2012 ANNUAL REPORT 1150 15TH STREET, NW WASHINGTON, DC 20071 (202) 334-6000 WASHPOSTCO.COM // CORPORATE DIRECTORY // BOARD OF DIRECTORS Donald E. Graham (3, 4) Dave Goldberg (3) G. Richard Wagoner, Jr. (1) Chairman of the Board and Chief Executive Officer Chief Executive Officer, SurveyMonkey Retired Chairman of the Board and Chief Lee C. Bollinger (2) Anne M. Mulcahy (2, 4) Executive Officer, General Motors Corporation President, Columbia University Retired Chairman of the Board and Chief Katharine Weymouth (3) Christopher C. Davis (1, 3, 4) Executive Officer, Xerox Corporation Chief Executive Officer, Washington Post Media Publisher, The Washington Post Chairman, Davis Selected Advisers, LP Ronald L. Olson (4) (2, 3, 4) Partner, Munger, Tolles & Olson LLP Barry Diller Committees of the Board of Directors Chairman and Senior Executive, IAC Larry D. Thompson (2) (1) Audit Committee Chairman and Senior Executive, Expedia, Inc. Retired Senior Vice President, (2) Compensation Committee Chairman and Senior Executive, TripAdvisor, Inc. General Counsel and Secretary, PepsiCo (3) Finance Committee Thomas S. Gayner (1, 3) (4) Executive Committee President and Chief Investment Officer, Markel Corporation OTHER COMPANY OFFICERS Veronica Dillon Rima Calderon Anthony Lyddane Senior Vice President, General Counsel and Vice President–Communications and Vice President–Tax Secretary External Relations Daniel J. Lynch Hal S. Jones Wallace R. Cooney Vice President and Treasurer Senior Vice President–Finance Vice President–Finance REVENUE BY PRINCIPAL OPERATIONS Nicole M. Maddrey Chief Financial Officer Chief Accounting Officer Vice President, Deputy General Counsel Ann L. McDaniel Denise Demeter and Assistant Secretary Senior Vice President Vice President–Human Resources Pinkie Dent Mayfield Vijay Ravindran Stacey Halota Vice President–Corporate Solutions Senior Vice President Vice President–Information Security and Privacy Assistant Treasurer n EDUCATION 55% Chief Digital Officer Jocelyn E. Henderson Aloma L. Myers Gerald M. Rosberg Vice President–Corporate Audit Services Assistant Treasurer n CABLE TELEVISION 20% Senior Vice President–Planning and Development Yuvinder Kochar Andrea Papa n Vice President–Technology Assistant Controller NEWSPAPER PUBLISHING 14% Chief Technology Officer n TELEVISION BROADCASTING 10% STOCK TRADING FORM 10-K The Washington Post Company Class B common stock is traded The Company’s Form 10-K annual report to the Securities and n OTHER BUSINESSES 1% on the New York Stock Exchange under the symbol WPO. Class Exchange Commission is part of this annual report to shareholders. A common stock is not traded publicly. All of the Company’s SEC filings are accessible from the Company’s website, washpostco.com. STOCK TRANSFER AGENT AND REGISTRAR ANNUAL MEETING General shareholder correspondence: The annual meeting of stockholders will be held on May 9, 2013, at Computershare Investor Services 9:00 a.m., at The Washington Post Company, 1150 15th Street, NW, P.O. Box 43078 Washington, DC. Providence, RI 02940-3078 Transfers by overnight courier: COMMON STOCK PRICES AND DIVIDENDS Computershare Investor Services High and low sales prices during the past two years were: 250 Royall Street 2012 2011 Canton, MA 02021 Transfers by certified mail: Quarter High Low High Low Computershare Investor Services 250 Royall Street January–March $405 $364 $456 $402 Canton, MA 02021 April–June $391 $328 $454 $404 SHAREHOLDER INQUIRIES July–September $38 1 $328 $430 $310 Communications concerning transfer requirements, lost certifi- cates, dividends and changes of address should be directed to October–December $383 $328 $394 $309 Computershare Investor Services: Tel: (800) 446-2617 (781) 575-2723 Class A and Class B common stock participate equally as to dividends. TDD: (800) 952-9245 Quarterly dividends were paid at the rate of $2.35 per share in 2011 and Questions also may be sent via the website, computershare.com/ $2.45 in 2012. At January 31, 2013, there were 28 Class A and 736 Class investor. B registered shareholders. In December 2012, the Company declared and paid an accelerated cash dividend totaling $9.80 per share in lieu of regular quarterly dividends that the Company otherwise would have declared and paid in calendar year 2013. DESIGN Vivo Design, Inc. PRINTING Westland Printers // FINANCIAL HIGHLIGHTS // (in thousands, except per share amounts) 2012 2011 Change Operating revenues $ 4,017,653 $ 4,131,145 –3% Income from operations $ 144,53 1 $ 325,858 –56% Net income attributable to common shares $ 131,218 $ 1 16,233 +13% Diluted earnings per common share from continuing operations $ 6.09 $ 18.30 –67% Diluted earnings per common share $ 17.39 $ 14.70 +18% Dividends per common share $ 19.60 $ 9.40 — Common stockholders’ equity per share $ 348.17 $ 342.76 +2% Diluted average number of common shares outstanding 7,404 7,905 – 6% OPERATING REVENUES INCOME FROM OPERATIONS ($ in millions) ($ in millions) 20 1 2 4,018 20 1 2 145 20 1 1 4,1 3 1 20 1 1 326 20 1 0 4,586 20 1 0 603 2009 4,221 2009 304 2008 4,051 2008 3 1 1 NET INCOME ATTRIBUTABLE TO COMMON SHARES RETURN ON AVERAGE COMMON ($ in millions) STOCKHOLDERS’ EQUITY* 20 1 2 1 3 1 20 1 2 5.2% 20 1 1 1 16 20 1 1 4.4% 20 1 0 277 20 1 0 9.8% 2009 92 2009 3. 1% 2008 65 2008 2. 1% DILUTED EARNINGS PER COMMON SHARE DILUTED EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS ($) ($) 20 1 2 6.09 20 1 2 17.39 20 1 1 18.30 20 1 1 14.70 20 1 0 39.76 20 1 0 31.04 2009 18.06 2009 9.78 2008 17.7 1 2008 6.87 * Computed on a comparable basis, excluding the impact of the adjustment for pensions and other postretirement plans on average common stockholders’ equity. // 2012 ANNUAL REPORT // 1 // TO OUR SHAREHOLDERS // 2012 was a banner year for two of our four major Tom Might became CEO in 1994 and has seen businesses, Post–Newsweek Stations and Cable the cable company through several strate- ONE. The other two, The Washington Post and gic transitions. The current reality: ever-rising Kaplan, recorded declining profits (the Post a charges from programmers and, especially, from little, Kaplan a lot). sports networks have taken most of the profit out of cable’s original business, delivering video Each of our four businesses has had years of service to our small-city markets. But we still being the Company’s most profitable. 2012 was a make a great business delivering the best Inter- runaway: Post–Newsweek Stations broke its all- net and telephone services in our markets. As time record of profitability, making $191.6 million these businesses mature, Cable ONE is lining for the year. up significant new businesses to maintain its momentum. Commercial sales just completed OK, it was a presidential election year and an its third year with high, double-digit growth, Olympic year. (Our two largest stations, in Detroit and home security services will debut this year. and Houston, are NBC affiliates and air the We’re also refocusing on our most valuable cus- Olympics.) This added $63 million to revenue tomers (those who take more than one of our ($52 million in political advertising, $11 million products and pay on time) by giving them pre- for the Olympics). ferred service, support and offers. But each Post–Newsweek station had a good Tom made one widely applauded change in year: three (Detroit, San Antonio and Jacksonville) his management team late in the year, promot- led their markets in news, and the others came ing Julie Laulis to chief operating officer of out of 2012 with momentum. Cable ONE. Julie’s a smart cable operator and a great complement to Tom. They lead a deep It was a great last year for Alan Frank, PNS’s management team where Steve Fox, SVP/chief 12-year CEO. Alan inherited a broadcasting com- technology officer, remains a mainstay, along pany in a strong position from his great prede- with Jerry McKenna, SVP/chief sales and mar- cessor, Bill Ryan. He leaves an even stronger keting officer. company. And, he helped us find a successor, Emily Barr, who should keep the streak of out- Kaplan had a mixed year, but two-thirds of standing management going for a long time. its businesses are emphatically going in the Post–Newsweek Stations will, of course, have a right direction. Kaplan Test Prep, the bedrock down year in profits in 2013 (no election). But of the company — founded 75 years ago by we should make considerably more than in Stanley Kaplan — has regained its footing. Its 2011, the last non-election year. losses shrank by $18 million, and we expect positive cash flow this year. Our test prep Cable ONE has been a fast-changing business products continue to work well for students in for the past ten years. (It was an oasis of stabil- a new environment. John Polstein, KTP’s long- ity before then — competition in every business time CEO, deserves a loud thank-you from line will do that to you.) shareholders for reviving a good business. 2 // THE WASHINGTON POST COMPANY // Each OF OUR four businesses has HAD YEARS OF BEING THE Company’S most profitable. 2012 was A runaway: Post–Newsweek Stations BROKE its ALL-TIME record OF profitability. Shareholders may well ask: if KTP is improving the company was struggling when we bought so much, why did we record a $112 million charge it — its struggles exceeded our expectations. against goodwill and other assets in the fourth Losses in Australia will be less in 2013.) quarter? One nice plus for Kaplan came in an annual sur- Forgive a small explosion: after three years of vey on private education in Singapore. We were recording GAAP losses (KTP was cash-flow voted number one in the country for the first positive in 2012), we were required to perform a time — a high honor in a country that makes the more extensive test as to whether the goodwill most of private-sector education and where we attributed to KTP’s business had been impaired.