The Press: Opening the Books

Along with the rest of the economy, profits in the publishing industry generally went down last year, but the status of the Washington Post Co.—one of the few major publishers in the field still under full family control—has long been a matter of speculation. Last week an SEC registration for a public stock offering disclosed that the financial story told in the private ledgers of the firm was no different from that in the public reports of other corporations: 1970 was a bad year.

The company, whose holdings include the Washington Post, Newsweek and television stations in Miami, Jacksonville and Washington, earned only $4.9 million after taxes on revenues of $178 million last year, compared with $7.7 million on $169 million a year earlier.* The Post did more than its share: it accounted for 44% of the company’s revenue last year and 66% of the profit. Newsweek and book publishing earned 45% of revenue but only 16% of profit; broadcasting contributed 11% of revenue, 18% of profit.

Cash Drain. In turning to the stock market to raise capital, the Post Co. offered several reasons in its prospectus. It said that the lack of a public market for its stock had inhibited diversification of the investment portfolio of its profit-sharing trust, had complicated the estate planning of the controlling stockholders, and had foreclosed the company from obtaining loans to finance its growth, including a new Post plant in downtown Washington. In the past, the company had assumed an obligation to repurchase the stock it distributed to employees. The prospectus said that “over the past’ three years such repurchases have, in the aggregate, imposed a substantial cash drain on the Company.” The new shares will carry limited voting rights; control will remain firmly in the hands of Post Publisher and Company President Katharine Graham.

* That was a drop of 37%. Time Inc., largest U.S. publisher, had net income of $20.6 million last year, a 14% decline. The Times Mirror Co. of Los Angeles, second largest, netted $30.1 million in 1970, off 10% from 1969. Time Inc., like the Post Co., reported improved earnings in the first quarter of 1971, but the Times Mirror was down slightly.