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The Washington Post Company 1999 Annual Report

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THE WASHINGTON POST COMPANY 1999 ANNUAL REPORT The Washington Post Company is a diversified media organization whose principal operations include newspaper and magazine pub- lishing, television broadcasting, cable television systems, electronic information services, test preparation, and educational and career services. A complete listing of the company’s activities can be found inside the front cover of this report. CONTENTS 001 Financial Highlights 002 To Our Shareholders 007 The Washington Post Company and the Web 025 Business Overview 25 Television Broadcasting 27 Newspaper Publishing 29 Cable 30 Magazine Publishing 31 Education and Career Services 032 Report of Independent Accountants 033 Management’s Discussion and Analysis of Results of Operations and Financial Condition 039 Consolidated Statements of Income 039 Consolidated Statements of Comprehensive Income 040 Consolidated Balance Sheets 042 Consolidated Statements of Cash Flows 043 Consolidated Statements of Changes in Common Shareholders’ Equity 044 Notes to Consolidated Financial Statements 056 Ten-Year Summary of Selected Historical Financial Data 058 Corporate Directory THE WASHINGTON POST COMPANY – IN BRIEF Television Broadcasting Herald also publishes six community weeklies in South Snohomish Post-Newsweek Stations–the owner and operator of six network- and North King Counties and a monthly business journal, and oper- affiliated VHF television stations. ates a commercial printing business. WDIV–the NBC affiliate in Detroit, MI, the 9th largest broadcasting Gazette Newspapers, Inc.–a publisher of 32 controlled-circulation market in the United States, with 1,855,500 television households. community weekly newspapers in Montgomery, Frederick, Carroll, and Prince George’s Counties, MD, with a combined circulation of KPRC–the NBC affiliate in Houston, TX, the 11th largest broad- 493,000 and one paid-circulation statewide weekend newspaper casting market in the United States, with 1,712,060 television with a circulation of 14,000; one monthly business publication with households. a circulation of 30,000; one twice-monthly real estate publication WPLG–the ABC affiliate in Miami, FL, the 16th largest broadcast- in Frederick County; 12 military newspapers for local military ing market in the United States, with 1,441,570 television house- bases; and operator of one of the largest commercial printing sites holds. in the Washington area. WKMG–the CBS affiliate in Orlando, FL, the 22nd largest broad- Robinson Terminal Warehouse–a newsprint handling and storage casting market in the United States, with 1,101,920 television facility with operations in Alexandria and Springfield, VA, and households. College Park, MD. KSAT–the ABC affiliate in San Antonio, TX, the 37th largest broad- Capitol Fiber Inc.–a handler and seller to recycling industries of casting market in the United States, with 684,730 television house- old newspaper and other waste paper collected in the Washington/ holds. Baltimore area. WJXT–the CBS affiliate in Jacksonville, FL, the 52nd largest broad- Cable casting market in the United States, with 540,450 television households. Cable ONE, Inc.–Headquartered in Phoenix, AZ, Cable ONE systems served 739,854 subscribers in 18 midwestern, western, and southern Newspaper Publishing states in 1999. States served and the number of basic subscribers in The Washington Post–a morning daily and Sunday newspaper published each as of December 31, 1999, were: in Washington, D.C. For the 12-month period ending September 30, 1999, The Post’s average paid circulation was 784,000 Monday Alabama.................. 35,633 Missouri.................... 23,032 through Friday and 1,085,000 Sunday. The Post maintains 21 foreign, Arizona.................... 67,420 Nebraska................... 12,544 6 national, and 12 metropolitan news bureaus. Arkansas.................. 7,814 New Mexico .............. 23,681 Washingtonpost.Newsweek Interactive–Headquartered in Arlington, California................ 107,303 North Dakota ............ 30,976 VA, Washingtonpost.Newsweek Interactive (WPNI) is the new-media Indiana.................... 16,216 Ohio.......................... 17,462 and electronic-publishing subsidiary of The Washington Post Iowa........................ 24,121 Oklahoma.................. 89,439 Company. Its mission is to develop the company’s editorial products Louisiana................. 1,628 South Dakota............ 1,324 and businesses on the World Wide Web. WPNI’s flagship products Minnesota................ 9,096 Tennessee.................. 9,711 include washingtonpost.com and Newsweek.com. Mississippi............... 162,059 Texas........................100,395 Total.........................739,854 The Washington Post National Weekly Edition–a tabloid publication of selected Post articles on politics, foreign affairs, popular culture, pub- Magazine Publishing lic policy, and personal finance, edited for a national audience, with a Newsweek–a weekly news magazine published in New York City, with circulation of 76,000. a 2000 circulation rate base of 3.1 million and a 12-month average The Washington Post Writers Group–a syndicator of 28 writers and car- circulation for 1999 of nearly 3.2 million. Newsweek maintains 9 U.S. toonists, plus material from Newsweek. The Writers Group also sells and 12 overseas bureaus. individual reprints of Washington Post articles and photos to print pub- Newsweek International–a weekly English-language news magazine pub- lications around the world. lished in New York City and circulated throughout the world. For 2000, The Herald–a morning daily and Sunday newspaper published in Newsweek International’s combined circulation for its three editions is Everett, WA, 30 miles north of Seattle. The Herald’s unaudited 663,000: Atlantic, 340,000; Asia, 240,000; Latin America, 83,000. estimated average paid circulation for the 12-month period ending In Australia, Newsweek is published as part of The Bulletin with September 30, 1999, was 54,000 daily and 62,500 Sunday. The Newsweek, a news magazine with a circulation of 85,000. Newsweek Japan (Newsweek Nihon Ban)–a Japanese-language SCORE!–offers learning programs for children and educational newsweekly with a circulation of 130,000. It is produced with TBS- resources for parents through its after-school learning centers, Britannica, which translates and publishes the magazine. SCORE! Prep tutoring service, and eSCORE.com. Newsweek Korea (Newsweek Hankuk Pan)–a Korean-language Affiliates newsweekly with a circulation of 90,000. It is produced with Joong- BrassRing, Inc. (54 percent equity interest)–a business-to-business ang Ilbo, which translates and publishes the magazine. hiring management and recruitment company, in which Kaplan is Newsweek en Español–a Spanish-language newsweekly with a Latin a partner, that helps companies hire the right candidates faster. American circulation of 52,000. It is produced with Ideas Publishing International Herald Tribune (50 percent of common stock)–a daily Group (IPG), based in Miami. newspaper headquartered in Paris, France. In 1999 the International Itogi–a Russian-language newsweekly with a circulation of 85,000. Herald Tribune had an average daily paid circulation of 234,710 in Itogi, “summing up,” is Russia’s first independent newsweekly. It is over 180 countries. produced by Seven Days Publishing, a subsidiary of Media Most. Los Angeles Times-Washington Post News Service, Inc. (50 percent of Teen Newsweek–a weekly eight-page magazine and teachers guide common stock)–a supplier of news, commentary, features, columns, aimed at America’s middle schools. Launched in September 1999, sports, photos, graphics, series, reviews, and editorials to 700 clients it is produced with Weekly Reader and has a circulation of 115,000. in 50 countries. Arthur Frommer’s Budget Travel–a bimonthly magazine with a U.S. Bowater Mersey Paper Company Limited (49 percent of common circulation rate base of 350,000. Newsweek acquired Budget Travel stock)–a newsprint manufacturer in Liverpool, Nova Scotia. in December 1999. The Washington Post Company 1999 Operating Income Newsweek Productions–a television production company that pro- ($ in millions)* duces “HealthWeek,” broadcast nationally on PBS, and other tele- Television Broadcasting vision programming and media projects. 167 Post-Newsweek Business Information–a publisher of controlled- circulation periodicals for the technology industry. PNBI also organizes trade shows and operates online services in government Cable Newspaper Publishing information technology and general technology news. 67 157 Education and Career Services Kaplan, Inc.–Headquartered in New York City with locations Magazine Publishing 62 throughout the U.S. and abroad, Kaplan is a leading provider of educational and career services for individuals, schools, and busi- *excluding losses of $38 million from Education and Career Services nesses. Kaplan’s four operating divisions are: and losses of $27 million from Other Businesses and Corporate Office. Kaplan Test Prep and Admissions–offers test preparation and admis- sions services worldwide; kaptest.com provides these services on The Washington Post Company 1999 Operating Revenue the Web; Kaplan Publishing includes books, software, and ($ in millions) Kaplan/Newsweek guides; and Kaplan Learning Services offers Television Broadcasting 342 (15%) instruction, staff development, and curriculum in schools. Cable Kaplan Professional –provides workplace training and education in 336 (15%) financial services, insurance,
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