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WaPo Co.’s Reality Check

Kaplan’s woes spell big trouble for 'The Post' and Slate

Illustration: GlueKit; Graham: Peter Foley/EPA/Newscom

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While other newspaper companies struggled to stay afloat, the Washington Post Co. was sitting relatively pretty. It had problems of its own, of course—let’s not forget Newsweek—but it also had a white knight: its education unit, Kaplan. Thanks to the boom in for-profit education, Kaplan has been a godsend for the company. But now it’s struggling, and its troubles seem to be affecting the Washington Post Co.’s journalism brands.

But the for-profit education industry has been under fire lately over loans pushed on students who couldn’t afford them to pay for schools that didn’t deliver on their promises, and the Obama administration has made a big push for reform. So it wasn’t too surprising to see Kaplan’s revenue fall 15 percent in the second quarter of this year. Even that decline only further highlighted Kaplan’s importance. Despite the drop, it still accounted for almost 60 percent of its parent company’s revenue.

“When Kaplan stops making the level of financial contribution to the company it historically had, it makes the lack of progress from the media side more noticeable and irksome,” one former Washington Post Co. executive says.

That’s what seems to have happened over the past couple of weeks, resulting in the closing of local bureaus at The Washington Post flagship and layoffs at Slate.com. And company brass is indicating more cuts are ahead. Post publisher Katharine Weymouth, niece of company chairman Don Graham, told shareholders last week that “2011 is looking to be a tougher year” for the paper despite improvements in 2010, and said, “We know we have to continue to reduce our cost structure.” It doesn’t help that the company’s online newspaper revenue was down 13 percent in the second quarter.

The company will try to grow revenue with a series of apps, Weymouth said, including a paid newspaper iPad app. As it searches for new sources of cash, the paper has also launched conferences, local verticals, and online classes (with help from Kaplan, as it happens).

Ironically, the Post Co. has long encouraged its units to operate autonomously, consistent with the view of longtime board member Warren Buffett that a company’s individual parts need to stand on their own financially. The company can’t count on Buffett’s wisdom anymore, though. He left the board earlier this year and has been down on newspapers lately, talking of their “unending losses.”