Monday, August 30, 2010

Who knew?

WaPo’s cash cow threatened

Two weeks ago, the Washington Post Company’s stock took a tumble after the Department of Education released proposed new federal loan repayment rules that looked like they’d hurt Kaplan’s for-profit universities’ bottom line.

This morning, the Wall Street Journal looks into the situation, which is dire enough to prompt the normally hands-off Don Graham to do some lobbying against the new rules.

"They aimed at the bad actors and they wound up scoring a direct hit on schools that service low-income students," Mr. Graham said in an interview. "That cannot be what the Obama administration wants."

The Journal also offers some numbers on how much the rules in their current form could hurt.

The proposal in anything like its current form will be a major blow, according to executives in the sector. Earlier this month, Craig Huber, a senior analyst at Access 342, an independent stock-research company, lowered his revenue estimate for Kaplan's higher-education unit for the next three years to annual declines of 5% to 7.5% instead of annual growth of 4% to 7.5%.

In the last two fiscal years, The Washington Post Company’s newspaper division lost $356 million, while Kaplan’s higher education unit, not even counting its test prep business, posted a profit of $450 million.

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