Virginia Postrel remarks concerning the results of the Washington Post Company:
“Per @Romenesko, Washpo lost $143 million through the first six months of this year.” Which means they lose $1.10 PER COPY. Yikes.”
That makes sense to me, but I do not hold myself out as an accounting expert or financial analyst. Question to professional analysts or accountants out there ... is that a fair way of representing the results of the newspaper division? I'm not disputing it, but would like a second opinion on whether that's a fair methodology for characterizing financial results, from someone who is pretty close to doing this for a living. Romenseko, writing at Poynter Online, says:
Graham tells investors: "We're not at all satisfied with results at The Post and Newsweek
Washington Post Co. chairman Don Graham, however, is thrilled with the results at Kaplan, which provides more than half of all Post Co. revenue, which has surged from $258 million in 1999 to more than $2 billion today. WP publisher Katharine Weymouth told shareholders that the newspaper division lost $143 million through the first six months of this year. In response to a question, she said that Post doesn't have a plan to start charging for its online content.
I'm not so concerned with finding the exact number of papers in question - assume if you like that the division works. My basic question is whether it is a fair way to represent results for a newspaper company or division like the Post.
The questions are how much they would have lost had they not printed a single copy and how much they would have lost had they printed one less copy. The marginal cost of the first copy is high, that of the last copy is (probably) low.
This is pretty basic stuff.
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You were reading a complaint about Dealer Services Corporation.
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HEARING RE: DEMURRER TO 4TH AMENDED COMPLAINT OF MICHAEL GRISSOM BY DEALER SERVICES CORPORATION, CLAUDIA PONCE, ROSA D MACIAS
03/05/2009 - 8:30 AM DEPT. 07
MICHAEL GRISSOM REPRESENTED BY JEFFREY B. MCMILLEN - JEFFREY MCMILLEN PRESENT.
DEALER SERVICES CORPORATION, CLAUDIA PONCE, ROSA D MACIAS REPRESENTED BY PRENOVOST, NORMANDIN, BERGH &DAWE - BENJAMIN GRIFFIN PRESENT.
COURT STATES HIS INDICATED RULING.
DEMURRER ON 4TH AMENDED COMPLAINT OF MICHAEL GRISSOM SUSTAINED IN PART AND OVERRULED IN PART
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What do you think fellow bloggers?
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Dealer Services Corporation Complaint by California Auto Dealers
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Dealer Services Corporation Complaint by Sg4242@charter.net
You were reading a complaint about Dealer Services Corporation.
Filing a new complaint about
“DEALER SREVICES CORPORATION ” - DSC UNDER INVESTIGATION CALIFORNIA DEPARTMENT OF CORPORATION
MR. GRISSOM SEEKING $189, MILLION IN DAMAGES
Part 1
Dealer Services Corporation Complaint
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Assumptions: Valid Existence, Good Standing, Qualification to Conduct Business, Authority, Due Execution
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If we want to know if the Post is producing a product that consumers like enough to pay the full value for, then it seems fair to look at the loss in the newspaper division and divide by the numbers of copies sold.
On a similar note I think it would also be fair to look at, say, the loss per train ride at Amtrak. That would tell you the difference between how much the average consumer is willing to pay for the service and the real cost of the service.
Look at return on tangible capital. Standard measure
management effectiveness.
But it doesn't seem to me to be outside the bounds of convenient discourse not amongst accountants to do some simple arithmetic. It's a newspaper. If they sold 130 million papers and lost 143 million dollars, I'd say Yikes.
Obviously if you're thinking about buying (or selling) stock you'll be interested in the structure of that loss. One time charges and the like. But if there isn't anything extraordinary about the result, if it's buck a paper in 2 bucks a paper out that's a tough loss leader.
---
As an aside it really drives me nuts when I hear people from the newspaper industry arrogantly insisting that they need to charge for online content to stop people from getting their work for free. Yes, eventually it will probably be possible to charge for online content but you can't do so now because there are too many papers and competition drives the price down to zero. The internet has improved the efficiency of news delivery and that means we need less duplication in the newspaper business. There is no sense in which the newspaper industry deserves to wastefully run duplicate versions of international and national news in every city and get paid for it.
Just like the printing press radically reduced the number of scribes needed so too does the internet reduce number of printed newspapers covering the same material needed. Once the dust is settled there will actually be more resources for doing serious reporting but the newspaper industry needs to accept that there needs to be major downsizing to eliminate duplicated effort first.
Yes if you want to get into accounting geek talk about fixed costs, variable costs, restructuring costs, impairment charges, unrealized foregin currency gains/losses, then read the SEC filings, otherwise WaPo lost $1.10 per copy
Newspapers are not the product which a newspaper company sells, any more than brownies are. The product is the readership; the buyers are the advertisers. The fact that you can get your product to pay a small fee for the privilege of delivering itself to your customer is just gravy.
And especially so in ad-based publishing, where ad revenue is only indirectly related to subscriber levels.
In other words, if you want to understand what's going on you have to talk about some complicated matters. Otherwise you can just talk about arithmetically accurate but unhelpful numbers.
But it would be the other way around... selling more papers would mean that they would be loosing LESS per paper.
On the other hand, some less numerate people might think that was the case. That's why Truepath said the $1.10 loss per copy could be misleading.
In the DC metro area, the WaPo is still considered liberal, just not as far left as the gray lady.
Anyhow the point is that the Post cast loose from a large number of supporters in order to secure their right flank. This is costing them.
So the Post should veer left to restore its credibility/revenue base?
Yeah, that's the ticket.
At $1.25, the Washington Post would break even if the company's other papers made comparable price increases. At $1.50, it could make a profit.
In 2007, the newspaper division was on pace for about $63 million in total operating income. In 1989 operating income was $176 million. Loss of circulation and financial crisis related drops in advertising revenues are the big culprits in the current loss.
There were two big one time charges in 2008. One was an $111 million employee buyout. The other was a more than $100 million writedown of goodwill (probably originally booked when newspapers were acquired at earlier dates). It isn't clear if any major one time charges of this type go into the $143 million loss figure.
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