Washington Post Co. (WPO)
In recent years, the overall fate of print media has been widely debated. The rise of products such as Amazon’s (AMZN: Charts, News, Offers) Kindle has called into question the viability of print books. The prevalence of news websites has allowed information regarding current events to be communicated much sooner than through reading a daily print newspaper. And magazine readership has declined, as some readers have found it more convenient to simply get the same information on their computer. Today, we find there may be a new print media casualty; Washington Post Co. has just announced that they are seeking a buyer for their popular magazine Newsweek. What has caused the Washington Post to sell their magazine, and does the magazine have much of a future?
Daily Chart
If you are not able to see the chart, your email client probably does not support javascript. To view it, please click here
Stock Analysis
A number of popular magazines have recently changed hands, declared bankruptcy, or halted or decreased the number of issues. Among them have been U.S. News and World Report, which has limited its number of issues to ten per year, Reader’s Digest, which declared bankruptcy, and BusinessWeek, which was sold for a mere $5.9 million. And now Newsweek becomes the latest magazine to struggle with the economy and financial issues. The economy during the last few years has been particularly hard on magazines, especially in the area of advertising. The magazine division of the Washington Post, comprised primarily of Newsweek, has lost over $45 million in the last two years. The Newsweek division attempted a number of changes including significant staff cuts, an increase in subscription costs, and a large reduction in circulation, but the company still faced solid losses due to the strong decrease in ad revenue.
What does the future hold for Newsweek? It is true that the economy is recovering, and that even advertising is seeing some improvements. Washington Post Chairman Donald Graham agreed that the magazine may do better this year than it did last year, but also conceded that the magazine may never again become profitable while still in his hands. There are no confirmed potential buyers yet, but Graham has said they will consider anyone who is interested, and many parties have come forward when similar magazines have recently put themselves up for sale. Based on the sale of other magazines, however, we can predict that Newsweek will sell for a fraction of what it was previously valued at; and even so, whoever buys the magazine will have a hard chore of trying to bring this publication back to making any profit whatsoever. Newsweek is one of the most popular magazines in the “newsweeklies” genre; this may be an indication that the end is approaching, unless the purchasing company really is able to turn this failing magazine around.
Washington Post Commentary:
- Daily Show Interview: Meacham on Newsweek Auction – The editor of Newsweek appeared on the Daily Show yesterday, and stated that he may consider purchasing the magazine.
- Washington Post reporter Greg Jaffe wins ford Prize for reporting in Afghanistan – This Washington Post reporter is being honored for his work on the war in Afghanistan.
More Stocks in the News:
- Nintendo Forecasts Miss Estimates on Lower Wii Sales – Nintendo’s yearly profit forecast was a disappointment, as Wii sales are projected to decline 12%.
- DirecTV’s High-Value Subscribers Drive 1Q Profit Surge – DirecTV’s (DTV: Charts, News, Offers) announcement had a strong reception, as profit was well above expectations.
- Sara Lee posts higher oper profit, sales flat – Sara Lee (SLE: Charts, News, Offers) saw profit go up, but sales remained below expectations, and raised questions on the company’s future performance.
