Newspaper Publishing Newspaper division operating income totaled $114.4 million in 2000, a decrease of 27 percent from $156.7 million in 1999. Revenue increased 5 percent to $918.2 million, from $875.1 million in the prior year. The decline in operating income resulted mostly from the $27.5 million pre-tax, one-time charge recognized in the fourth quarter of 2000 in connection with the early retirement program completed at The Washington Post, increased spending for marketing and advancement of washingtonpost.com, a lower pension credit, and higher newsprint expense. These factors were offset in part by higher print and online advertising revenue. The Washington Post had a good year. Solid financial results were accompanied by important innovations to meet the changing needs of readers and advertisers in The Post’s increasingly diverse marketplace. Major steps were taken to streamline operations and reduce costs. Revenue increased by over 4 percent in 2000. Excluding pension credits and one-time production staff buyouts, expenses grew by 3 percent. Print advertising revenue was up 4 percent to $664 million in 2000, from $641 million in 1999. Automotive, corporate, financial, technology, and home furnishings segments all showed substantial gains over the prior year. Classified advertising increased 2 percent. To afford new opportunities for advertisers to reach their target audiences efficiently and effectively, the newspaper initiated expanded zoning opportunities, launched special business sections, and invested in new equipment. The weekly Home, Washington Business, and Sunday Recruitment sections were redesigned to provide an enhanced experience for readers and more choices for advertisers. A new feature focusing on the booming technology sector in the National Capital Region was launched. For the second straight year, daily circulation for the 12 months ending September 30 showed a slight increase. The gain was fueled by the growing presence of the newspaper in school classrooms throughout the region. The Post also launched a weekday KidsPost page to help attract and retain 8-to 12-year-old readers. Sunday circulation for the same period declined by just under 1 percent. A new early Sunday edition was launched in July to ensure that there is a Post product available to meet this market niche. Responding to readers’ needs, The Post put later news and sports scores in its editions, provided greater local coverage through zoning of the Metro and Sports sections, and converted weekly local sections serving several Maryland counties and the District of Columbia to a more engaging and informative format. The Post’s new production facilities produced excellent results. Press speeds increased 17 percent, with significant improvements in print quality and reductions in waste. Washingtonpost.Newsweek Interactive (WPNI) experienced the most dramatic growth of its five-year history in 2000, expanding the company’s news and information franchise and achieving online revenue of $27.1 million, compared to $15.6 million in 1999. WPNI’s flagship product, washingtonpost.com, made significant progress in furthering its two primary missions: being the definitive place of community for greater Washington and making Washington fathomable to the rest of the nation and world. With little national marketing, washingtonpost.com drew larger national and international audiences in 2000. By year-end, the site was regularly breaking records for daily and monthly page views. Page views for December 2000 increased by 72 percent over December 1999. washingtonpost.com received numerous industry awards in 2000. washingtonpost.com’s reputation as the leading Internet destination for politics helped to fuel growth. With content from The Post’s award-winning political team, increased multimedia features, and new partnerships, washingtonpost.com set new standards for deep, comprehensive coverage of politics on the web. A powerful washingtonpost.com local marketing initiative that more clearly defined the site as the D.C. area’s leading news, entertainment, and information destination also contributed to growing traffic. The success of WashingtonJobs.com also stimulated site visits. A mid-summer redesign that expanded the resources available to job seekers and employers helped WashingtonJobs.com triple revenue from 1999 to 2000. December site traffic jumped 107 percent over the prior year. In addition to jobs, washingtonpost.com’s online classified marketplace flourished, with cars and apartments showing strong performance. Newsweek’s web site, now located at Newsweek. MSNBC.com, also expanded, seeing double-digit traffic growth during the year. In October, WPNI launched Washtech.com, the definitive site for technology news and information in the D.C. region. The new site combines content from its own staff, The Washington Post, and Post Newsweek Tech Media Group to create an important technology resource. Another initiative was the company’s entry into the delivery of content “beyond the desktop.” Users now can have washington-post.com news sent to their email, wireless devices, and personal digital assistants. The site launched a political email newsletter mid-year and, in a matter of months, saw subscriptions rise to over 20,000. In 2001, washingtonpost.com will offer email newsletters covering major news stories, sports, and entertainment. Washington Post Writers Group in 2000 awarded its first three FineToon fellowships under a new program to develop new comic-strip artists and expects to add to its list of syndicated cartoonists in 2001. Syndication revenue from international publications softened in 2000, but North American revenue and income from text and photo reprint operations continued to grow. The Herald, in Everett, Washington, launched two highly successful weekly sections in 2000. The new Sunday Employment section and Thursday Home and Garden section proved popular among readers and advertisers alike. Combined with strong gains in preprint advertising volume, advertising revenue growth topped 7 percent for the third consecutive year. Strong revenue results were offset by rising newsprint prices, escalating employee benefit costs, and declining circulation revenue, causing operating income to fall a disappointing 12 percent below the record results posted in 1999. The Gazette launched three community newspapers to bring its combined mid-week controlled circulation for Montgomery, Frederick, Carroll, and Prince George’s Counties to 35 editions and 554,000 copies in 2000. For the fourth consecutive year, The Gazette was awarded first place for General Excellence by Suburban Newspapers of America. Comprint Printing, the organization’s commercial printing operation, completed installation of a prepress technology that provides straight-to-film/plate service for its customers and other units of The Washington Post Company. On February 28, 2001, The Gazette completed the acquisition of Southern Maryland Newspapers from Chesapeake Publishing Corp. Cable division operating cash flow was $143.7 million in 2000, up only 2 percent from $140.2 million in 1999. Revenue increased to $358.9 million, up 7 percent from $336.3 million in 1999. Basic cable programming expense continued its steady rise to $66.3 million, up 12 percent in 2000. The other major reason for sluggish growth was the second and third quarter launch of free Cable ONE Digital® to half of Cable ONE’s customer base. Access to 149 new additional digital channels is being offered free for the first 12 months to any basic cable customer who agrees to self-install a digital receiver. The free 12-month offer has a dampening impact on 2000 and 2001 cash flows.