Compelled by bleak economic conditions, The Washington Post Company is making an effort to diversify from its sagging publishing and education business. The company is purchasing Forney Corporation, a supplier of products and systems for power and industrial boilers, from United Technologies Corp. (UTX - Analyst Report).
Management stated that the acquisition demonstrates Washington Post’s focus on investing in companies with solid earnings prospective in the long-term along with a good management team. Financial terms of the transaction were not disclosed.
The company’s education and publishing businesses have long been grappling with sinking revenues. Alongside, waning advertising demand has been taking a toll on the company’s performance. As a result, Washington Post is laying emphasis on diversifying its business model by adding new revenue streams to reduce its susceptibility to the economic conditions. The company expects to close the transaction in early August.
Earlier, in a similar move, the company acquired Celtic Healthcare Inc. – a company engaged in home healthcare and hospice services in the northeastern and mid-Atlantic regions.
Besides diversifying, Washington Post is shedding its publishing assets. The company divested its daily and Sunday newspaper, The Herald, based in Everett, WA, La Raza, to Black Press Ltd. and its subsidiary Sound Publishing.
The publishing industry as a whole has been struggling with sinking advertising revenues and declining circulation as more and more readers are gradually choosing free online news, thereby making the print-advertising model increasingly irrelevant.
Other than The Washington Post, The New York Times Company (NYT - Analyst Report) completed the sale of About Group, which it acquired in 2005, to IAC/InterActiveCorp for a consideration of $300 million, divested its remaining stake (210 Class B units) in the Fenway Sports Group and sold Regional Media Group.
Currently, we maintain our long-term Neutral recommendation on the stock.