the audit that will be out in few weeks — the business is making money and, get this, distributing money from its profit-sharing plan to its employees.

It helps that Mr. Klingensmith is a local boy. He grew up in “friendly Fridley,” a suburb of Minneapolis, and he is a serious Twins fan. He traded deeply paneled rooms with a view of Rockefeller Center and its fabled skating rink for a fourth-floor office festooned with Twins memorabilia and a view of the staff parking lots, one of which is decorated with a statue of Joe Mauer of the Twins, a local hero, and another of Lucy from Peanuts, reading a newspaper.

Even Lucy probably notices that it’s a smaller newspaper than it used to be. Once a reliable moneymaker for the Cowles family, The Star Tribune was sold to McClatchy for $1.2 billion in 1998. As the midsize newspaper business tumbled, The Star Tribune became a drag on earnings for McClatchy and it was sold to Avista Capital Partners for $530 million at the end of 2006.

The private equity firm loaded $500 million in debt on the property just before revenue dropped by almost half. There were extensive layoffs, interim publishers, and in January 2009 the newspaper, the nation’s 15th largest, filed for bankruptcy. Like Mr. Klingensmith, I grew up reading the newspaper and I found it gut-wrenching to watch.

The newspaper ended up in the hands of its creditors, including the investment firm Angelo, Gordon and Company, which also has stakes in the Tribune Company and Philadelphia newspapers.

By the time Mr. Klingensmith said yes to the publisher’s job at the start of 2010, $500 million in debt had been reduced to $100 million in the reorganization, costs were way down because of the cuts, and revenues from both advertising and circulation had begun to crawl back.

The reason the company had profits to share is that while ad revenue was down 9 percent in 2010, it was far less than the 15 percent that had been budgeted. According to David Brauer,  who covers the paper for MinnPost, a local news site, the difference yielded more than $30 million in earnings before interest, taxes, depreciation and amortization in 2010. And daily circulation has remained essentially flat even though the price of the daily newspaper was raised to 75 cents from 50 cents in May. The Sunday newspaper, which did not increase in price, has gone from a low of about 477,000 in September 2009 to 504,600 in September 2010, according to audit reports.

“When I was talking to them about the job, I looked at the financials and thought it had a good shot,” Mr. Klingensmith said. “I actually thought that newspapers have a lot more life in them than they get credit for.”


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