The Washington Post Company Business Information, Profile, and History
Washington, D.C. 20071
The Washington Post Company has established six goals: 1) quality&mdashø produce the best newspapers, magazines, television programs and other products we can; 2) to run an outstanding business, measured by the increase in intrinsic shareholder value over time; 3) to be not just a good, but an exceptional, place for people to work, and a leader in the hiring and promotion of minorities and women; 4) to be a company that provides outstanding customer service; 5) to be creative, adaptive, flexible and intelligent enough to adapt to the changes in our business environment; and 6) to be a respected part of the communities where we do business.
History of The Washington Post Company
The Washington Post Company and its subsidiaries are leaders in the news and communications media industry. The Washington Post has been a nationally respected and influential newspaper published daily to serve Washington, D.C., and the adjacent suburban area for over 120 years, and has consistently contributed a large share of the company's revenue. The company also published the politically-oriented Washington Post National Weekly Edition, a daily newspaper in Everett, Washington, and the increasingly popular Newsweek magazine. Other subsidiaries included six television stations, cable television systems in 16 states serving over 600,000 households, educational centers to prepare students for standardized college-admission tests and other professional exams, and an online legislative-information service. Through its ownership of all the company's class A common stock, the Graham family has maintained effective control over the company.
From a Democratic Slant to Mainstream Political Respect, 1877--1905
The Washington Post was first published on December 6, 1877, by Stilson Hutchins. Hutchins had come to the nation's capital from St. Louis, Missouri, where he had been associated with several newspapers. His goal in starting the Post was to establish a newspaper at the center of national affairs reflecting the views of the Democratic Party. At this time, the era of Reconstruction had just ended with the controversial presidential election of Rutherford B. Hayes, a Republican, over Samuel Tilden, a Democrat, by a special congressionally-appointed electoral commission. Hutchins did not approve of Hayes's victory and his paper rarely referred to the man as "president." Within a year, the Post's circulation had reached more than 6,000 copies a day. The first Sunday edition was published on May 2, 1880, making it the first seven-day paper in Washington. By the late 1880s, Hutchins gave up his editorial allegiance to the Democrats and began to describe his paper as "independent." By 1888 Hutchins had bought out the Post's only competitor (the Republican National) and, for a short time, published the Evening Post, an afternoon edition. The paper made a profit for most of its early existence, but Hutchins soon sold it to pursue other interests.
The paper was purchased in 1889 for $210,000 by Frank Hatton and Beriah Wilkins, $30,000 of which was raised by selling a press back to Hutchins. Hatton, who had a background in journalism, took care of the production of the paper, while Wilkins, who had served three terms in the House of Representatives, handled business matters. They incorporated their newspaper company as The Washington Post Company and the same year, at the request of the newspaper's new owners, noted bandleader John Philip Sousa wrote "The Washington Post March" to be played at the awards ceremony for winners in a Post essay contest. For the next several years, the company flourished under the guidance of Hatton and Wilkins, with profits averaging $100,000 a year between 1892 and 1894. Circulation was reported at about 16,000 daily and 20,000 on Sundays.
In 1903, however, with Hatton dead and Wilkins seriously ill, the paper was again for sale. Wilkins died before a sale could be made, but his son made a deal with John R. McLean, owner of the Cincinnati Enquirer, with McLean obtaining a minority share in the paper. By 1905, McLean had secured enough additional shares to place himself in control of the Post.
From the Ashes, A New Post Emerges, 1906--46
McLean adopted the style of journalism that had been so successful for William Randolph Hearst. He added sections to the Post for feature stories, comic strips, and sports. He gave less emphasis to political news, which had been the paper's specialty. From 1905 to 1909, Sunday circulation was as high as 40,000, the best in the city, but daily circulation, while it averaged 30,000, began to decline. When McLean died in 1916, his son Edward McLean took over operations. The first years of the younger McLean's tenure were prosperous, with the Post's Sunday circulation reaching 75,000, placing it second to the Washington Star, and profits reached a peak of $376,612 from 1921 to 1923. Edward McLean, however, became ensnared in the Teapot Dome scandal that rocked the presidency of Warren G. Harding during the early 1920s. At the center of the scandal was U.S. Secretary of the Interior Albert B. Fall, who had taken bribes to secretly lease oil-rich government lands without taking competitive bids. McLean became less able to handle the company's business affairs, and the editorial quality of the Post declined. From 1924 to 1932, the paper had only two profitable years. In 1933 it went through bankruptcy proceedings and was eventually sold for $825,000 at an auction held on June 1, 1933.
Eugene Meyer, a New York investment banker, was the new owner of the Post. With a sizeable fortune in investment banking, Meyer was willing to spend his money to make the Post both a quality newspaper and a profitable one. His task would not be easy, as circulation had fallen to about 50,000. He quickly began hiring a new staff of reporters and editors, and went to court to prevent several comic strips from being transferred to the Washington Herald. This was a period of great upheaval in Washington, as the New Deal policies of Democratic President Franklin D. Roosevelt were being implemented to pull the U.S. out of the Depression. One such aspect of the New Deal was the creation of the National Recovery Administration, which was supposed to spur industrial recovery and create jobs. Although Meyer was a staunch Republican, he did place the Blue Eagle, symbolic of the National Recovery Administration, on his paper. The paper was not as supportive, however, of other New Deal programs--particularly the Works Progress Administration (WPA), which funded construction of buildings, bridges, and roads to fight unemployment.
The New Deal period also saw one of the Post's most comical typographical errors. At a time when Roosevelt was suffering from a cold, a Post headline read, "FDR in Bed with Coed." The president called the paper to ask for 100 copies of the first edition, but the error had been caught and copies of the issue had already been pulled from circulation. By 1938 circulation had climbed to 100,000 and its advertising volume was the second-highest in Washington. This performance was still well below that of the Star, the only profitable newspaper in the capital during the Great Depression. Annual losses at the Post were about $1 million from 1934 to 1937. Business improved during World War II, with profits for 1942 to 1945 totaling $249,451.
Eugene Meyer relinquished daily control of the Post in 1946 when President Harry S. Truman appointed him first president of the World Bank. Control of the paper stayed in the family, however, as Meyer transferred his voting stock to his daughter, Katharine Graham, and her husband, Philip Graham, on July 23, 1948. Philip Graham had already been installed as publisher of the paper, and the majority of the voting stock, 3,500 shares, was transferred to him, compared to 1,500 shares for Katharine. Under a modified incorporation of the company, the shares were put in a trust controlled by a five-member committee. The committee was authorized to decide on any future changes in the ownership of the voting stock in order to ensure that the company remained true to certain editorial standards (the committee remained in place until shares of the Washington Post Company were first offered to the public in 1971).
A Changing of the Guard Twice, 1947--65
When Graham became publisher of the paper he began instituting managerial changes. Within two years he had hired a new managing editor, business manager, and circulation manager. Following the lead of Meyer, who in 1944 had purchased a radio station, Graham acquired a radio station and a television station in Washington in 1949. In 1953 he bought another TV station in Jacksonville, Florida. The next year, 1954, The Washington Post Company made its most important corporate acquisition. After a period of negotiation, Meyer, who still acted as the company's chairman of the board, agreed to buy the Washington Times-Herald for $8.5 million. With the removal of the Times-Herald as a competitor, the Post was assured of a monopoly as Washington's only morning newspaper. The operations of the two papers were combined very quickly to counter any antitrust action the government might undertake, but no such action was pursued. Within four months, the combined papers had a daily circulation of 381,417 and 393,680 Sunday, and ranked as the ninth-largest morning paper in the country.
In March 1961, Philip Graham made another monumental acquisition--purchasing Newsweek, the general newsmagazine--from its stockholders for $15 million. Newsweek soon became an integral part of the company's operations. The following year Graham exhibited further foresight by forming a national news wire service in conjunction with the Los Angeles Times which would later serve upwards of 500 subscribers worldwide. In 1963, Philip Graham's tenure and years of manic-depressive illness ended when he took his own life. Upon his death, Katharine Meyer Graham took the reins of the company as president, to the chagrin of many who doubted her abilities to run the Washington Post Company in a man's world. She not only proved herself as more than up to the job--eventually earning the nickname of "the Iron Lady"--but basked in the glow of transforming the Post from a successful operation into a phenomenally profitable newspaper that put journalism first, whatever the price. Though she originally kept the same management team put in place by her husband, in 1965 Katharine ushered in a new era at the Post with the appointment of Benjamin Bradlee as managing editor.
A New Era of Responsibility and Recognition, 1966--75
In 1966 Graham continued her husband's acquisition program by buying a 45 percent interest in the Paris edition of the New York Herald-Tribune. The next year, through a partnership with the New York Times, The Washington Post Company began to publish the Paris paper as the International Herald Tribune. The end of the decade found Philip's last major acquisition, Newsweek, prospering, having exceeded the domestic advertising pages of its nearest rival, Time. Bradlee had also begun to make his mark on the Post, including the introduction of the "Style" section in 1969 as a way of combining all cultural news in one place. Bradlee was also to play a pivotal role in the two big stories of the 1970s that earned the Post its widest acclaim as an important national newspaper.
The first of these stories involved the publication of the Pentagon Papers. On June 13, 1971, the New York Times began to publish this secret, government version of the history of the Vietnam War in serial form, but within three days the administration of President Richard M. Nixon had secured an injunction forcing the Times to cease publication of the documents. A few days later, the Post secured a copy of the papers; in a meeting at Bradlee's home, reporters prepared the Post's version of the Pentagon Papers for publication. Lawyers for the paper advised against publishing any story. The Post Company was in the process of going public; the stock had been issued but not yet sold. An indictment for criminal liability could easily place the transaction in jeopardy, threatening the very foundation of the company. Bradlee argued strongly in favor of publication and Katharine Graham made the final decision to publish. The government soon filed suit against the Post and the cases against both the Times and the Post were argued jointly. On July 1, 1971, the Supreme Court decided in favor of the newspapers by a six-to-three vote.
Soon after its success with the Pentagon Papers, the Post scored another major reporting coup with its handling of the Watergate affair. On June 27, 1972, there was a burglary at the Democratic Party headquarters in Washington. Because of its location, the Post was better equipped to go after the Watergate story than other newspapers. Two reporters specializing in the Washington city beat, Bob Woodward and Carl Bernstein, were assigned to the story, and with the help of several government officials, uncovered the link between the Watergate burglary and the Nixon Administration. Nixon and his aides retaliated by having Administration supporters challenge the broadcasting licenses of the company's Florida TV stations before the Federal Communications Commission. The company prevailed, though its share price suffered a decline during the Watergate period. Yet the Post's reporting ultimately led to Nixon's resignation as president and in 1973 the paper was awarded a Pulitzer Prize for public service for its coverage of the Watergate affair.
While the Watergate and Pentagon Papers stories propelled the Post into the national limelight, several changes took place on the business side of the company. In 1971 the Washington Post Company completed its IPO of more than 1.35 million shares of Class B stock for $33 million. All of the Class A stock stayed within the Graham family; a capitalization that gave the Grahams a majority of the vote and the right to elect 70 percent of the directors, with Class B stockholders electing the remainder. In that same year the company also organized the Washington Post Writers Group to syndicate material produced by its staff writers, and moved into a new $25 million building in downtown Washington. It also purchased the Trenton Times, of Trenton, New Jersey, which proved to be a modestly successful operation.
By 1973, the Post had achieved the number-one position in Washington, accounting for 65.8 percent of advertising space, 56.6 percent of daily circulation, and 67.1 percent of Sunday circulation. The only other newspaper remaining to compete with it was the Star. The Post also encountered labor difficulties in the 1970s, facing strikes by its printers in 1973, by reporters and other members of the Newspaper Guild in 1974, and an especially brutal strike by the pressmen in 1975. Nevertheless, growth continued and the paper was able to emerge from all three strikes in a stronger position than before. The company, meanwhile, continued its media buying trend, acquiring TV stations (Miami in 1969, and Hartford in 1974). The Washington radio station purchased in 1949 was disposed of through the donation of its FM operations to Howard University in 1971 and the sale of its AM facility in 1977. In 1978, the company traded its TV station in Washington for a station in Detroit.
The Ascent of a Third Graham, 1976--95
During the heady 1970s, Donald Graham, son of Katharine and Philip, had begun working at the Post. By 1976 he had moved up the ranks to become general manager and in '79 he took charge of the paper as its publisher, with Katharine remaining in overall charge as chairman of the company. Meanwhile, Newsweek's annual profits for 1977 were almost triple the price Philip Graham had paid in 1961; a year later, the company purchased the Herald, a daily newspaper located north of Seattle, in Everett, Washington.
The Post received a big boost in 1981 with the closing down of its last remaining competitor, the Star; circulation increased from 595,000 to 730,000 daily, and from 827,000 to 952,000 on Sundays. However, additional competition emerged in 1982 with the establishment of a new paper, the Washington Times, and further competition came from specialized suburban newspapers. Nevertheless, the company finished the year with solid operating revenues of $877.7 million and net income of $68.4 million. In 1983 came the launch of the Washington Post Weekly, a government-oriented paper specializing in politics, economics, and diplomatic matters; the following year, the Post was redesigned from top to bottom, for the first time in 50 years.
By 1988 when hostile takeover bids were becoming common in the corporate world and especially among newspapers, the Graham family took steps to protect its ownership of the Post. Because lawsuits at other newspapers had challenged the system of having two classes of stock by arguing that all stockholders should be entitled to vote on a merger plan, the charter of the Post was changed to make a majority vote of both classes of stock necessary to approve a merger. This year also marked a zenith for profit, when net income soared to $269.1 million on operating revenues of $1.37 billion and stock earnings leaping to $20.91 per share. The company's jubilation was somewhat short-lived, however, for both revenue and income began a downward trend after a modest increase in 1989, a year in which the company began the first of several ambitious stock repurchasing plans as both a good investment and to ward off potential takeovers. Newsweek, though, continued to shine brightly by achieving a subscriber base of 3 million and an estimated readership of nearly 20 million.
With the dawn of the 1990s, the company's growth slowed for the first time in years, and operating revenues and net income fell. Though revenues slipped just over $5.4 million, income plummeted by $23.3 million. Was this a chance occurrence due to a culmination of circumstance or the beginning of a trend? Post-watchers had seen their urban newspaper weather many a blight and survive when other newspapers had folded. Just four years earlier, in 1986, the 15 largest newspapers in the United States accounted for 21 percent of all newspapers sold. Along with this trend, however, came a decline in urban population and a sales drop for daily metropolitan newspapers. The Post, as a survivor, benefited from the elimination of its major competitors yet soon faced another difficulty with the emergence of more news-related television (especially 24-hour cable news services). Yet it was helped by the ever-growing population of the Washington metro area and capitalized on this boom by offering special sections geared to readers in suburban Maryland and Virginia, and the company purchased land to build additional production facilities nearer to its suburban readers.
In 1991 Donald Graham was named CEO of the company in addition to his responsibilities as the Post's publisher. Katharine remained chairman of the board. Two years later, in 1993, Katharine was named chairman of the executive committee, while Donald became the company's chairman of the board. Another major transition was the retirement of Ben Bradlee, the Post's charismatic guiding force. Replaced by Leonard Downie, the paper seemed to stumble and lose its edge while the Washington Times quickly filled the gap. Yet after a few years of dismal earnings (1991's $70.8 million, 1992's $127.8 million) managed a comeback to 1993's $165.4 million in net income on revenues of nearly $1.50 billion.
For 1994 and 1995, revenue continued to climb with $1.61 billion and $1.71 billion, respectively, and income corresponded with a modest step in 1994 to $170 million and a grander hike to $190 million in 1995. The latter year also marked the purchase of eight new top-of-the-line offset presses and groundbreaking on a new printing facility in College Park, Maryland. The new plant, which was to be operational by 1998, was designated along with another in Springfield, Virginia, to take over all printing for the region and replace two older facilities in the D.C. area. Circulation for the Post in 1995 had reached 834,641 for its daily paper (about 60 percent of the area's total circulation), and 1.14 million for its Sunday edition.
The Future of the Post and Its Parent Company, 1996 and Beyond
In 1996 the company continued to broaden its communications empire with the purchase of Columbus Television Cable Corp. of Mississippi, and Rural Missouri Cable T.V. of Branson, Missouri. Over at the magazine division, trouble brewed with the "anonymous" publication of a Clinton presidential satire called Primary Colors, whose author turned out to be Newsweek columnist Joe Klein. The furor and controversy over Klein's identity and refusal to come forward led to his resignation from the magazine. In addition, two big names were added to the company's Board of Directors--Warren Buffett of Berkshire Hathaway, Inc. (which owned nearly 19 percent or over 1.7 million shares of the Post Company's Class B shares) and Daniel Burke, retired CEO and president of Capital Cities/ABC Inc. Operating revenues for the year hit a healthy $1.85 billion and net income soared to nearly $221 million, climbing over $100 million for the first time since 1988's spectacular $269.1 million.
The following year Katharine Graham was once again in the limelight with the publication of Personal History, a 642-page memoir detailing her rocky ride as the Iron Lady of the Washington Post Company. Candid about the effects of her husband's suicide, emerging from his and her father's imposing shadows, and mistakes in the early years trying to please everyone, Graham chronicled her journey from shaky newcomer to steely matriarch of one of the world's most respected newspapers.
In 1997 the company diversified further into communications by producing a weekly news magazine show with Maryland Public Television called Healthweek, to be anchored by CBS's Sharyl Attkinsson on PBS. As the Washington Post Company forged ahead into more TV and cable systems, the broadcast division's profits overtook those of the print media. The Post, once the dominant force behind the company in sales and earnings, accounted for only a third of operating income beaten by the broadcast division's 44 percent--a whopping figure given its 18 percent figure in revenue. Yet no matter how large the company's broadcast media became, the newspaper bearing its name would always represent the company. With 11 local news bureaus around D.C., five national (Austin, Chicago, Los Angeles, Miami, and New York) and 20 international bureaus, the Post's professional edge was second to none--a feat Stilson Hutchins never imagined when he founded his politically-based newspaper in 1877.
Principal Subsidiaries: The Washington Post; The Washington Post National Weekly Edition; The Herald; Robinson Terminal Warehouse Corporation; Capitol Fiber, Inc.; the Gazette Newspapers, Inc.; Post-Newsweek Broadcast Division--WDIV-TV; KPRC-TV; WPLG-TV; WFSB-TV; KSAT-TV; WJXT-TV; Post Newsweek Cable; Newsweek International; Newsweek Japan; Newsweek Korea; Itogi; Newsweek en Espanol; Kaplan Educational Centers; Legi-Slate, Inc.; Moffet, Larson & Johnson, Inc.; PASS Sports; Digital Ink Co.; TechNews, Inc.
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