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Washington Post Hits the Skids

In these tumultuous times for newspapers, no one is immune. Even the Washington Post, one of the more stable and profitable papers in the country, is facing a number of hard choices financially.

In a 2,000-word letter to Washington Post Co.'s shareholders released yesterday, company chairman Don Graham disclosed that the news division - dominated by flagship Washington Post - lost nearly $25 million in 2008 and is expected to lose "substantially more" in 2009.

Responding to the gloomy outlook, the Post announced that it will be offering voluntary buyouts - its fourth since 2003 and the first since May 2008, when more than 100 staffers took the buyouts.

Graham conceded that beyond the immediate losses, he is still grasping for solutions to turn around a business that's seemingly on its deathbed:

So what's the future of the newspaper and news magazine businesses? I have no answer to this question. ... Today, it isn't obvious that even the best-run, most successful newspaper can be consistently profitable. But The Post will get every chance. ... We are willing to lose money ... if the losses are on a path to a healthy, profitable business.

Are we investing in The Post and Newsweek as a public service or because we feel their business models can be fixed? Emphatically the latter: it is universally understood that we must move toward profitability at The Post and Newsweek after what we hope will be a low point in 2009. But how we'll get there is not clear. We must cut costs; but we must (and will) continue producing excellent newspapers and magazines. Then, we have to continue to find new sources of revenue (at a time when some of our customers will be cutting back because of their own financial problems).

The Post Co., which also owns Newsweek, Slate, Kaplan education and Cable One, is trading at $380 a share, down from $800 at the end of 2007.