• by Erik Sass  @eriksass1, May 7, 2007

The Washington Post Company can join its big-league brethren. It also reported poor first-quarter profits--which fell 16% to $63.9 million, down from $76.4 million for the same period of 2006--in an earnings report released Friday.

The dip was due almost entirely to a 10% drop in newspaper publishing revenues, which fell to $219.2 million, attributable to circulation declines as well as weak print ad demand. Overall, revenues rose 4% to $985.6 million, largely on the strength of its broadcast and educational businesses.

Print ad revenue in particular fell 16% at The Washington Post to $125.1 million, due in part to falling demand for classified real-estate advertising--driving a 53% decline in newspaper operating income, ending at $15 million. The company's Newsweek property saw ad revenue fall 18%, to $61.2 million.

Equally alarming, there wasn't a sufficient online boost.

As with other major newspapers, the Post's online properties experienced a drop in their percentage rate of growth during the first quarter--with revenues rising just 10%, compared to 34% for the first quarter of 2006, on a year-over-year basis. In dollar figures, the first quarter of this year saw a $2.5 million increase to $25.1 million, compared with a $7.5 million increase during the first quarter of last year. Altogether, online ads now account for about 17% of the newspaper's total ad revenues.

The New York Times Co., the Tribune Co., Gannett and McClatchy also experienced drops in online growth rates during the first quarter of 2007 compared to 2006. That's bad news, according to newspaper analyst Ken Doctor. "Online growth is slowing at [same] the time print revenue decline is deepening. Those revenues are declining fairly rapidly. Newspaper executives have been hoping the pace of online growth would pick up, rather than slow down."

What does the future hold in this gloomy scenario? Doctor predicts that as newspaper companies reorganize, they will emerge as "significantly smaller companies."