COVID-19 Schools Graham, But Broadcast Rises In Q1

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Graham Holdings Company is known as the parent of Graham Media Group — the owner of such TV station as WDIV-4 in Detroit that has its roots in The Washington Post and the Graham family that famously owned the newspaper through the Watergate Era and until summer 2013.


It is also the parent of Kaplan, the educational services company based in Fort Lauderdale, Fla.

With a diverse revenue portfolio, Graham in normal times can benefit from both advertising and tuition. But, times are far from normal. And, Graham has already been impacted. The good news: Its TV stations held up strong through March 31, Graham’s Q1 2020 earnings show.

Overall, Graham reported a net loss of $33.2 million (-$6.32), compared to income of $81.7 million ($15.26) in Q1 2019.

The COVID-19 pandemic and shelter-at-home rules “significantly impacted” the company during the quarter, and Graham says this significant adverse impact is expected to continue through the third quarter of 2020 — and perhaps through the rest of the year.

However, the results were greatly impacted by a Q1 2019 income tax benefit, making comps slightly difficult. Once the items that lifted Graham’s Q1 ’19 results were removed, the picture is a bit better for Graham: Income before taxes in Q1 2020 dipped to $41.1 million, from $52.5 million.

A closer look at the results shows that Kaplan Inc. is the culprit for the dip in income.

Education division revenue fell to $356.4 million in Q1 2020, from $372.5 million, as operating income shrank to $4.7 million, from $25.6 million.

At Graham Media Group, led by President/CEO Emily Barr, political ad revenue brought home the bacon.

Revenue at Graham’s television broadcasting division increased 7% to $115.4 million, from $108.2 million, and it is thanks in part to a $9.4 million increase in political advertising revenue. Graham also enjoyed a $600,000 gain in year-over-year retransmission consent revenue.

Operating income in Q1 increased by 1%, to $35.8 million from $35.5 million.

That said, there’s rocky water on the horizon for Graham Media, which is based along Lake Michigan in Chicago. The postponement of the 2020 Summer Olympic Games and overall reduced advertising demand due to the COVID-19 pandemic are expected to negatively impact ad revenue and operating results for the remainder of 2020.

Graham Media operates NBC affiliates KPRC-2 in Houston, WDIV-4 in Detroit and WSLS-10 in Roanoke-Lynchburg; ABC affiliate KSAT-12 in San Antonio (ABC); CBS affiliate WKMG-6 in Orlando; and two stations in Jacksonville: WCWJ-TV, an affiliate of The CW Network, and unaffiliated news-focused sibling WJXT.

There is also the Detroit-based Graham Digital and the Atlanta-based Social News Desk, which provides more than 2,500 global newsroom customers “with a single dashboard to publish, measure, curate and monetize local news content on social platforms.”

Graham Holdings also includes a manufacturing division, comprised of four businesses; home health and Hospice services in three states; marketing firm SocialCode; and the Clyde’s Restaurant Group, acquired in July 2019. This includes the famed Old Ebbitt Grill, a Washington, D.C., institution steps away from the White House.

Furthermore, Graham Holdings in January 2019 acquired Honda of Tysons Corner and Lexus of Rockville from SonicAutomotive.