Washington Post Co. (WPO) said first-quarter profit fell 67 percent after revenue declined in its Kaplan education unit, which has come under government scrutiny.
Net income dropped to $15.2 million, or $1.87 a share, from $45.4 million, or $4.91, a year earlier, the Washington-based company said today in a statement. Revenue declined 6.9 percent to $1.06 billion.
The company, which also owns the Washington Post newspaper and cable television assets, said results were affected by a decline in new students at Kaplan, with enrollments off 23 percent at Kaplan University and Kaplan Higher Education campuses. Kaplan’s operating earnings for the first quarter fell 73 percent and revenue slid 10 percent to $640.6 million.
Results included non-operating expenses of $24 million, including $30.7 million for the writedown of an investment in Corinthian Colleges Inc. (COCO), the company said. The expense a year earlier was $3.3 million.
Post Co. said it expects Kaplan’s operating income to continue to decline “very substantially” in 2011. The company had said potential rulemaking by the U.S. Department of Education could impact Kaplan’s future operating results.
For-profit colleges, including Kaplan, are facing increased regulations as they undergo state and federal investigations. Democratic Senator Tom Harkin of Iowa, chairman of the Senate education committee, has held four hearings on for-profit colleges and at least four state attorneys general are investigating the companies.
Education companies get as much as 90 percent of their revenue from federal student grants and loans. The Education Department is proposing a set of rules, called “gainful employment,” that would tie access to such aid to students’ incomes and loan repayment rates. The department sent the rules to the White House Office of Management & Budget May 2, the last step before formal publication.
Revenue at the newspaper division, which also includes the Herald of Everett, Washington, was little changed at $155 million. The unit had an operating loss of $12.8 million, compared with $13.8 million a year earlier.
Washington Post fell $20.31, or 4.7 percent, to $412.25 at 4 p.m. in New York Stock Exchange composite trading. The shares have declined 6.2 percent this year.
To contact the editor responsible for this story: Peter Elstrom in New York at firstname.lastname@example.org