[Slide 1]Good morning, everyone. Today we’re going to do something a little different. Instead of giving you a general overview of the company, I’m going to briefly cover our broadcast, newspaper, magazine, and Internet operations. Then I’m going to take a closer look at our cable business. And finally, I’ll introduce Jonathan Grayer, the remarkably brilliant and able president and CEO of Kaplan, for an in-depth discussion of our education operations. As you know, Kaplan has been the focus of much of our investment activity over the past two years. It’s now one of the largest education companies in the country. And it’s key to our future.

When I first became CEO of the company in 1991, I said that we had corporate leadership of unproven quality, but we had sensational division heads. Nine years later, I think corporate leadership still has a lot to prove, but the division heads are better then ever. You’ll see why in Jonathan’s presentation and in Tom Might’s presentation, as recited by me.

[Slide 2] To begin: Post-Newsweek Stations, our largest profit contributor, is turning in an outstanding year and will, we think, conclude 2000 with the highest profit margins of any group broadcaster.

[Slide 3] All six PNS stations had good November ratings books. Our stations in Detroit, San Antonio, and Jacksonville are number one in their markets. Miami is second among non-Hispanic stations. In Houston, we continue to close the gap with our competitors, and we’re winning the demographics contest. And our newest station, in Orlando, has shown significant growth in newscast time periods.

[Slide 4] Broadcast revenue, up over 6 percent year to date, has been propelled by extensive political and issue advertising in Michigan and Florida. Among our four stations in those states, we received approximately $34 million-net from that category, more than half of which came from Detroit.

Unfortunately, these non-repeating dollars mask what appears to be a significant drying up of advertising funds in our broadcasting markets for all media. [Slide 5] In December we’re pacing a minus-two percent, and in January the trend is worse. Across the country we’re seeing a slowdown in many categories. So 2001 is shaping up as a challenging year. Still, we have the ratings strength to maximize share and profitability.

[Slide 6] The Washington Post newspaper is in fine shape. [Slide 7] We just posted increased daily circulation for the 4th consecutive ABC reporting period. I am distressed that Sunday circulation is down, but we continue to take all the steps we can to reverse it. And The Post continues to outperform almost all big daily newspapers in both daily and Sunday circulation.

Journalism may be better than ever. Len Downie and Steve Coll make up a remarkable editorial team. [Slide 8] Profits are good. Excluding the effects of a buyout offer to former composing room employees, The Post will record better financial results than in our strong 1999. And this despite being tempered by extra money we’ve spent to address extensive nagging problems in advertiser billing associated with a new system we crashed into operation to beat Y2K.

[Slide 9] Overall print ad revenue is running 4.6 percent ahead, year to date. Recruitment revenues are up 5.6 percent through October. However, recruitment linage, which was up 3.3 percent for the first six months of the year, has been down 4.2 percent since July.

Other classified revenue is up 1.3 percent, year to date, due to continuing strength in auto. General advertising continues very strong, up almost 15 percent through October.

[Slide 10] As you know, newsprint price increases in late 1999 and in the spring and fall of 2000 produced a 6 percent increase in newsprint prices this year, contributing to a hike in newsprint expense of almost 9 percent.

Another price increase is expected in the spring of 2001. As a result, newsprint costs are expected to be about 20 percent higher next year.

[Slide 11] No wonder I’m eager to talk about our online ventures, known by the user-friendly name of Washingtonpost.Newsweek Interactive. [Slide 12] I’m especially pleased with the performance of washingtonpost.com. This election year presented us with a huge opportunity, and post.com made the most of it.

[Slide 13] The site has experienced rapidly increasing traffic and reached a new high in October, with more than 100 million page views for the first time.

[Slide 14] Election Day set a new all-time high for washingtonpost.com page views. And Election Day was surpassed the following day with a whopping [Slide 15] 10.3 million page views, which, we were surprised to learn in a memo from my friend Arthur Sulzberger to his staff, was more than The New York Times.

[Slide 16] In fact, washingtonpost.com outperformed The Times (and other major newspaper sites) for two consecutive weeks following the election among at-work users.

[Slide 17] The latest Media Metrix numbers show washingtonpost.com with a 3.7 percent national penetration, our highest ever. Our local market penetration of 28 percent far surpasses that of any other local site.

[Slide 18] The growth of WashingtonJobs.com is one of the best success stories in the entire company. The site was re-launched earlier this year with a wide array of new features, and [Slide 19] traffic has shot up as a result.

In October (the most recent month for which we have figures), page views were up 120 percent over the same month last year. [Slide 20] Revenue at WashingtonJobs.com has almost tripled through October and will reach $10 million for the year. This compares with $3.2 million in ’99 and $800,000 in ’98.

Our success here demonstrates that local is a meaningful niche - and being without a national partner has not set us back.

The online auto and real estate categories also are doing well. [Slide 21] A recent Wall Street Journal article reported on the real-life experience of Fitzgerald Auto Malls, a major auto dealer doing business on the Web. Our cars.com site produced the most leads and the least cost per lead of any other site.

There’s been a lot of negative press lately about the potential of online advertising. But, to offer the single most unfashionable sentence of this meeting, I’m convinced that if we assemble the audience, give it a positive experience, and make the Web work for advertisers (and users) - as we clearly have done in the recruitment, auto and real estate categories -- online advertising can succeed.

Of course, we have a ways to go to achieve our online profit goals. But we are having major success in traffic and important success in revenue.

[Slide 22] Newsweek expects to turn in another respectable year in 2000. Operating income, excluding the pension credit, will be down slightly from a very strong 1999. The variance is related to lower newsstand sales (with fewer strong newsstand special issues like the death of JFK, Jr.), increased spending on the Olympics and presidential election, and higher circulation expenses. However, these factors were offset in part by an improved performance internationally and continued cost control.

[Slide 23] Domestic advertising revenue will remain essentially unchanged this year. While PIB pages will show a drop of roughly 5 percent, it’s almost entirely due to the softness in the automotive category for all magazines and, in Newsweek’s case, the loss of Ford business for the ’99-’00 model year. Those revenue losses were made up by strong growth in net rates on pages sold.

[Slide 24] Circulation continues to be a strong suit for Newsweek. According to recent ABC statements, Newsweek maintained its lead in several important categories, including the number of long-term subscribers (Newsweek has the lowest churn rate in the field), the lowest use of premiums, and the lowest use of bulk copies.

[Slide 25] Despite the challenges of increased paper costs and a 9.9 percent postal increase, Newsweek should do well in 2001. Above all, it has one of the strongest editorial lineups in its history.

[Slide 26] Now, I'd like to spend quite a lot of time on the cable division, known as Cable ONE. I know most of you aren't cable analysts. And you know that I'm not a cable expert. But I want you to know that under a truly remarkable manager in Tom Might, Cable ONE is really building something special, and it will make a difference to our shareholders.

As you know, most of our newspaper peers who were in cable have gotten out of the business. And several larger MSOs also got in and out during the past decade. Why did we elect to stay? Why is Cable ONE different from other cable companies? What does it suggest about our prospects?

First and foremost, we have exceptional management. We would not be in the cable business if we didn't have Tom Might and his team in charge. What you're about to see is Tom's vision of Cable ONE, consistent with the truly exceptionally decentralized nature of our company. I'm telling you about it because I think it's big enough to be important.

[Slide 27] The first unique feature of Cable ONE is our unusual portfolio of holdings. We’ve chosen to operate in non-urban markets that offer several advantages. We’re talking about big- and medium-sized towns well removed from metropolitan markets, not tiny cable systems or highly rural America.

Our communities have enough scale to offer all the advanced cable services, but we face less competition in these markets for several reasons.

There is less chance of wired competition from RBOCs, wireless competition from MMDS, and any competition at all from over-builders. Because many of our customers cannot receive adequate local network broadcast signals with an antenna, they rely on Cable ONE for even basic TV, which gives us perhaps the highest basic penetration in the business, at 72 percent.

Similarly, the satellite DBS providers do not carry our local or regional broadcasters in most cases. Today, they only carry local signals in 37 of the top 43 markets. That 37-market footprint covers 60 percent of national TV households, but only 19 percent of Cable ONE households.

[Slide 28] Over the past decade, Tom and his team have patiently but persistently shaped our cable holdings in a drive for larger non-urban system sizes and greater concentration in fewer states. We’ve done 20 deals in the past 4 years: 15 acquisitions, 3 trades, and 2 sales.

In addition, we hope to close on a very large trade with AT&T in less than 2 months, which will give us 70 percent of the cable customers in Idaho in 5 nice large systems. The net result will be a gain of 240,000 customers since 1996.

Seventy-five percent of our customers are in just five states: Mississippi (the largest), Idaho (when the deal closes), Texas, Oklahoma, and Arizona.

Our average system size has more than doubled in this period, from 7,000 to 17,000. This factor is very important to the economics of rolling out new services.

[Slide 29] Our average net price per new subscriber, including trades and sales, has only been $1,360, or 11.4 times operating cash flow. We could have done more deals, but we couldn’t have done more good deals.

Many of the systems we acquired had been under-managed, but Cable ONE has created a formula for large, non-urban markets that allows us to quickly improve cash flow. For example, in Prescott, Arizona (a system we bought from Time Warner), cash flow will be up 90 percent in five years; in Columbus, Mississippi (a family-owned system), cash flow will be up 54 percent in 5 years; and in Pascagoula, Mississippi (a Marcus and Sammons system), cash flow will be up 40 percent in 3 years.

[Slide 30] Cable ONE’s operating strategy also is different from other cable companies. [Slide 31] It can be summed up very simply: stay focused at all cost on customer satisfaction with the core business.

To stay focused on satisfaction, Cable ONE did two things. First, it rebranded the company - adopting the Cable ONE name - and challenging every employee to make Cable ONE the best cable company in the business. Tom Might and his team initiated more than 30 changes in operations to get this job done.

[Slide 32] For example, we guarantee same-day service calls. If you call by 3:00 p.m., we will stay until your problem is fixed. We are the only cable company with this national guarantee - and it is free.

[Slide 33] Second, Cable ONE held back from launching new services until it had achieved a superior level of performance in the core analog TV business.

Some other cable companies rushed out new services as their primary defense against DBS competition. We relied on customer satisfaction as our primary defense. Meanwhile, we steadily readied our plants through upgrades for the day, now at hand, when we would launch new services.

Has this commitment paid off? [Slide 34] This year, a J.D. Power and Associates survey showed that Cable ONE ranks number one in the nation in cable company customer satisfaction (and this is the first time we have been big enough to be included in their results), though we still are behind our DBS competitors. This is a huge achievement - and a personal triumph for Tom, who insisted on customer satisfaction as the one key benchmark.

We think our focus on customer satisfaction has contributed to preserving market share in a hotly competitive environment. [Slide 35] Today, we have 72 percent market share; DBS has 15 percent, and broadcast-only antenna homes have 12 percent. "Other" is down to less than 1 percent with the demise of MMDS.

I don’t mean to imply that DBS has not done well. They’ve taken a lot of subscribers from Cable ONE even as our customer satisfaction was rising. But now the fun begins as we move from product deficiency to product parity and product superiority.

[Slide 36] Here’s a one-slide summary of the operating and portfolio strategy payoff. Operating cash flow is up 300 percent since we entered the cable business in 1986, from $34 million to $141 million in 1999. And it is up 40 percent in the past 4 years.

[Slide 37] This hasn’t come cheaply. We’ll spend over $600 million of capital on our cable operations in just 10 years, 1996 to 2005 - and even more if we enter the telephony business. This slide is not adjusted for the Idaho trade I mentioned, but the net effect of Idaho on these numbers will be very small.

We started our upgrades in 1996, and we will finish in 2004. But you must be noticing the enormous spikes in 2000 and 2001.

This leads me to Cable ONE’s deliberately late, but now rapid, deployment of new services. While we held back on digital video and cable modem launches until the technology met our standards, we have steadily rebuilt our plants to be ready.

[Slide 38] This year 60 percent of our customers will be served by upgraded plant; next year, 83 percent will be. That’s the red bar. But the exciting news is the rapid rollout of new services. We just started selling digital video two months ago, and we’ll only pass 28 percent of our customer base with the service this year. But we’ll reach 96 percent by the end of next year, again the red bar. We currently are launching three or four systems every month.

Almost as exciting is our cable modem launch, which just ended the test-market phase in August, but will be available to 42 percent of our customers by year end, and 83 percent by the end of 2001. Again, that is the big red bar.

[Slide 39] Why did we wait? So we could do it our way. The Cable ONE team wanted the technology to be ready. And as we waited, we could study the successes and failures of all the other cable companies. We borrowed the best ideas, avoided the worst, and added our own interesting twists. This slide describes our unique technology. Another will describe our even more unique marketing strategy.

What all that technical lingo on the slide means - and I will be the first to tell you I don't understand it - is that we can fit 18 digital channels into each analog channel space. Other cable operators average only 12 or less. It also means we’re not dependent on industry standard digital packaging from HITS.

To the customer, it just means we offer 149 additional digital channels on day one, and over 200 total channels. No other cable company launched digital video company-wide with this kind of throw-weight.

[Slide 40] That brings me to Cable ONE’s unique marketing strategy, again a Tom Might creation unique in the industry. Sometimes, when you have a product this good, you wonder how big the demand could be if you remove all the barriers.

Cable ONE is going to find out, because we plan to give away digital access to all interested customers free for 12 months, no strings attached.

When Tom Might and his team examined other cable company digital launches, the slow penetration growth and high churn frustrated them. Other cable companies typically get less than 10 percent annual penetration, and 60 percent annual churn in digital.

The best penetration in the industry is only 17 percent after 3 years of effort. [Slide 41] In contrast, Cable ONE hopes to be well over 30 percent penetrated by the end of 2001, its first full year.

[Slide 42] Cable ONE has budgeted only $13 of acquisition and installation expense per new digital customer - $6.50 for marketing (it doesn’t take as much to give things away) - and $6.50 for our modest labor needs. Cable ONE’s customers self-install the digital receivers. In contrast, DBS is spending over $500 per new subscriber, and we estimate other cable companies are spending over $100 per sub in acquisition and installation costs.

And it’s working. In Norfolk, our first system to launch - I should explain that in keeping with our small-market strategy, that's Norfolk, Nebraska - we attained 12-percent penetration in 9 weeks, exceeding our target of 1 percent per week. This is more penetration in 2 months than other cable companies have in one year.

What about churn? We’re assuming that 40 percent of our starts will be gone when we start billing in the 13th month, but the system will be 30 to 40 percent penetrated by that time, even with the roll-off.

As a bonus, we’re also seeing up to 40 percent growth in premium subscriptions and expect even bigger pay-per-view growth.

Then there is the ultimate payoff, a $100 increase in annual cash flow beginning in the 13th month when each digital subscriber starts paying.

[Slide 43] To sum up our digital expectations, Cable ONE’s unprecedented bid for penetration may hamper cash flow growth in 2000 and 2001, but will yield unprecedented rewards in 2002 and 2003.

[Slide 44] Tom and the Cable ONE team followed a similar strategy for high-speed cable modems. Like digital video, we waited for the technology to be ready, and we learned from others, so we could do it our way. Once again, our technology and marketing are unique in the industry.

We’re using standard DOCSIS modems, 100 percent. Unlike everyone else, we’re not buying them for our customers. All have been sold through local retail computer dealers who partner with us in our markets, 100 percent.

Furthermore, our Internet engineers developed software that allows modems to be self-installed, 100 percent. And these same engineers also perfected the ultimate self-provisioning coup. All customers order their new service right over the brand-new cable modem connection linked to our registration page.

Because we’d been offering a dial-up service for the preceding three years and had really learned the business, we were able to launch high-speed modems entirely on our own, without partners like @Home or RoadRunner. We’re probably the only major cable operator to pull this off, but it saves us 40 to 50 percent of revenue that these partners take off the top.

[Slide 45] We sell different speeds at different prices. Our average residential revenue is a healthy $43.62, and since customers have paid for the modem up front and our sales and installation labor is minimal - and we don’t share the revenue with @Home or Roadrunner -- our margins and ROI are very attractive. We hope to attain the industry average 3 percent annual penetration growth in each system from the launch date. We’re currently running between 2 and 3 percent penetration growth without any marketing support or modem purchase price subsidies. If marketing is not able to lift the rate to 3 percent or more, we’ll examine options to reduce the $250 cable modem purchase barrier.

[Slide 46] We’ll pass 83 percent of our customer base with this service by the end of 2001, but we’ll be up to 70 percent by just next April, which is our first cable modem anniversary. Again, Cable ONE launched last, but we’ll pass most other cable companies in market deployment. We think the unique simplicity of our whole cable modem sales and self-installation process also may lead to superior customer penetration numbers, too.

[Slide 47] In short, I hope you see why Cable ONE is unique - and uniquely attractive. It’s going to be a strong engine for future growth for a long time to come.

Now I’ll turn the program over to Jonathan Grayer...

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