August 3, 2016 Last Updated 11:30 am

Kaplan Higher Education revenue declines impact Graham Holdings Q2 earnings results

The company that remains after the sale of The Washington Post to Amazon founder Jeff Bezos still owns several media properties, but is dominated by the for-profit education unit

Who pays attention to Graham Holdings these days? I recently mentioned the company to someone in the newspaper business and they responded “who?”

Graham Holdings Company is what was left of The Washington Post Co. after Donald Graham sold off the Post to Amazon founder Jeff Bezos. Since then the company only popped up in press releases and the news whenever another asset was sold off.

The company’s main asset is Kaplan, the for-profit educational services company. But GHC also onws fiv e television stations and the website Slate. It also owns the global affairs magazine Foreign Policy.

GHC remains very much a family affair, with Tim O’Shaughnessy brought in as president. O’Shaughnessy was the founder of LivingSocial, but most importantly, he is the son-in-law of CEO Donald Graham.

kaplan_higher_edThe two things that I have always felt held the WaPo back was the family ownership of the company, and the fact that it owned Kaplan. There is nothing wrong with family ownership, of course. That is, until there is.

Family ownership works best when there is a commitment to the legacy and goals of the company. I have worked for several family owned publishing companies. One newspaper firm I worked for in the Bay Area was run by an elderly publisher, very conservative, very careful, but also very dedicated to the communities his papers served. The result was a newspaper company that was well respected, grew (albeit slowly) and but was willing to take risks when the goal was to better serve the readers. Another firm I worked for seemed to be run so that the family members had something to brag about at the country club.

Kaplan, I felt, was the albatross around the neck of the WaPo, though. Here was a for-profit enterprise that took advantage of federal education funding. According to the Brookings Institution, the amount of debt owed by students attending for-profit colleges grew from $39 billion in 2000 to $229 billion in 2014. Could The Washington Post effectively cover this scandal of higher education when its own company was at the center of it?

As the latest earnings report shows, things are not well at Kaplan today. Revenue for the education division fell 20 percent in Q2, with Kaplan Higher Education (KHE) the source of most of the losses.

“In the second quarter and first six months of 2016, KHE revenue declined 34% and 32%, respectively, due to campus sales and closings, and declines in average enrollments at Kaplan University,” the company said.

foreign_policy_cover_07-08-12-300Although Kaplan makes up about two-thirds of total revenue for the company, other divisions did better. Revenue at the television broadcasting division, for instance, increased 6 percent to $96.5 million.

Although GHC has been mostly selling assets, it did acquire Dekko, a manufacturer of electrical workspace solutions, architectural lighting, and electrical components, which contributed to a rise in revenue at GHC’s third category (besides Kaplan and TV) which is called simply Other Businesses. That segment also includes Slate and Foreign Policy.

Graham Holdings Company may one day be back in the news should they decide to close up shop of its remaining media properties Slate and Foreign Policy, but until then it is one of those less talked about media companies that once was a big player.

Disclosure: I once interviewed at The Washington Post Co. for a position in their B2B division, but walked out of the interview when I felt the president of that division was being unprofessional during a group interview. The HR manager, who attended the dog and pony show, later apologized for her boss’s behavior and he was later let go, but there went my chance to move to DC.

  • Long time Shareholder of wpo/ ghc 3 months ago

    I own ghc, unfortunately, i have mafe a return but dislike the way the company is run. They need an experienced management team, not a son in law, however smart he maybe, je lacks experience.

  • BH 3 months ago

    I worked for Kaplan University for a grueling 1.5 years. I couldn’t wait to get out. The most unprofessional organization I’ve ever worked for. All they care about is enrolling new students to cover for the ones leaving out the back door. Kaplan currently has about 30K students, they had 80K when I was there.

  • Dahn Shaulis 3 months ago

    This is all part of the zombie college crash and the much larger US College Meltdown.