Donald Graham, CEO of The Washington Post Company (WPO) made this comment to Fortune last summer: "If Internet advertising revenues don’t continue to grow fast," he says, "I think the future of the newspaper business will be very challenging. The Web site simply has to come through."

Any shareholders in the company who hoped that the plan was a good one are very disappoint today. The WPO third quarter numbers were not very good. The online figures were abysmal.

WPO reported net income of $72.5 million ($7.60 per share) for its third quarter ended September 30, 2007, compared to net income of $73.3 million ($7.60 per share) for the third quarter of last year. Revenue for the third quarter of 2007 was $1,022.5 million, up 8% from $946.9 million in 2006. The increase is due mostly to significant revenue growth at the education and cable television divisions.

Newspaper publishing division revenue totaled $210.2 million for the third quarter of 2007, a decrease of 7% from $225.6 million in the third quarter of 2006.

Revenue generated by the WPO online publishing activities, primarily washingtonpost.com, increased 11% to $27.2 million for the third quarter of 2007, from $24.5 million for the third quarter of 2006. The lack of growth here is astonishing, as is the relatively small amount of revenue. Contrast the figures to The New York Times (NYT) were in the third quarter, the company’s Internet revenues increased 26.5 percent to $79.7 million from $63.0 million in the third quarter of 2006. Internet businesses include digital archives, NYTimes.com, Boston.com, About.com and other Company Web sites.

The Post is falling well behind the curve in terms of turning the power of its print brands into online success. And, given the head start that companies like NYT and Dow Jones (DJ) already have, the game may be nearly over. Online consumers will only get their news from so many places.

Douglas A. McIntyre

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