Graham Holdings Co - Annual Report: 2010 (Form 10-K)

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED JANUARY 3, 2010

Commission file number 1-6714

The Washington Post Company

(Exact name of registrant as specified in its charter)

Registrant’s Telephone Number, Including Area Code: (202) 334-6000

Securities Registered Pursuant to Section 12(b) of the Act:

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x  No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Act”). Yes ¨  No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x  No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨  No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨  No x

Aggregate market value of the registrant’s common equity held by non-affiliates on June 26, 2009, based on the closing price for the Company’s Class B Common Stock on the New York Stock Exchange on such date: approximately $2,800,000,000.00.

Shares of common stock outstanding at February 25, 2010:

Class A Common Stock – 1,291,693 shares

Class B Common Stock – 7,961,086 shares

Documents partially incorporated by reference:

Definitive Proxy Statement for the registrant’s 2010 Annual Meeting of Stockholders

(incorporated in Part III to the extent provided in Items 10, 11, 12, 13 and 14 hereof).

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PART I

Item 1. Business.

The Washington Post Company (the “Company”) is a diversified education and media company. The Company’s Kaplan subsidiary provides a wide variety of educational services, both domestically and outside the United States. The Company’s media operations consist of the ownership and operation of cable television systems, newspaper publishing (principally The Washington Post), television broadcasting (through the ownership and operation of six television broadcast stations) and magazine publishing (Newsweek).

Information concerning the consolidated operating revenues, consolidated income from operations and identifiable assets attributable to the principal segments of the Company’s business for the last three fiscal years is contained in Note Q to the Company’s Consolidated Financial Statements appearing elsewhere in this Annual Report on Form 10-K. (Revenues for each segment are shown in Note Q gross of intersegment sales. Consolidated revenues are reported net of intersegment sales, which did not exceed 0.2% of consolidated operating revenues.)

The Company’s operations in geographic areas outside the United States consist primarily of Kaplan’s foreign operations and the publication of the international editions of Newsweek. During the fiscal years 2009, 2008 and 2007, these operations accounted for approximately 12%, 13% and 12%, respectively, of the Company’s consolidated revenues, and the identifiable assets attributable to foreign operations represented approximately 13%, 13% and 11% of the Company’s consolidated assets at January 3, 2010, December 28, 2008, and December 30, 2007, respectively.

Education

Kaplan, Inc., a subsidiary of the Company, provides an extensive range of education and related services worldwide for students and professionals. Effective in the third quarter of 2009, Kaplan reorganized its operations into four segments: Kaplan Higher Education, Kaplan Test Preparation, Kaplan International and Kaplan Ventures.

The following table presents the net revenue for the three years ended December 31, 2009, 2008, and 2007 for each of Kaplan’s reportable segments:

See Note Q to the Company’s Consolidated Financial Statements for the segment information required by Items 101(b) and 101(d) of Regulation S-K.

Kaplan Higher Education

Kaplan Higher Education provides a wide array of certificate, diploma and degree programs—on campus and online—designed to meet the needs of students seeking to advance their education and career goals.

In 2009, Kaplan’s U.S. based higher education division included the following businesses: Kaplan University and Kaplan Higher Education Campuses. Each of these businesses is described briefly below.

Kaplan University

Kaplan University specializes in online education, is accredited by the Higher Learning Commission of the North Central Association of Colleges and Schools and holds other programmatic accreditations. Most of Kaplan University’s programs are offered online, while others are offered in a traditional classroom format at ten campuses in Iowa, Nebraska and Maryland. Kaplan University also includes Concord Law School, the nation’s first fully online law school. At year-end 2009, Kaplan University had approximately 60,400 students enrolled in online programs and 5,120 students enrolled in its classroom-based programs.

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Kaplan Higher Education Campuses

At the end of 2009, Kaplan’s Higher Education Campuses business consisted of 73 schools in 19 states that were providing classroom-based instruction to approximately 44,500 students (including the 5,120 students enrolled at Kaplan University’s on-ground campuses). Each of these schools is accredited by one of several regional or national accrediting agencies recognized by the U.S. Department of Education.

Program Offerings and Enrollment

Kaplan University and Kaplan Higher Education Campuses offer degree and certificate programs in a variety of subject areas. Among them are the following:

Kaplan University and Kaplan Higher Education Campuses enrollment at December 31, 2009, 2008 and 2007 totaled by degree and certificate programs were as follows:

Financial Aid Programs and Regulatory Environment

Funds provided under the federal student financial aid programs that have been created under Title IV of the Higher Education Act of 1965, as amended (the “Federal Higher Education Act”), historically have been responsible for a majority of the net revenues of Kaplan Higher Education. During 2009, funds received under Title IV programs accounted for approximately $1,283 million, or approximately 83%, of total Kaplan Higher Education revenues, and 49% of Kaplan, Inc. revenues. The Company estimates that funds received from students borrowing under third-party private loan programs comprised approximately 1% of its higher education net revenues. Beginning in 2008 and continuing through 2009, as the private loan market deteriorated, Kaplan Higher Education provided loans directly to some Kaplan students under a third-party institutional loan program. Lending under Kaplan’s institutional loan program totaled approximately 1% of its higher education net revenue in 2009. Direct student payments, funds received under various state and agency grant programs and corporate reimbursement under tuition assistance programs accounted for most of the remainder of 2009 Kaplan Higher Education revenues. The significant role of Title IV funding in the operations of Kaplan Higher Education is expected to continue.

Title IV programs encompass various forms of student loans, with the funds being provided either by the federal government itself or by private financial institutions with a federal guarantee protecting the institutions against the risk of default. In some cases, the federal government pays part of the interest expense. Other Title IV programs offer

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nonrepayable grants. Subsidized loans and grants are only available to students who can demonstrate financial need. During 2009, about 71% of the approximately $1,283 million of Title IV funds received by Kaplan Higher Education came from student loans, and approximately 29% of such funds came from grants.

Title IV Eligibility.    To maintain Title IV eligibility, a school must comply with extensive statutory and regulatory requirements relating to its financial aid management, educational programs, financial strength, administrative capability, facilities, recruiting practices and various other matters. Among other things, the school must be licensed or otherwise authorized to offer its educational programs by the appropriate governmental body in the state or states in which it is physically located, be accredited by an accrediting agency recognized by the U.S. Department of Education (the “Department of Education”) and be certified to participate in the Title IV programs by the Department of Education. Schools are required periodically to apply for renewal of their authorization, accreditation or certification with the applicable state governmental bodies, accrediting agencies and the Department of Education. In accordance with Department of Education regulations, some schools in Kaplan Higher Education are combined into groups of two or more schools for the purpose of determining compliance with certain Title IV requirements, and each such group is assigned its own identification number, known as an OPEID number. As a result, the schools in Kaplan’s Higher Education division have a total of 33 OPEID numbers.

No assurance can be given that the Kaplan schools currently participating in Title IV programs will maintain their Title IV eligibility, accreditation and state authorization in the future or that the Department of Education might not successfully assert that one or more of such schools have previously failed to comply with Title IV requirements.

Student Default Rates.    A school may lose its eligibility to participate in Title IV programs if student defaults on the repayment of Title IV loans exceed specified rates, referred to as “cohort default rates.” The Department of Education calculates a cohort default rate for each of Kaplan Higher Education’s OPEID numbers. The schools in an OPEID number whose cohort default rate exceeds 40% for any single year may lose their eligibility to participate in the Federal Family Education Loan (“FFEL”) and Direct Loan programs and Federal Pell Grant programs for at least two fiscal years, except in the event of a successful adjustment or appeal. The schools in an OPEID number whose cohort default rate equals or exceeds 25% for three consecutive years may lose their Title IV eligibility to participate in FFEL, Direct Loan and Federal Pell Grant programs for at least two fiscal years, except in the event of a successful adjustment or appeal. The schools in an OPEID number whose cohort default rate equals or exceeds 25% in any one of the three most recent fiscal years for which rates have been issued by the Department of Education may be placed on provisional certification by the Department of Education.

The enactment in August 2008 of the Higher Education Opportunity Act (which reauthorized the Federal Higher Education Act) changed the methodology that will be used to calculate cohort default rates for future years. Under the revised law, the period of time for which student defaults are tracked and included in the cohort default rate calculation is extended by a year, which is expected to increase the cohort default rates for most institutions. That change became effective with the calculation of institutions’ cohort default rates for the federal fiscal year ending September 30, 2009; those rates are expected to be calculated and issued by the Department of Education in 2012. The Department of Education will not impose sanctions based on rates calculated under this new methodology until three consecutive years of rates have been calculated, which is expected to occur in 2014. Until that time, the Department of Education will continue to calculate rates under the old method and impose sanctions based on those rates. The revised law also increases the threshold for ending an institution’s participation in certain Title IV programs from 25% to 30% for three consecutive years, effective for three-year cohort default rates issued beginning in fiscal year 2012.

The cohort default rate for Kaplan University (which comprises 52% of Kaplan Higher Education’s revenue) and for all of Kaplan Higher Education for the federal fiscal year periods 2007, 2006 and 2005 were as follows:

For the 2007 cohort year, four reporting units had a cohort default rate of 25% or more. For the 2008 cohort year, which has been issued in draft form by the Department of Education, only one reporting unit had a cohort default rate greater than 25%, and none had two or more consecutive years above 25%. These 2008 draft rates are not final and are subject to revision. Based on the 2008 draft cohort default rates, we expect Kaplan University’s 2008 fiscal year cohort default rate to be between 15% and 17%, and the overall Kaplan Higher Education rate to be between 16% and 18%. Student loan default rates tend to be higher in certificate and associate’s degree programs as compared to bachelor’s and graduate degree programs. A majority of Kaplan Higher Education students are enrolled in certificate and associate’s degree programs.

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Kaplan Higher Education has implemented initiatives to mitigate the increased risk of student loan defaults for Kaplan University and Kaplan Higher Education Campuses’ students. Kaplan has dedicated resources focused on helping the students who are at risk of default. Kaplan personnel contact students and provide assistance, which includes providing students with specific loan repayment information, lender contact information and debt counseling. Kaplan has also implemented a financial literacy and counseling program for current students and has refined and improved its student retention programs, resulting in improved retention rates. Students who withdraw prior to program completion demonstrate a higher loan default rate than those who continue through to graduation. Although Kaplan has dedicated resources to mitigate the increased risk of student loan defaults by its students, there is no guarantee that such efforts will be successful.

The “90/10” Rule.    Prior to the enactment of the Higher Education Opportunity Act, any for-profit postsecondary institution (a category that includes all of the schools in Kaplan Higher Education) would lose its Title IV eligibility for at least one year if more than 90% of the institution’s receipts for any fiscal year were derived from Title IV programs, as calculated on a cash basis in accordance with the Federal Higher Education Act and applicable Department of Education regulations. Under amendments to the Federal Higher Education Act, a for-profit institution loses its eligibility to participate in the Title IV programs for a period of at least two fiscal years if the institution derives more than 90% of its receipts from Title IV programs for two consecutive fiscal years, commencing with the institution’s first fiscal year that ends after August 14, 2008. An institution with Title IV receipts exceeding 90% for a single fiscal year ending after August 14, 2008, will be placed on provisional certification and may be subject to other enforcement measures. The 90/10 Rule calculations are performed for each OPEID unit. The largest OPEID reporting unit in Kaplan’s Higher Education division in terms of revenue is Kaplan University, which accounted for approximately 61% of the Title IV funds received by the division in 2009. In 2009, Kaplan University derived less than 87.5% of its receipts from the Title IV programs, and other OPEID units derived an average of less than 83% of their receipts from Title IV programs, with no unit deriving more than 88% of its receipts from such programs.

The proportion of Kaplan Higher Education’s revenue from certificate and associate degree programs is composed of a higher percentage of Title IV funds than is the case for its bachelor’s and other degree programs. A majority of Kaplan Higher Education students are enrolled in certificate and associate degree programs. Kaplan Higher Education is taking various measures to reduce the percentage of its receipts attributable to Title IV funds, including emphasizing direct-pay and employer-paid education programs, encouraging students to carefully evaluate the amount of Title IV borrowing, and developing additional professional development and continuing education programs. Although Kaplan is taking steps to address compliance with the 90/10 Rule, there can be no guarantee that these measures will be adequate to prevent the 90/10 Rule calculations from exceeding 90% in the future.

Regulations Regarding Disbursement or Retention of Title IV Funds.    The Department of Education may fine a school, require a school to repay Title IV program funds, limit or terminate a school’s eligibility to participate in the Title IV programs, initiate an emergency action to suspend the school’s participation in the Title IV programs without prior notice or opportunity for a hearing, transfer a school to a method of Title IV payment that would adversely affect the timing of the institution’s receipt of Title IV funds, deny or refuse to consider a school’s application for renewal of its certification to participate in the Title IV programs, refer a matter for possible civil or criminal investigation or take other enforcement measures if it finds that the school has failed to comply with Title IV requirements or improperly disbursed or retained Title IV program funds. In addition, there may be other legal theories under which a school could be sued as a result of alleged irregularities in the administration of student financial aid.

Change of Control.    Each Kaplan Higher Education school is certified to participate in Title IV programs. Pursuant to Title IV program regulations, a school that undergoes a change in control, which may include a change in control of a school’s parent corporation or other owners, must be reviewed and recertified by the Department of Education and obtain approvals from certain state agencies and accrediting bodies, in some cases prior to the change of control. Certifications obtained from the Department of Education following a change in control are granted on a provisional basis that permits the school to continue participating in Title IV programs, but provides fewer procedural protections if the Department of Education asserts a material violation of Title IV requirements.

Standards of Financial Responsibility.    An institution participating in the Title IV programs must comply with certain measures of financial responsibility under the Higher Education Act and under Department of Education regulations. Among other things, the applicable regulations require an institution to achieve a composite score of at least 1.5 as calculated under Department of Education regulations based on data in annual financial statements submitted to the Department of Education. If an institution fails to achieve a composite score of 1.5 or fails to comply with other financial responsibility standards, the Department of Education may place conditions on the institution’s participation in the Title IV programs and may require the institution to submit to the Department of Education a letter of credit in an amount of at least 10% to 50% of the institution’s annual Title IV participation for its most recent fiscal year. The Department of Education has

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measured the compliance of Kaplan Higher Education schools based on the composite score of the division. For the 2009 fiscal year, Kaplan’s Higher Education had a composite score of 2.45.

Department of Education Program Reviews.    In September 2008, the Department of Education began a Program Review at Kaplan’s Higher Education division’s CHI-Broomall campus. The Program Review is ongoing. The reviewers have completed their field work. CHI-Broomall and Kaplan have responded to a preliminary report issued by the Department of Education, are responding to a February 12, 2010 request by the Department of Education for additional information and are cooperating fully in the review. The Department of Education has not yet issued a final report on this review. No assurance can be given that the Department of Education’s final report will not have a significant adverse effect on Kaplan’s ability to continue to operate this school.

The Department of Education has also conducted Program Reviews at Kaplan’s Higher Education division’s Pittsburgh and Baltimore locations, which began in October 2007 and May 2008, respectively. Kaplan has responded to all requests for information and is cooperating fully in these reviews. The Department of Education has not yet issued final reports on these reviews. No assurance can be given that the Department of Education’s final report will not have a significant adverse effect on Kaplan’s ability to continue to operate these schools.

In September 2009, the Department of Education began a Program Review of Kaplan University at its offices in Fort Lauderdale, FL. Kaplan University is continuing to respond to all requests for information and is cooperating fully in the review. The reviewers completed their field work, are reviewing documentation already submitted and are gathering additional documentation. The Department of Education has not issued the final Program Review report. No assurance can be given that the Department of Education’s final report will not have a significant adverse effect on Kaplan’s ability to continue to operate this school.

In January 2010, the Department of Education began a program review at Kaplan Higher Education’s Bauder campus. That same month, the Department of Education issued an expedited final determination letter, closing its program review with no significant finding.

The Company is presently not aware of any proceeding by the Department of Education to fine any Kaplan school for a failure to comply with any Title IV requirement, or to limit, suspend or terminate the Title IV eligibility of any Kaplan school.

Institutional Accreditation.    As noted previously, to remain eligible to participate in Title IV programs, a school must maintain its accreditation by an accrediting agency recognized by the Department of Education. In 2009, no Kaplan Higher Education division school received notice from its institutional accreditors indicating that the school’s accreditation was being withdrawn or that the school was being issued an order to show cause why its accreditation should not be withdrawn.

Congressional Reauthorization of Title IV Programs.    All of the Title IV financial aid programs are subject to periodic legislative review and reauthorization. In addition, while Congress historically has not limited the amount of funding available for the various Title IV student loan programs, the availability of funding for the Title IV programs that provide for the payment of grants is primarily contingent upon the outcome of the annual federal appropriations process.

Whether as a result of changes in the laws and regulations governing Title IV programs, a reduction in Title IV program funding levels or a failure of schools within Kaplan Higher Education to maintain eligibility to participate in Title IV programs, a material reduction in the amount of Title IV financial assistance available to the students attending those schools would have a significant negative impact on Kaplan’s operating results. In addition, any development that has the effect of making the terms on which Title IV financial assistance is made available materially less attractive could also adversely affect Kaplan’s operating results.

Test Preparation

Kaplan Test Preparation (“KTP”) includes the following businesses: Test Preparation and Tutoring; Professional and Licensure; and Kaplan Publishing. Each of these businesses is discussed briefly below.

Test Preparation and Tutoring

The test preparation and tutoring business prepares students for a broad range of college and graduate school admissions examinations, including the SAT, ACT, LSAT, GMAT, MCAT and GRE. During 2009, these courses were offered at numerous locations throughout the U.S., Canada, Puerto Rico, Mexico, London and Paris. KTP also offers courses online, which are delivered in a live online classroom and a self-study format. In addition, KTP licenses material for certain of its courses to third parties and a Kaplan affiliate, which, during 2009, offered courses at 55 locations in 11 countries outside the U.S. KTP also offers programs and services, including college admissions examination preparation courses, directly to schools and school districts for students in kindergarten through 12th grade. These offerings were

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provided through Kaplan’s K12 Learning Services business, which, in the first quarter of 2010, was integrated into KTP’s business. In July 2009, KTP launched Kaplan Tutoring, which offers individualized live tutoring and customized online programs for children from kindergarten through 8th grade.

Professional and Licensure

The professional and licensure businesses (collectively, “Professional and Licensure”) prepare professionals for a variety of licensing and advanced designation exams and offer continuing education in various fields. Professional and Licensure includes the following businesses: Kaplan Medical and Kaplan Nursing, which prepare students for licensure exams including the USMLE and NCLEX exams; Kaplan PMBR, which offers full-service bar review in 19 states, as well as review for the multistate portion of the bar exam nationwide; Kaplan Schweser, which offers test preparation courses to financial services professionals for the CFA, FRM and CPA exams, as well as continuing education for accountants; Kaplan Financial Education, which provides entrance exam preparation and continuing education courses for financial services professionals; Kaplan Real Estate Education, which provides courses for real estate, home inspection, architecture and engineering; Kaplan Professional Publishing, which provides printed and online materials that help individuals study for and/or satisfy state licensing and continuing education requirements; and Kaplan Continuing Education, which offers certificate programs in fields such as business, finance, health care and information technology.

The courses offered by KTP are provided in various formats including classroom-based instruction, online programs, printed study guides, in-house training and through other technological means. During 2009, these businesses enrolled more than 638,000 students in their courses (including over 206,000 enrolled in online programs).

Publishing

Kaplan Publishing, which is operated separately from Kaplan Professional Publishing, publishes a variety of general trade and educational books in subject areas such as test preparation, business, law, medicine and nursing. At the end of 2009, Kaplan Publishing had nearly 550 books in print, more than 330 e-Books and 20 mobile applications for smart- phones.

Kaplan International

Kaplan International includes Kaplan Europe and Kaplan Asia Pacific. Each of these businesses is discussed briefly below.

Kaplan Europe

Kaplan Europe, which Kaplan formed in connection with the 2009 reorganization, includes the following businesses, which are all based in the U.K. and Ireland: Kaplan Professional; Kaplan International Colleges; and a set of higher education institutions.

The Kaplan Professional business in Europe is a U.K.-based provider of training, test preparation services and degrees for accounting and financial services professionals, including those studying for ACCA, CIMA and ICAEW qualifications. In addition, Kaplan Professional provides legal and professional training, including the operation of a U.K. law school in collaboration with Nottingham Trent University’s Nottingham Law School. In 2009, Kaplan Professional provided courses to approximately 74,000 students, of which 48,000 were dedicated to accounting and financial services professionals. Kaplan Professional is headquartered in London and has 27 training centers located throughout the U.K.

The Kaplan International Colleges (“KIC”) business comprises a University pathways business and an English-language business. The University pathways business offers academic preparation programs especially designed for international students who wish to study in English-speaking countries. KIC operates University pathways programs in collaboration with six U.K. universities, two U.S. universities and one Australian university. At the end of 2009, KIC’s University pathways business was serving over 2,800 students. The English-language business (previously operated under the name “Kaplan Aspect”) provides English-language training, academic preparation programs and test preparation for English proficiency exams, principally for students wishing to study and travel in English-speaking countries. KIC operates a total of 43 English-language schools, with 21 located in the U.K., Ireland, Australia, New Zealand and Canada, and 22 located in the U.S., where they operate under the name Kaplan International Centers. During 2009, the English-language business served approximately 55,000 students.

Kaplan Europe also includes three higher education institutions located in the U.K. and Ireland. These institutions are Dublin Business School, Holborn College and Kaplan Open Learning. At year-end, these institutions had an aggregate of approximately 8,050 students.

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Kaplan Asia Pacific

Kaplan Asia Pacific operates primarily in Singapore, Australia, Hong Kong and China.

In Singapore, Kaplan provides students with the opportunity to earn undergraduate and graduate degrees, principally in business-related subjects, science and engineering, as well as communications and media. Kaplan degrees are offered by affiliated educational institutions in Australia, the U.K. and the U.S. In addition, Kaplan’s Singapore business offers pre-university and diploma programs. Kaplan also offers accountancy exams and financial markets training in Singapore. At year-end 2009, Kaplan’s Singapore business had approximately 18,000 students enrolled in its programs.

In Australia, Kaplan delivers a broad range of financial services education and professional development courses. In 2009, this business provided courses to more than 11,000 students through classroom programs and to more than 30,000 students through distance-learning programs. Additionally, Kaplan operates three Australian accredited Kaplan Business School centers, in Sydney, Melbourne and Adelaide, offering foundation and master’s degree programs. Finally, through Bradford College, Kaplan offers two academic preparation programs for entry into Australian undergraduate university programs for 700 international students.

In Hong Kong, Kaplan offers accountancy exams, non-exam-based postgraduate programs, financial markets training and continuing professional development training. Kaplan also offers Mandarin-language training and test preparation courses for the Chinese Proficiency Test. During 2009, Kaplan’s Hong Kong business provided courses to over 20,000 students.

In China, Kaplan provides academic preparation programs for entry to overseas universities at campuses in several cities in China. Kaplan China had approximately 600 students enrolled at the end of 2009.

Kaplan Ventures

The Kaplan Ventures division manages and develops businesses in markets adjacent to Kaplan’s core educational businesses. Kaplan Ventures’ management provides these businesses with industry expertise and management support with a view toward the long-term strategic benefits these businesses may provide to Kaplan. In 2009, the Kaplan Ventures division included Kaplan EduNeering, Kaplan Compliance Solutions, Education Connection, Kaplan IT Learning, The Kidum Group and Kaplan Virtual Education.

Kaplan EduNeering provides online regulatory compliance training and learning management systems technology principally for businesses in the pharmaceutical, medical technology, health care, energy, telecom and defense-related industries. During 2009, Kaplan EduNeering provided services to more than 1.5 million users at approximately 376 companies.

Kaplan Compliance Solutions (“KCS”) assists insurance carriers, agencies and broker/dealers with their licensure and/or registration filings and assists its clients in compliance with myriad national and state-level regulatory requirements applicable to these industries. During 2009, KCS provided services to more than 700 companies.

Kaplan IT Learning provides certification preparation, assessment, learning services and software to help individuals and organizations train on software applications and prepare for technical certifications in the information technology industry. During 2009, Kaplan IT Learning delivered more than 160,000 certification preparation practice tests.

The Kidum Group, headquartered in Tel Aviv, Israel, provides test preparation courses for Israeli high school graduation exams, university admissions exams and the GMAT. Kidum also provides English-language courses at 11 permanent centers located throughout Israel as a franchisee of Wall Street International, which is a provider of English-language training to corporations and individuals at locations outside the U.S. During 2009, Kidum provided courses to approximately 30,000 students.

Kaplan Virtual Education (“KVE”) operates charter and private virtual schools that offer online instruction to students in grades 6 through 12. KVE also provides instructors and curriculum and manages virtual schools for 19 school districts throughout the U.S. At year-end 2009, KVE was providing courses to approximately 3,850 students.

Cable Television Operations

Through its subsidiary Cable ONE, Inc. (“Cable ONE”), the Company owns and operates cable television systems that provide video, Internet and phone service to subscribers in 19 midwestern, western and southern states. At the end of 2009, Cable ONE provided cable service to approximately 669,000 basic video subscribers (representing about 48% of the 1,395,000 homes passed by the systems) and had in force approximately 219,100 subscriptions to digital video service, 392,800 subscriptions to cable modem service and 109,600 subscriptions to VoIP (digital voice) service. Digital video, cable modem and VoIP services are available in markets serving virtually Cable ONE’s entire subscriber base. The digital video services offered by Cable ONE include certain premium, cable network and local over-the-air channels in HDTV.

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Regulation of Cable Television and Related Matters

Cable ONE’s cable, Internet and voice operations are subject to various requirements imposed by local, state and federal governmental authorities. The regulation of certain cable television rates pursuant to procedures established by Congress has negatively affected Cable ONE’s revenue. Certain other legislative and regulatory matters discussed in this section also have the potential to adversely affect Cable ONE’s cable television, Internet and voice businesses.

Cable Television

Federal law requires or authorizes the imposition of a wide range of regulations on cable television operations.

Franchising.    Cable ONE’s cable systems are required to obtain franchises from state or local governmental authorities to operate. Those franchises typically are nonexclusive and limited in time, contain various conditions and limitations, and provide for the payment of fees to the local authority, determined generally as a percentage of revenues. Additionally, those franchises often regulate the conditions of service and technical performance and contain various types of restrictions on transferability. Failure to comply with all of the terms and conditions of a franchise may give rise to rights of termination by the franchising authority. The Federal Communications Commission (“FCC”) has adopted rules designed to expedite the process of awarding competitive franchises and relieving applicants for competing franchises of some locally-imposed franchise obligations. The FCC also has extended certain of these “reforms” to incumbent cable operators. Separately, a number of states (including Iowa, Kansas, Louisiana, Missouri, Tennessee and Texas—all states in which Cable ONE operates cable systems) have enacted laws to permit video service providers to secure statewide franchises, thereby relieving these providers of the need to seek multiple authorizations from various local franchising authorities within a state. This development, which is especially beneficial to new entrants, is expected to continue to accelerate the competition Cable ONE is experiencing in the marketplace for video service.

Rate Regulation.    FCC regulations prohibit local franchising authorities or the FCC to regulate the rates that cable systems charge for certain levels of video cable service, equipment and service calls when those cable systems are subject to “effective competition.” The FCC has confirmed that some of the cable systems owned by the Company fall within the effective-competition exemption, and the Company believes, based on an analysis of competitive conditions within its systems, that other of its systems may also qualify for that exemption. Nevertheless, monthly subscription rates charged for the basic tier of cable service, as well as rates charged for equipment rentals and service calls for many of Cable ONE’s cable systems, remain subject to regulation by local franchise authorities in accordance with FCC rules. However, rates charged by cable systems for tiers of service other than the basic tier—such as pay-per-view and per-channel premium program services, digital video, cable modem and digital telephone services—and for advertising currently are exempt from regulation.

“Must-Carry” and Retransmission Consent.    Federal law provides that a commercial television broadcast station may, subject to certain limitations, insist on carriage of its signal on cable systems located within the station’s market area. Similarly, a noncommercial public station may insist on carriage of its signal on cable systems located either within the station’s predicted Grade B signal contour or within 50 miles of a reference point in a station’s community designated by the FCC. As a result of these obligations, certain of Cable ONE’s cable systems must carry broadcast stations that they might not otherwise have elected to carry, and their freedom to drop signals previously carried has been reduced.

Commercial broadcasters have the right to elect at three-year intervals to forego must-carry rights and insist instead that their signals not be carried by cable systems without their prior consent. The next three-year election cycle begins October 1, 2011, with the elections effective January 1, 2012, through December 31, 2014. In some cases, Cable ONE has been required to provide consideration to broadcasters to obtain retransmission consent, such as commitments to carry other program services offered by a station or an affiliated company, to purchase advertising on a station or to provide advertising availabilities on cable to a station. More recently, some broadcasters have begun to seek cash payment from cable systems such as Cable ONE for the right to carry their signals. This development results in increased operating costs for cable systems that ultimately increase the rates cable systems charge subscribers.

Digital Television (“DTV”).    FCC regulations require cable systems to ensure that all local must-carry broadcast stations are “viewable” by all subscribers. Moreover, where a must-carry broadcast station’s signal is transmitted in high-definition television (“HDTV”) format, cable operators generally are required to carry the signal in HDTV format. Although certain smaller cable systems are not subject to these requirements, satisfaction of the generally applicable obligation could increase Cable ONE’s costs by requiring it to expand the capacity of its cable systems or to delete some existing programming to make room for all of the video streams included in broadcasters’ DTV signals.

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Pole Attachments.    Federal law requires most telephone and power utilities to charge reasonable rates to cable operators for utilizing space on utility poles or in underground conduits. The FCC has adopted two separate formulas for calculating such rates: one for attachments by cable operators generally and a higher rate for attachments used to provide “telecommunications services.” A number of cable operators (including the Cable ONE) are using their cable systems to provide not only television programming, but also Internet access and digital voice. In 2002, the U.S. Supreme Court held that the lower pole attachment rates apply not only to attachments used to provide traditional cable services, but also to attachments used to provide Internet access services. The FCC has not yet determined whether digital voice provided by cable operators is a “telecommunications service” that would trigger the higher pole attachment rates. Changes to Cable ONE’s pole attachment rate structure could significantly increase its annual pole attachment costs.

Federal Copyright Issues.    The Copyright Act of 1976, as amended, gives cable television systems the ability, under certain terms and conditions and assuming that any applicable retransmission consents have been obtained, to retransmit the signals of television stations pursuant to a compulsory copyright license. Those terms and conditions require all cable systems that retransmit broadcast signals to pay semiannual royalty fees, generally based on the systems’ gross revenues from basic service and, in certain instances, the number of “distant” broadcast signals carried. The compulsory license fees have been increased on several occasions since this act went into effect. Since 1989, a separate compulsory copyright license for distant signal retransmissions has applied to direct broadcast satellite (“DBS”), and in 1999, Congress provided DBS with a royalty-free compulsory copyright license for distribution of the signals of local television stations to satellite subscribers in the markets served by such stations. The cable compulsory license for local and distant signals and the DBS local signal compulsory license are permanent, while the DBS distant signal compulsory license is scheduled to sunset at the end of February 2010, although it is possible that the DBS distant signal compulsory license will be extended. In addition, the cable and DBS compulsory licenses employ different methodologies for calculating royalties, with cable using a percentage of revenues approach and DBS using a flat, per subscriber, per signal payment approach.

Congress is considering amendments to the cable compulsory license that could affect application of the compulsory license to the retransmission of digital television broadcast signals, revise certain compulsory license reporting requirements and change how statutory royalty fees are calculated. In addition, the Copyright Office is considering requests for clarification of the application of the cable compulsory license to the retransmission of distant DTV broadcast signals and for clarification and revisions of certain cable compulsory copyright license reporting requirements. Cable ONE cannot predict the outcome of any such inquiries, rulemaking proceedings or legislative initiatives; however, it is possible that changes in the rules or copyright compulsory license fee computations or compliance procedures could have an adverse effect on its business by increasing copyright compulsory license fee costs or by causing Cable ONE to reduce or discontinue carriage of certain broadcast signals that it currently carries on a discretionary basis.

Telephone Company Competition.    Federal law permits telephone companies also to offer video programming services. Over the past decade, telephone companies have pursued multiple strategies to enter the market for the delivery of multichannel video programming services. Initially, some telephone companies partnered with DBS operators to resell a DBS service to their telephone customers. Some telephone companies still do this, but other telephone companies have entered into traditional franchise agreements with local and state franchising authorities and have constructed their own video programming delivery systems. Still other telephone companies have developed other methods to deliver video programming that, depending on the technology employed, may be regulated in a manner similar to the Company’s cable systems. Some telephone companies have taken the position that the specific technology employed in delivering video programming dictates whether a local franchise is required. The theory is that because the provider is not delivering a “cable service,” as that term is defined in federal law, but rather is delivering an “information service,” which by law is not subject to regulation by state and local governments, no local franchise is required. Neither the FCC nor the courts have addressed this issue definitively, but in the meantime, most major telephone companies are entering into franchise agreements to provide their video programming distribution services to consumers. Increased competition from telephone companies that provide competing services could have a material effect on Cable ONE’s business.

Wireless Services.    At various times over the past decade, the FCC has taken steps to facilitate the use of certain frequencies, notably the 2.5 GHz and 3.1 GHz bands, to deliver over-the-air multichannel video programming services to subscribers in competition with cable television systems. However, those services generally were not deployed commercially in any significant way. Beginning in 2004, the FCC adopted rule changes that allowed the 2.5 GHz band to be used for nonvideo services and permitted transmitters to be deployed in cellular patterns. As a result of these rule changes, the 2.5 GHz and other frequency bands (including the 1.7 GHz and 2.1 GHz bands in which the FCC auctioned spectrum in 2006) now are being adopted for the delivery of two-way broadband digital data and high-speed Internet access services capable of covering large areas. Initially, these services were going to be provided on a fixed basis, delivering access to houses and businesses, but they now are expected to accommodate mobile devices, such as laptop computers with a wireless adapter card. These wireless networks are expected to use a variety of advanced

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transmission standards, including an increasingly popular standard known as WiMAX, and may result in the increased availability of mobile video services. Also in 2006, a number of cellular telephone providers introduced or expanded subscription services that deliver full-length television programs or video clips directly to cellular telephones, although at present these services are capable of supporting only a limited number of available video streams. In 2008, the FCC auctioned additional spectrum in the 700 MHz band, which historically has been used for analog television broadcasting, and it is expected that this additional spectrum will be used to accommodate broadband, video and other services to mobile devices. Although it is not yet clear what effect, if any, the increased availability of mobile video services will have on the cable television industry, these developments likely will increase the number of competitive alternatives to Cable ONE’s services.

Horizontal and Vertical Ownership Limits.    In September 2009, a reviewing court struck down and remanded the FCC’s horizontal cable ownership rule, which provided that a single company could not serve more than 30% of potential cable subscribers (or “homes passed” by cable) nationwide. Although the reviewing court’s decision authorizes the FCC to seek to justify the rule, it is not clear whether the FCC will attempt to do so. Separately, the FCC has proposed reinstating vertical ownership restrictions that would cap the percentage of a cable system’s channel capacity that could be used to carry channels in which the operator has an ownership interest, but it has taken no action to implement such restrictions. There currently is no restriction on the ownership of both a television broadcast station and a cable television system in the same market.

Set-Top Boxes.    Pursuant to a Congressional directive to promote competition in the retail market for set-top converter boxes, the FCC has adopted rules barring cable operators from deploying set-top boxes with “integrated” security and navigation functions and requiring cable operators to support boxes and other devices designed to accept plug-in cards (“CableCARDs”) that provide the descrambling and other security features that traditionally have been included in the integrated set-top converter boxes leased by cable operators to their customers. The FCC has granted some requests for waivers of this rule, including one such request filed by Cable ONE to allow it to offer low-cost, HD-capable integrated set-top boxes to subscribers of its Dyersburg, TN, system. The general prohibition on integrated set-top boxes has the potential to increase the capital costs of cable operators (because of the need to provide CableCARDs to customers and because the new type of converter box is typically more expensive than the traditional integrated box).

Other Requirements.    In February 2008, the FCC issued revised commercial leased access rules that require cable operators to make a certain portion of their systems’ capacity available to parties desiring to transmit programming via cable on a leased basis. These revised rules could substantially reduce the rates for parties desiring to lease capacity on cable systems and also impose a variety of leased access customer service, information and reporting standards. Implementation of these new rules has been stayed by the courts, and certain of the rules also were rejected by the Office of Management and Budget (“OMB”) as inconsistent with the federal Paperwork Reduction Act. Certain parties have requested that the FCC override the OMB ruling, but no action has been taken on that request. The FCC has not indicated its intent to move forward with implementation of these new rules. If they take effect, however, they likely will increase Cable ONE’s costs and could cause additional leased access activity on Cable ONE’s cable systems. As a result, Cable ONE may find it necessary to either discontinue other channels of programming or opt not to carry new channels of programming or other services that may be more desirable to its customers.

The FCC also regulates various other aspects of cable television operations. Long-standing FCC rules require cable systems to black out from certain distant broadcast stations the syndicated programs for which local stations have purchased exclusive rights and requested exclusivity, and to delete, under certain circumstances, duplicative network programs broadcast by distant stations. The FCC also imposes certain technical standards on cable television operators, exercises the power to license various microwave and other radio facilities frequently used in cable television operations and regulates the assignment and transfer of control of such licenses.

Internet Access Services

In 2005, the U.S. Supreme Court upheld the FCC’s classification of cable modem service as an “information service.” As a result, cable modem service is not subject to the full panoply of regulations that applies to “cable services” or “telecommunications services” under the Communications Act of 1934, as amended (the “Communication Act”), nor is it subject to state or local government regulation. In response to the Supreme Court’s decision, the FCC ruled that a telephone company’s offering of digital subscriber line (“DSL”) Internet access service is also an “information service.”

Cable ONE currently offers broadband Internet access service on virtually all of its cable systems and is the sole Internet service provider on those systems. Cable ONE does not restrict the websites that its broadband Internet access subscribers may view; however, regulations that distinguish between interference with subscriber access and reasonable network management are evolving and, over time, could begin to interfere with Cable ONE’s ability to manage its

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network or provide services to its subscribers. The FCC currently is considering whether to impose certain “net neutrality” obligations on providers of broadband Internet access services, and the outcome of that proceeding is unclear. Congress, from time to time, also has considered whether to impose net neutrality requirements on providers of broadband Internet access service that would limit the ability of such providers to prioritize the delivery of particular types of content, applications or services over their networks. As a result of allegations that cable operators may be interfering with transmission and receipt of data on so-called “peer-to-peer” networks, several entities asked the FCC to ban such practices and to rule that reasonable network management practices do not include conduct that would block, degrade or unreasonably discriminate against lawful Internet applications, content or technologies. The FCC has ruled against at least one cable operator thus far in response to this request, but the cable operator has sought judicial review of the ruling, and the appeal is pending. Cable One cannot predict the outcome of this appeal or the impact it may have on net neutrality considerations in the future.

As part of the American Reinvestment and Recovery Act of 2009 (“ARRA”), the federal government has implemented a program pursuant to which a total of approximately $7.2 billion in grants and loans will be distributed to fund investment in the development of broadband networks throughout the U.S. It is expected that these grants and loans will be distributed mostly to facilitate the deployment of broadband Internet access services in rural and remote regions that do not already enjoy such services. The ARRA also required the FCC to develop a national broadband plan that is intended to guide U.S. policy in the area of domestic broadband deployment. The national broadband plan, which the FCC is expected to deliver to Congress on March 17, 2010, does not contain self-effectuating provisions, but it is expected to serve as a blueprint for broadband regulatory policy in the U.S. and, therefore, could have a material effect on Cable ONE and other providers of broadband Internet access services.

Providers of broadband Internet access services are subject to many of the same federal and state privacy laws that apply to other providers of electronic communications, such as cable companies and telephone companies, including the Electronic Communications Privacy Act, which addresses interceptions of electronic communications that are in transit; the Stored Communications Act, which addresses acquisitions of electronic data in storage; and the Communications Assistance for Law Enforcement Act (“CALEA”), which requires providers to make their services and facilities accessible to law enforcement for purposes of surveillance. Various federal and state laws also apply to Cable ONE and to others whose services are accessible through Cable ONE’s broadband Internet access service. These laws include copyright laws, prohibitions on obscenity and requirements governing unsolicited commercial email.

In December 2006, Cable ONE purchased in the FCC’s Advanced Wireless Service auction approximately 20 MHz of spectrum in the 1.7 GHz and 2.1 GHz frequency bands in areas that cover more than 85% of the homes passed by Cable ONE’s systems. This spectrum can be used to provide a variety of advanced wireless services, including fixed and mobile high-speed Internet access using WiMAX and other digital transmission systems. Licenses for this spectrum have an initial 15-year term and 10-year renewal terms. Licensees will be required to show that they have provided substantial service by the end of the initial license term to be eligible to renew, but there are no interim construction or service requirements. Cable ONE is evaluating how best to utilize its spectrum.

Voice Services

Voice Over Internet Protocol (“VoIP”).    Cable companies, including Cable ONE and others, offer telephone service using VoIP, which permits users to make telephone calls over broadband communications networks, including the Internet. Federal law preempts state and local regulatory barriers to the offering of telephone service by cable companies and others, and the FCC generally has preempted specific state laws that seek to regulate VoIP.

The FCC has held that VoIP services generally are interstate in nature and thus subject exclusively to the FCC’s federal jurisdiction. This decision was upheld on appeal, although the FCC has an ongoing proceeding to consider whether VoIP services provided by cable companies and others are properly classified as an “information service,” “telecommunications service” or some other new category of service. This determination, once made, could have numerous regulatory implications for cable companies that provide VoIP services, including Cable ONE. Although the FCC has yet to ascribe a regulatory definition to VoIP services, the FCC nevertheless has imposed a number of obligations on VoIP providers, some of which are discussed more fully below. In the absence of a definitive FCC decision, several states (including some in Cable ONE’s service territory) also have attempted—and are expected to continue to attempt—to regulate VoIP services like traditional telephony service and impose certain fees and taxes on the provision of VoIP services. These state actions could have an adverse effect on Cable ONE’s business by increasing its costs to provide VoIP services. Legislation from time to time has been introduced in Congress to address the classification and regulatory obligations of VoIP providers. The prospects for passage of any such legislation are uncertain.

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Emergency 911 Services.    The FCC has ruled that an interconnected VoIP provider that enables its customers to make calls to and from persons who use the public switched telephone network must provide its customers with the same enhanced 911 (“E911”) features that traditional telephone and wireless companies are obligated to provide. This requirement was upheld on appeal. The FCC is currently assessing whether additional rules related to the provision of E911 services by interconnected VoIP service providers should be adopted.

CALEA.    FCC regulations require providers of interconnected VoIP service to comply with the requirements of CALEA, which requires covered carriers and their equipment suppliers to deploy equipment that law enforcement officials can access readily for lawful wiretap purposes.

Universal Service.    The FCC has determined that interconnected VoIP service providers must contribute to the universal service fund. The amount of a company’s universal service fund contribution is based on a percentage of revenues earned from end-user interstate and international services. This percentage figure changes from time to time and generally has been increasing, prompting Congress and the FCC to consider ways in which the universal service fund and the payment obligations of fund contributors should be reformed. Cable One cannot predict whether and how such reform will occur and the extent to which it may affect providers of VoIP services, including Cable ONE.

Intercarrier Compensation.    The FCC is considering various proposals designed to reform the manner in which providers of telecommunications and VoIP services compensate one another for transporting and terminating various forms of network traffic. FCC determinations regarding the rates, terms and conditions for transporting and terminating such traffic can have a profound and material effect on the profitability of providing voice and data services. It is not possible to predict what actions the FCC might take in this area or the effect that they will have on Cable ONE.

CPNI.    In 2007, the FCC adopted rules expanding the protection of customer proprietary network information (“CPNI”) and extending CPNI protection requirements to providers of interconnected VoIP. CPNI is information about the quantity, technical configuration, type, location and amount of a phone customer’s use. These requirements generally have increased the cost of providing VoIP service, as providers now must implement various safeguards to protect CPNI from unauthorized disclosure.

Access for Persons With Disabilities.    FCC regulations require providers of interconnected VoIP services to comply with all disability access requirements that apply to telecommunications carriers, including the provision of telecommunications relay services for persons with speech or hearing impairments. These requirements generally have had the effect of increasing the cost of providing VoIP services.

Regulatory Fees.    The FCC requires interconnected VoIP service providers to contribute to shared costs of FCC regulation through an annual regulatory fee assessment. These fees have increased Cable ONE’s cost of providing VoIP services.

Local Number Portability.    Providers of interconnected VoIP services and their “numbering partners” must ensure that their subscribers have the ability to port their telephone numbers when changing service providers, and local exchange carriers and commercial mobile radio service providers must port numbers that they control to an interconnected VoIP service provider upon a valid port request. Cable ONE, along with other providers of interconnected VoIP service, must contribute funds to cover the shared costs of local number portability and the costs of North American Numbering Plan Administration. The FCC currently is considering whether additional numbering requirements (such as allowing consumers access to abbreviated dialing codes like 211 and 311) should be applied to interconnected VoIP service providers. Although consumers’ ability to port their existing telephone numbers to interconnected VoIP service has created additional opportunities for Cable ONE to gain voice customers, the local number portability and associated rules overall have had the effect of increasing the cost of providing VoIP service.

Newspaper Publishing

The Company’s newspaper publishing operations include results for its flagship newspaper, The Washington Post, its website, washingtonpost.com, The Slate Group and a number of additional newspapers and websites.

The Washington Post

WP Company LLC (“WP Company”), a subsidiary of the Company, publishes The Washington Post, which is a morning daily and Sunday newspaper primarily distributed by home delivery in the Washington, DC, metropolitan area, including large portions of Maryland and northern Virginia. The Post’s two primary sources of revenue are advertising and subscription fees, which accounted for 68% and 29% of its total revenue in 2009, respectively. Advertising revenue is derived from the sale of display and classified advertisements, as well as the insertion of preprinted advertisements.

The following table shows the average paid daily (including Saturday) and Sunday circulation of the Post for 52-week periods ended September 30, 2007 and September 28, 2008, as reported by the Audit Bureau of Circulations (“ABC”)

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and as estimated by the Post for the 52-week period ended September 27, 2009, (for which period ABC had not completed its audit as of the date of this report), from the semiannual publisher’s statements submitted to ABC for the 26-week periods ended March 29, 2009 and September 27, 2009:

The Post’s primary circulation territory accounts for more than 90% of its daily and Sunday circulation and consists of Washington, DC, and communities generally within a 50-mile radius from the city (but excluding Baltimore City and its northern and eastern suburbs). The current newsstand price is $0.75 for the daily newspaper and $2.00 for the Sunday newspaper in this area. The rate charged for each four-week period for home-delivered copies of the daily and Sunday newspaper was raised to $21.56 effective January 18, 2010. The rate charged for Sunday-only home delivery was raised to $7.40 for each four-week period effective January 18, 2010. On June 1, 2009, daily and Sunday newsstand prices were raised from $0.75 to $1.00 and from $2.00 to $2.50, respectively, outside the primary circulation area. Rates for home-delivered copies of the daily and Sunday newspaper outside the primary circulation area for each four-week period are $34.00 and are $10.00 for the Sunday newspaper only. From March 2, 2009, through January 17, 2010, newsstand and home-delivery prices in certain counties outside the greater Washington area were $0.75 daily and $2.00 on Sunday. As of January 18, 2010, prices in these counties are the same as those in areas outside the primary circulation area.

With the final issue date of December 21/28, 2009, WP Company ceased publication of The Washington Post National Weekly Edition, a tabloid that contained selected articles and features from The Washington Post edited for a national audience. The National Weekly Edition had a basic subscription price of $78.00 per year and was delivered by second-class mail to approximately 11,348 subscribers.

The Post’s subscriber loyalty program, PostPoints, has approximately 173,000 members. The program allows readers to earn points, exchangeable for rewards, through a variety of activities centered on interacting with The Washington Post in print and online, shopping at participating advertisers and helping the community.

The Post closed its printing plant located in Prince George’s County, MD, in July 2009. Printing operations have been consolidated in the Fairfax County, VA, printing plant.

In January 2010, the Post’s print and online operations were integrated. As a result, WP Company now publishes washingtonpost.com, an Internet site that currently features much of the full editorial text of The Washington Post and most of the Post’s classified advertising, as well as original content, blogs written by Post reporters and others, interactive discussions hosted by Post reporters and outside subject experts, user-generated comments and content obtained from other sources.

As measured by WP Company, this site averaged more than 250 million page views per month and had an average of 23.9 million unique visitors per month during 2009. Washingtonpost.com also features extensive information about activities, groups and businesses in the Washington, DC, area, including arts and entertainment and news focusing on politics and on technology businesses and related policy issues. This site has developed a substantial audience of users who are outside the Washington, DC, area, and WP Company believes, based on analytical data, that approximately 87% of the unique users who access the site each month are in that category. WP Company provides online advertisers with a wide range of options, including to advertise on selected pages or page combinations or to specific geographic areas and demographic groups. WP Company also provides content on websites specially formatted to be downloaded and displayed on web-enabled cell phones and other personal digital devices.

WP Company has about 548 full-time editors, reporters and photographers on its staff, of which 77 were formerly part of the online operations. WP Company draws upon the news reporting facilities of the major wire services, maintains a network of correspondents and contract writers in international news centers and maintains reporters in nine local news bureaus.

The Los Angeles Times-Washington Post News Service disbanded at the end of 2009. On January 1, 2010, WP Company and Bloomberg News launched The Washington Post News Service with Bloomberg News, which offers a selection of content from the Post and Bloomberg News stories to newspapers and other subscribers daily.

WP Company owns an interest in Classified Ventures, a newspaper industry company that offers online classified advertising databases for cars and apartment rentals. Washingtonpost.com provides links to the Classified Ventures’

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national car and apartment rental websites (cars.com and apartments.com). In addition, washingtonpost.com launched Trulia real estate search functionality in April 2009. Trulia enables readers to search real estate listings online using self-selected search criteria.

WP Company shares select news material and promotional resources with NBC News and MSNBC, and washingtonpost.com is being provided with access to certain MSNBC.com multimedia content. The parties are currently renegotiating the terms of this cross-promotional arrangement, which dates back to 2000.

The Slate Group

The Slate Group publishes Slate, an online magazine, and several additional websites. Slate features articles analyzing news, politics and contemporary culture and adds new material on a daily basis. Content is supplied by the magazine’s own editorial staff, as well as by independent contributors. The Slate Group also publishes The Root, an online magazine focused on issues of importance to African Americans and others interested in black culture, offering daily news and provocative commentary on politics and culture; The Big Money, an online magazine launched in September 2008 featuring articles and commentary on business news; and Foreign Policy, a bimonthly print magazine and website that features articles analyzing current events, business and policy news from around the world. In addition, Foreign Policy hosts a small number of foreign policy conferences every year.

Express Publications

Express Publications Company, LLC (“Express Publications”), another subsidiary of the Company, publishes Express, a weekday tabloid newspaper, which is distributed free of charge using hawkers and news boxes near Metro stations and in other locations in Washington, DC, and nearby suburbs with heavy daytime sidewalk traffic. A typical edition of Express is 48 to 60 pages and contains short news, entertainment and sports stories, as well as both classified and display advertising. Current daily circulation is approximately 184,300 copies. Express relies primarily on wire service and syndicated content and is edited by a full-time newsroom staff of 23. Advertising sales, production and certain other services for Express are provided by WP Company. The Express newsroom also produces a website, ExpressNightOut.com, which features entertainment and lifestyle coverage of local interest.

Post–Newsweek Media

The Company’s Post–Newsweek Media, Inc. subsidiary publishes two weekly paid-circulation, three twice-weekly paid-circulation and 26 controlled-circulation weekly community newspapers. This subsidiary’s newspapers are divided into three groups: The Gazette Newspapers, which circulate in Montgomery, Prince George’s and Frederick counties and in parts of Carroll County, MD; and Southern Maryland Newspapers, which circulate in southern Prince George’s County and in Charles, St. Mary’s and Calvert counties, MD; and the Fairfax County Times, which circulates in Fairfax County, VA. During 2009, these newspapers had a combined average circulation of approximately 835,000 copies. This division also produces military newspapers (most of which are weekly) under agreements where editorial material is supplied by local military bases, with the exception of one independent newspaper. In 2009, the 12 military newspapers produced by this division had a combined average circulation of more than 125,000 copies.

The Gazette Newspapers have a companion website (Gazette.net) that includes editorial material and classified advertising from the print newspapers. The military newspapers produced by this division are supported by a website (DCMilitary.com) that includes base guides and other features, as well as articles from the print newspapers. The Southern Maryland Newspapers‘ website (SoMdNews.com) also includes editorial and classified advertising from the print newspapers. The Fairfax County Times website (FairFaxtimes.com) also includes editorials and classified advertising from the print newspapers. Each website also contains display advertising that is sold specifically for the site.

The Gazette Newspapers, Southern Maryland Newspapers and the Fairfax County Times together employ approximately 170 editors, reporters and photographers.

This division also operates a commercial printing business in suburban Maryland.

The Herald

The Company owns The Daily Herald Company, publisher of The Herald in Everett, WA, about 30 miles north of Seattle. The Herald is published mornings seven days a week and is primarily distributed by home delivery in Snohomish County and online at Heraldnet.com. The Daily Herald Company also provides commercial printing services and publishes The Enterprise, a weekly community newspaper home delivered in south Snohomish County. The Daily Herald Company also publishes La Raza del Noroeste, a weekly Spanish-language newspaper that is distributed free of charge in more

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than 780 retail locations in Snohomish, King, Skagit and northern Pierce counties, and the Snohomish County Business Journal, a monthly publication focused on Snohomish County business news .

The Herald’s average paid circulation as reported to ABC for the 12 months ending March 31, 2009, was 46,665 daily (Monday through Friday); 46,414 (Monday through Saturday) and 50,322 Sunday. The aggregate average weekly circulation of The Enterprise Newspapers during the 12-month period ending March 31, 2009, was 70,928 copies as reported by Verified Audit Circulation. The circulation of La Raza del Noroeste during the three-month period ended March 31, 2009, was 21,783 copies, as reported by Verified Audit Circulation. The monthly circulation of the Snohomish County Business Journal is approximately 14,100 copies.

The Herald, The Enterprise, La Raza and the Snohomish County Business Journal together employ approximately 80 editors, reporters and photographers.

Greater Washington Publishing

The Company’s Greater Washington Publishing, Inc. subsidiary publishes several free-circulation advertising periodicals that have little or no editorial content and are distributed in the greater Washington, DC, metropolitan area using sidewalk distribution boxes. Greater Washington Publishing’s periodicals of that kind are Apartment Showcase, which is published monthly and has an average circulation of about 46,000 copies; New Homes Guide, which is published six times a year and has an average circulation of about 51,000 copies; and Guide to Retirement Living Sourcebook, which is published nine times a year and has an average circulation of about 35,000 copies. Greater Washington Publishing, Inc. ceased publication of Washington Spaces Magazine in 2009, with the November/December Early Winter 2009 issue as its final issue.

El Tiempo Latino

El Tiempo Latino LLC publishes El Tiempo Latino, a weekly Spanish-language newspaper that is distributed free of charge in northern Virginia, suburban Maryland and Washington, DC, using sidewalk news boxes and retail locations that provide space for distribution. El Tiempo Latino provides a mix of local, national and international news together with sports and community-events coverage and has a current circulation of approximately 50,000 copies. Employees of the newspaper handle advertising sales as well as prepress production, and content is provided by a combination of wire service copy, contributions from freelance writers and photographers and stories produced by the newspaper’s own editorial staff.

Television Broadcasting

Post–Newsweek Stations, Inc. (“PNS”), a subsidiary of the Company, owns six television stations located in Houston, TX; Detroit, MI; Miami, FL; Orlando, FL; San Antonio, TX; and Jacksonville, FL. The following table sets forth certain information with respect to each of the Company’s television stations:

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Revenue from broadcasting operations is derived primarily from the sale of advertising time to local, regional and national advertisers. In 2009, advertising revenue accounted for 90% of the total for PNS’s operations. Advertising revenue is sensitive to a number of factors, some specific to a particular station or market and others more general in nature. Some examples include a station’s audience share and market ranking; seasonal fluctuations in demand for air time; annual or biannual events, such as sporting events and political elections; and broader economic trends. The recent economic crisis put downward pressure on advertising revenue as businesses cut their advertising budgets. Most notably, the automobile industry, historically a large buyer of television advertising, contracted dramatically in recent years and reduced overall advertising spending accordingly. PNS’s revenue in 2009 reflects the effects of this contraction.

Regulation of Broadcasting and Related Matters

PNS’s television broadcasting operations are subject to the jurisdiction of the FCC under the Communications Act. The FCC, among other things, assigns frequency bands for broadcast and other uses; manages broadcast licensing; regulates equipment used by stations; and adopts and implements regulations and policies that directly or indirectly affect the ownership, operations and profitability of broadcasting stations.

Each PNS television station holds an FCC license that is renewable upon application for an eight-year period.

Digital Television (“DTV”) and Spectrum Issues. During 2009, in conjunction with the nationwide digital television transition, each PNS station discontinued analog broadcasts and currently broadcasts only in digital format. The digital broadcast format used by television stations allows transmission of high-definition television (“HDTV”) programming, multiple channels of standard-definition television programming (“multicasting”), and subscription video and data services known as “ancillary and supplementary” services. PNS, along with other broadcasting companies, has been actively pursuing the use of digital spectrum to provide mobile video service to consumers, in partnership with consumer electronics manufacturers and other partners.

Television stations may receive interference from a variety of sources, including interference from other broadcast stations that is below a threshold established by the FCC. That interference could limit viewers’ ability to receive television stations’ signals. The amount of interference to stations may increase in the future because of the FCC’s decision to allow electronic devices known as “white space” devices to operate in the television frequency band on an unlicensed basis. That decision is on appeal.

As a part of an effort to develop a national broadband plan, the FCC and Congress have begun to consider reallocation of spectrum for use by wireless broadband providers. Although no specific proposals have been announced, any reallocation that involves television spectrum could materially affect PNS’s operations.

Carriage of Local Broadcast Signals. The Communications Act and the FCC rules allow a commercial television broadcast station, under certain circumstances, to insist on mandatory carriage of its signal on cable systems serving the station’s market area (“must carry”). For stations that elect must carry, only a single stream of video (that is, a single channel of programming), rather than a television broadcast station’s entire signal, is eligible for mandatory carriage by a cable system operator. Thus, a television station currently can obtain carriage of one or more digital multicast streams only through retransmission consent agreements.

Alternatively, stations may elect, at three-year intervals, to forego must-carry rights and allow their signals to be carried only pursuant to a “retransmission consent” agreement. Stations that elect retransmission consent may negotiate for compensation from cable systems in exchange for the right to carry their signals in the form of such things as mandatory advertising purchases by the system operator, station promotional announcements on the system and cash payments to the station. Each of PNS’s television stations is being carried on all of the major cable systems in each station’s respective local market pursuant to retransmission consent agreements.

Commercial television stations also may elect either mandatory carriage or retransmission consent with respect to the carriage of their signals on direct broadcast satellite (“DBS”) systems that choose to provide “local-into-local” service (i.e., to distribute the signals of local television stations to viewers in the local market area). In 2008, the FCC ruled that if a DBS operator carries the signal of any television station in a market in HDTV, it will be required to carry all other local stations in HDTV (rather than in a lower-resolution format). Recognizing the capacity and technological constraints faced by DBS operators, the FCC established a four-year phase-in period, starting in 2009, during which DBS systems must progressively transition their local-into-local markets into compliance with this “HD carry-one, carry-all” requirement.

As with cable, stations make DBS carriage elections at three-year intervals. The signal of each of the Company’s television stations is being carried by EchoStar and DirecTV (the two nationwide DBS operators in the United States, operating the Dish Network and DirecTV systems, respectively) on a local-into-local basis pursuant to retransmission consent agreements.

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On or prior to October 1, 2008, the Company elected retransmission consent status for its stations with respect to major cable operators and the two DBS operators. These elections apply to the three-year period from January 1, 2009 through December 31, 2011, and the Company has negotiated retransmission consent agreements with the major cable and DBS operators serving each of its stations’ markets.

Ownership Limits. The FCC’s rules limit the number and type of media outlets in which a single person or entity may have an attributable interest. Among other restrictions, the FCC’s local television multiple ownership rule generally permits one company to own two television stations in the same market only if there are at least eight independently owned full-power television stations in that market (including noncommercial stations and counting co-owned stations as one), and if at least one of the commonly-owned stations is not among the top-four-ranked television stations in that market. In addition, the FCC restricts so-called “cross-ownership” of newspapers and broadcast stations within a market. The Communications Act requires the FCC to review its ownership rules periodically and to repeal or modify any rule that it determines is no longer in the public interest.

In its 2008 ownership rules review order, the FCC liberalized its daily newspaper/broadcast cross-ownership rule to presumptively allow newspaper/broadcast combinations in the 20 largest markets, subject to several fairly rigorous economic hardship and public interest criteria. It also declined to modify its other ownership rules, including the local television multiple ownership rule. A number of media companies and public interest groups have challenged the FCC’s modification of the daily newspaper/broadcast cross-ownership rule and its retention of the other ownership rules. These challenges are pending judicial review. Several public interest groups also have asked the FCC to reconsider its 2008 ownership rules review order; this request is also pending.

By law, a single person or entity may have an attributable interest in an unlimited number of television stations nationwide, as long as the aggregate audience reach of such stations does not exceed 39% of nationwide television households, and as long as the interest complies with the FCC’s other ownership restrictions.

Programming. Five of PNS’s six stations are affiliated with one or more of the national television networks, which provide a substantial amount of programming to their television station affiliates. PNS’s Jacksonville station, WJXT, has operated as an independent station since 2002. In addition, each of the Company’s stations receives programming from syndicators and other third-party programming providers. PNS’s performance depends, in part, on the quality and availability of third-party programming, and any substantial decline in the quality or availability of this programming could materially affect PNS’s operations.

Public Interest Obligations. To satisfy FCC requirements, stations generally are expected to air a specified number of hours of programming intended to serve the educational and informational needs of children and to complete reports on a quarterly basis concerning the children’s programming that they broadcast. In addition, the FCC requires stations to limit the amount of advertising that appears during certain children’s programs. This past year, the FCC began to consider changes to its children’s programming rules in light of technological developments and changes in the video marketplace, and Congress last year held a hearing on the same subject. No specific changes to the children’s programming requirements have yet been adopted.

The FCC has considered imposing public interest programming requirements like those that apply to children’s programming to broadcast television programming more broadly. In November 2007, the FCC adopted new “enhanced disclosure” obligations for broadcasters that would require, among other things, reporting on public interest programming and online posting for stations’ public files. However, these obligations are subject to administrative and judicial review and therefore have not gone into effect.

In a separate “localism” proceeding, the FCC received comments on whether to adopt additional proposals, including license renewal guidelines that would establish minimum amounts of locally-oriented programming, require broadcasters to establish permanent community advisory boards and require stations to locate their main studios in their communities of license. The localism proceeding is pending at the FCC.

It is not possible to predict what, if any, effect adoption of the proposed new obligations would have on PNS’s operations, but a substantial increase in programming obligations could adversely affect PNS.

Political Advertising. The FCC regulates the sale of advertising by PNS’s stations to candidates for public office and imposes other restrictions on the broadcast of political announcements more generally. The application of these regulations may limit the advertising revenues of PNS’s television stations during the periods preceding elections.

Broadcast Indecency. The FCC’s policies prohibit the broadcast of indecent and profane material during certain hours of the day, and the FCC regularly imposes monetary forfeitures when it determines that a television station violated that policy. Court challenges concerning the validity of the FCC’s indecency policy are ongoing, and many broadcasters have argued, among other things, that the FCC has failed to justify its indecency decisions adequately, that the FCC’s

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policy is too subjective to guide broadcasters’ programming decisions and that its enforcement approach otherwise violates the First Amendment.

The U.S. Supreme Court issued a decision during 2009 in which it reversed a decision by the U.S. Court of Appeals for the Second Circuit. The Second Circuit decision had held that the FCC violated its procedural obligations when it found that certain television stations’ broadcast of so-called “fleeting expletives” was indecent. Neither court ruled on whether the FCC’s indecency policy was constitutional, however, and that question now is pending before the Second Circuit.

It is not generally the FCC’s policy to notify licensees when it receives indecency complaints regarding their broadcasts before it issues a formal Letter of Inquiry or takes other enforcement action. As a result, the FCC may have received complaints of which PNS is not aware alleging that one or more of its stations broadcast indecent material. PNS was notified on January 25, 2008, that the FCC had proposed a monetary forfeiture against station KSAT, along with 51 other television stations, in connection with the station’s broadcast of an allegedly indecent scene in an episode of the drama “NYPD Blue.” KSAT, along with the other affected ABC affiliates, has appealed the FCC’s decision. The case is pending before the U.S. Court of Appeals for the Second Circuit.

Sponsorship Identification. During 2006 and 2007, a media watchdog group filed a series of complaints at the FCC alleging that various broadcast stations and cable channels had violated the FCC’s sponsorship identification rules by broadcasting material provided to them by a third party without disclosing the source of the material. The FCC issued Letters of Inquiry to three PNS stations that had been named in the complaints. Specifically, WJXT was named in the first complaint, along with 76 other broadcast stations, and WKMG and WPLG were named in the second complaint, along with 44 other stations. The FCC has not proposed any enforcement action against these stations.

In September 2007, however, the FCC released two decisions involving news telecasts by a cable operator identified in the same set of complaints. In these decisions, the FCC purported to expand the scope of its sponsorship identification rules in the context of news broadcasts. These decisions do not directly affect PNS, but they are relevant because the FCC typically uses similar standards to evaluate alleged sponsorship identification violations by broadcast stations and cable operators. The FCC’s investigations concerning the three PNS stations are pending. It is not possible to predict what further actions, if any, the FCC may take in response to the complaints.

The FCC is conducting proceedings concerning various matters in addition to those described in this section. The outcome of these FCC proceedings and other matters described in this section could adversely affect the profitability of PNS’s television broadcasting operations.

Magazine Publishing

Newsweek, Inc.

Newsweek, Inc. (“Newsweek”) publishes Newsweek, a weekly global forward-looking news and ideas magazine and its digital platform, Newsweek.com. Newsweek is published domestically and internationally. The domestic edition of Newsweek includes more than 100 different geographic or demographic editions that carry substantially identical news and feature material, but enable advertisers to direct messages to specific market areas or demographic groups. Newsweek is sold through subscription mail order sales derived from a number of sources, principally direct-mail promotion, as well as online and on newsstands. Newsweek‘s published advertising rates are based on its average weekly circulation rate base and are competitive with those of the other publications in its category. Newsweek reaffirmed its plans to reduce its domestic rate base to 1,500,000 copies in the first quarter of 2010, reflecting a shift in focus to a different demographic that is closer to its core base of loyal subscribers. This demographic consists of a group of subscribers who are highly educated, who have demonstrated a high level of interest in news and ideas and who have higher incomes. This will change Newsweek’s competitive set, making it the largest premium news and ideas magazine, aligned more closely with The Economist, New York magazine, New Yorker, Wired, BusinessWeek and The Atlantic. In 2009, Newsweek, Inc. increased the subscription price of Newsweek and its national advertising rates to reflect a more valuable subscriber base.

Internationally, Newsweek is published in English in a Europe, Middle East and Africa edition; an Asia edition covering Japan, Korea and south Asia; and a Latin America edition. Editorial copy solely of domestic interest is eliminated in the international editions and is replaced by other international, business or national coverage primarily of interest abroad. Newsweek estimates that the combined average weekly paid circulation for these English-language international editions of Newsweek in 2009 was approximately 460,000 copies.

Newsweek has agreements with publishers in a number of foreign countries to produce and distribute local-language editions of Newsweek abroad. Currently, Newsweek is published in Japanese, Korean, Spanish, Arabic, Polish, Russian and Turkish. In addition to containing selected stories translated from Newsweek‘s various U.S. and foreign editions, each

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of these magazines includes editorial content created by a staff of local reporters and editors. Newsweek estimates that the combined average weekly paid circulation of the various foreign-language international editions of Newsweek was approximately 561,000 copies in 2009.

The online version of Newsweek includes material from Newsweek‘s print edition, as well as original content. Newsweek assumed responsibility for producing Newsweek.com from WashingtonpostNewsweek Interactive Company, LLC (“WPNI”) effective January 1, 2009. Newsweek.com maintains a content-sharing, co-branding and traffic relationship with MSNBC.com that has evolved from a contractual relationship that was established in 2000.

Arthur Frommer’s Budget Travel magazine, another Newsweek publication, was published ten times during 2009 and had an average paid circulation of more than 675,000 copies. Newsweek sold its Budget Travel operations, including all assets and liabilities formerly reported as Newsweek Budget Travel, effective December 31, 2009.

Other Activities

Avenue100 Media Solutions Inc.

Avenue100 Media Solutions Inc. (“Avenue100”), formerly known as CourseAdvisor, Inc. is a digital marketing company headquartered in Woburn, MA that sources leads for academic institutions and recruiting organizations. Avenue100 operates as an independent subsidiary of the Company.

Bowater Mersey Paper Company

The Company owns 49% of the common stock of Bowater Mersey Paper Company Limited (“Bowater Mersey”), the majority interest in which is held by a subsidiary of AbitibiBowater, Inc. Bowater Mersey is engaged in the manufacture and sale of newsprint and lumber, as well as the production of electricity in Nova Scotia, Canada.

Production and Raw Materials

The Washington Post and El Tiempo Latino are produced at the printing plant of WP Company in Fairfax County, VA. The Herald, The Enterprise Newspapers, the SCBJ and La Raza del Noroeste are produced at The Daily Herald Company’s plant in Everett, WA, while The Gazette Newspapers, Southern Maryland Newspapers, Express (since March 30, 2009) and the Fairfax County Times are printed at the commercial printing facilities owned by Post–Newsweek Media, Inc. Ten military papers, three free weeklies and one paid weekly from Southern Maryland are printed at Chesapeake Publishing in Easton, MD. Greater Washington Publishing’s periodicals are produced by independent contract printers. The Post closed its printing plant located in College Park, MD, in July of 2009.

In 2009, The Washington Post, Express and El Tiempo Latino consumed about 105,000 tons* of newsprint in WP Company’s printing plants in Prince George’s County, MD and Fairfax County, VA. Printing of Express was transferred to Post–Newsweek Media, Inc. in March 2009 and consumed an additional 3,778 tons. Such newsprint was purchased from a number of suppliers, including AbitibiBowater, Inc., which supplied approximately 33% of the 2009 newsprint requirements for these newspapers.

The price of newsprint has historically been volatile. The RISI East Coast Newsprint Price Index, which provides monthly single-price estimates based on marketplace surveys of both buyers and sellers, for 30-lb. newsprint (the kind of newsprint used by The Washington Post and most of the newspapers published by Post–Newsweek Media, Inc.), began 2009 at $694 per short ton, declined to $395 by August and rebounded to $481 by year-end. From December 2009 through January 2010, The Washington Post transitioned from 30-lb. newsprint to 27.7-lb newsprint. (Because of quantity discounts and other factors, the RISI index prices do not necessarily correspond with the prices actually paid for newsprint by the Company’s subsidiaries.) The Company believes that adequate supplies of newsprint are available to The Washington Post and the other newspapers published by the Company’s subsidiaries through contracts with various suppliers. More than 90% of the newsprint consumed by WP Company’s printing plant includes recycled content. The Company owns 80% of the stock of Capitol Fiber Inc., which handles and sells to recycling industries old newspapers, paper and other recyclable materials collected in Washington, DC, Maryland and northern Virginia.

Newsweek‘s domestic edition is produced by two independent contract printers at four separate plants in the United States; advertising inserts and photo-offset films for the domestic edition are also produced by independent contractors. The international editions of Newsweek are printed in England, Singapore, the Netherlands, South Africa and Hong Kong. Since 1997, Newsweek and a subsidiary of Time Warner have used a jointly owned company based in England to provide and procure production and distribution services for the Europe, Middle East and Africa edition of Newsweek and the Europe edition of Time. In 2002, this jointly owned company began providing certain production and distribution services for the Asia editions of these magazines.

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The domestic edition of Newsweek consumed about 17,000 tons of paper in 2009, the bulk of which was purchased from four major suppliers. The current cost of body paper (the principal paper component of the magazine) is approximately $1,000 per ton.

In 2009, the operations of The Daily Herald Company and Post–Newsweek Media, Inc. consumed approximately 4,648 and 8,740 tons* of newsprint, respectively, which were obtained in each case from various suppliers. Approximately 40% of the newsprint used by The Daily Herald Company and 68% of the newsprint used by Post–Newsweek Media, Inc. includes recycled content.

More than 90% of the aggregate domestic circulation of Newsweek is delivered by periodical (formerly second-class) mail, and most subscriptions for such publications are solicited by either first-class or standard (formerly third-class) mail. Thus, substantial increases in postal rates for these classes of mail could have a significant negative impact on the operating income of these business units. Postal rates have increased in each of the past four years. Future postal rate increases generally will be limited to increases in the Consumer Price Index. Effective May 2009, there were rate increases of 4.8% for first-class, 3.9% for standard and 4.0% for periodical mail, which increased Newsweek’s 2009 postal costs (January through April) by about $0.3 million.

Competition

Kaplan’s businesses operate in fragmented and competitive markets. Kaplan Higher Education competes with both facilities-based and other distance-learning providers of similar educational services, including not-for-profit colleges and universities and for-profit businesses. Kaplan Test Preparation division’s test preparation and tutoring business competes with a variety of regional and national test preparation businesses, with individual tutors and with in-school preparation for standardized tests. Kaplan Test Preparation division’s professional and licensure business competes in each of its professional lines with other companies that provide alternative or similar professional training, test preparation and consulting services. Overseas, each of Kaplan’s businesses competes with other for-profit companies and, in certain instances, with governmentally supported schools and institutions that provide similar training and educational programs.

Cable television systems operate in a highly competitive environment. In addition to competing with over-the-air reception, cable television systems face competition from various other forms of video program delivery systems, including DBS services, telephone companies and the Internet. Certain of the Company’s cable television systems have also been partially or substantially overbuilt, using conventional cable system technology by various small to mid-sized independent telephone companies, which typically offer cable modem and telephone service, as well as basic cable service. Even without constructing their own cable plant, local telephone companies compete with cable television systems in the delivery of high-speed Internet access by providing DSL service. In addition, some telephone companies have entered into strategic partnerships with DBS operators that permit the telephone company to package the video programming services of the DBS operator with the telephone company’s own DSL service, thereby competing with the video programming and cable modem services being offered by existing cable television systems. Satellite-delivered broadband and high-powered WiMAX services will increasingly provide competition to Cable ONE. Finally, video programming is becoming increasingly available on the Internet, where viewers can watch programming for free, as well as access pay-per-view offerings. Cable ONE distinguishes itself from its competition by providing excellent local customer service and consistently attaining very high levels of customer satisfaction.

The Washington Post competes in the Washington, DC, metropolitan area with The Washington Times, a newspaper that has published weekday editions since 1982. The Post also encounters competition for advertising revenue and audience in varying degrees from other newspapers and specialized publications distributed in the Post’s circulation area (including newspapers published in suburban and outlying areas and nationally circulated newspapers), and from websites, television, radio, magazines and other advertising media, including direct-mail advertising. Express similarly competes with various other advertising media in its service area, including both daily and weekly free-distribution newspapers.

Washingtonpost.com, Newsweek.com and the websites produced by The Slate Group face competition from many Internet sites that provide news and information, sites that cover niche content, sites that aggregate content and sites where users generate content. The Company’s websites compete for advertising revenue with these types of websites, as well as with a wide variety of other print publications and online services, plus other forms of advertising. Display advertising is a key source of revenue for Company websites. With advertising inventory continuing to increase and advertising networks becoming more prevalent, the display advertising marketplace is experiencing some pricing

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pressures, and our websites are not immune to this trend. Washingtonpost.com also relies on classified advertising as a key revenue source. Classified advertising has become a crowded field online, with a number of national and local competitors, often with a vertical focus. For example, Carmax.com and Autobytel.com aggregate national car listings; Redfin.com and move.com aggregate national real estate listings; Monster.com, Hotjobs! (which was recently acquired by Monster) and CareerBuilder.com aggregate employment listings. All of these vertical-niche sites can be searched locally. Finally, several services challenge established business models. Some nationally managed sites, such as Yelp and OpenTable, also offer local information and services. Major search engines have also entered local markets. For example, Google and Yahoo! have launched local services that offer directory information for local markets with enhanced functionality, such as mapping and links to reviews and other information. In addition, other forms of digital distribution, such as smartphones and e-readers, are also competitive with Company news sites.

The Herald circulates principally in Snohomish County, WA; its chief competitor is the Seattle Times, a daily newspaper published in Seattle whose Snohomish County circulation is principally in the southwestern portion of the county. The Enterprise Newspapers is distributed in south Snohomish County, where the principal competitors are the Seattle Times and The Journal Newspapers, a group of monthly controlled-circulation newspapers. Numerous other newspapers and shoppers are distributed in The Herald‘s and The Enterprise’s principal circulation areas. La Raza del Noroeste‘s principal competitors in its circulation territory are the Spanish-language newspapers El Mundo and Tu decides, both weekly publications delivering in eastern and western Washington territories, and with significantly lower circulation than La Raza in the Puget Sound region. The chief competitor for the Snohomish County Business Journal is the Puget Sound Business Journal.

The circulation of The Gazette Newspapers is limited to Montgomery, Prince George’s and Frederick counties and parts of Carroll County, MD. The Gazette Newspapers compete with many other advertising vehicles available in their service areas, including The Potomac and Bethesda/Chevy Chase Almanacs, The Western Montgomery Bulletin, The Bowie Blade-News, The West County News and The Laurel Leader, weekly controlled-circulation community newspapers; The Montgomery Sentinel, a weekly paid-circulation community newspaper; The Prince George’s Sentinel, a weekly controlled-circulation community newspaper, which also has a weekly paid-circulation edition; and The Frederick News– Post and Carroll County Times, daily paid-circulation community newspapers. The Southern Maryland Newspapers circulate in southern Prince George’s County and in Charles, Calvert and St. Mary’s counties, MD, where they also compete with many other advertising vehicles available in their service areas, including the Calvert County Independent and St. Mary’s Today, weekly paid-circulation community newspapers; the County Times, a free weekly; and The Pennysaver, a shopper. The Fairfax County Times circulates in Fairfax County, VA, where it also competes with many other advertising vehicles available in the service area, including Herndon–Reston Observer, Connections, Sun Gazette, Chronicles and Examiner, which are all community newspapers. It also competes with the following shoppers: Merchandiser, Buyer’s Guide and Val Pak.

The Examiner, a free newspaper containing national and international as well as local news, is being published six days a week in northern Virginia, suburban Maryland and Washington, DC. The Examiner’s home edition is delivered to targeted ZIP codes on Thursdays and Sundays. A street edition is distributed Monday through Friday within the Washington, DC, metropolitan area. The Examiner competes in varying degrees with The Gazette Newspapers, Express and The Washington Post.

The advertising periodicals published by Greater Washington Publishing compete with many other forms of advertising available in their distribution area, as well as with various other free-circulation advertising periodicals.

El Tiempo Latino competes with other Spanish-language advertising media available in the Washington, DC, area, including several other Spanish-language newspapers.

PNS competes for audiences and advertising revenues with television and radio stations, cable television systems and video services offered by telephone companies serving the same or nearby areas; with direct broadcast satellite services; and, to a lesser degree, with other media, such as newspapers and magazines. Cable television systems operate in substantially all of the areas served by the Company’s television stations, where they compete for television viewers by importing out-of-market television signals; by distributing pay-cable, advertiser-supported and other programming that is originated for cable systems; and by offering movies and other programming on a pay-per-view basis. In addition, DBS services provide nationwide distribution of television programming, including pay-per-view programming and programming packages unique to DBS, using digital transmission technologies. The Company’s television stations may also become subject to increased competition from low-power television stations, wireless cable services and satellite master antenna systems, which can carry pay-cable and similar program material. In addition, major TV networks offer some of their programming on their Internet sites free of charge.

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Avenue100 competes with businesses that provide lead generation products or services into the educational services markets and ones that develop web properties and interactive marketing programs to optimize yield in the recruiting field. The largest lead generation competitors include Quinstreet, EducationDynamics and CollegeBound.

The magazine industry is highly competitive, both within itself and with other advertising media, including Internet-based media, that compete for audience and advertising revenue.

Executive Officers

The executive officers of the Company, each of whom is elected annually by the Board of Directors, are as follows:

Donald E. Graham, age 64, has been Chairman of the Board of the Company since September 1993 and Chief Executive Officer of the Company since May 1991. Mr. Graham served as President of the Company from May 1991 until September 1993 and prior to that had been a Vice President of the Company for more than five years. Mr. Graham also served as Publisher of The Washington Post from 1979 until September 2000 and as Chairman of the Post from September 2000 to February 2008.

Veronica Dillon, age 60, became Senior Vice President in June 2008 and the Vice President, General Counsel and Secretary of the Company in January 2007. Ms. Dillon began her career with the Company in February 1991 as corporate counsel at Kaplan, Inc. She was subsequently named General Counsel at Kaplan in June 1995 and then served as Kaplan’s Chief Administrative Officer beginning in December 2003.

Boisfeuillet Jones, Jr., age 63, became Vice Chairman of the Company and Chairman of The Washington Post in February 2008. Mr. Jones joined The Washington Post in 1980 as Vice President and counsel. In 1995, he became President and General Manager and was named Associate Publisher in January 2000. In September 2000, he succeeded Donald Graham as Publisher and Chief Executive Officer of The Washington Post.

Hal S. Jones, age 57, became Senior Vice President–Finance of the Company in November 2008 and Chief Financial Officer in January 2009. He had most recently been Chief Executive Officer of Kaplan Professional, responsible for Kaplan’s professional businesses in financial services, real estate, technology and engineering in the United States and the United Kingdom. Mr. Jones has spent 20 years at The Washington Post Company and Kaplan, serving in a variety of senior management positions with a focus on finance, auditing and accounting.

Ann L. McDaniel, age 54, became Senior Vice President–Human Resources of the Company in June 2008 and was formerly Vice President–Human Resources since September 2001. She also serves as Managing Director of Newsweek, Inc., a position she assumed in January 2008. Ms. McDaniel had previously served as Senior Director of Human Resources of the Company since January 2001 and before that held various editorial positions at Newsweek.

Gerald M. Rosberg, age 63, became Senior Vice President–Planning and Development of the Company in June 2008 and was formerly Vice President–Planning and Development since February 1999. He had previously served as Vice President–Affiliates at The Washington Post, a position he assumed in November 1997. Mr. Rosberg joined the Company in January 1996 as the Post‘s Director of Affiliate Relations.

Wallace R. Cooney, age 47, became Vice President–Finance and Chief Accounting Officer of the Company in June 2008. Mr. Cooney joined the Company in 2001 as Controller and prior to that had been with Gannett Co., Inc. and Price Waterhouse LLP.

Employees

The Company and its subsidiaries employ approximately 21,500 persons on a full-time basis.

Worldwide, Kaplan employs approximately 15,000 persons on a full-time basis. Kaplan also employs substantial numbers of part-time employees who serve in instructional and administrative capacities. During peak seasonal periods, Kaplan’s part-time workforce exceeds 19,000 employees. In Canada, 39 Kaplan employees are represented by a union.

Cable ONE has approximately 2,341 full-time employees, none of whom is represented by a union.

WP Company has approximately 2,058 full-time employees. About 1,137 of that unit’s full-time employees and about 308 part-time employees are represented by one or another of five unions. Collective bargaining agreements are currently in effect with locals of the following unions covering the full-time and part-time employees and expiring on the dates indicated: 945 editorial, newsroom and commercial department employees represented by the Communications Workers of America (June 7, 2011); 29 machinists represented by the International Association of Machinists (January 10, 2011); 16 photoengravers-platemakers represented by the Graphic Communications Conference of the

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International Brotherhood of Teamsters (February 6, 2012); 32 paper handlers and general workers represented by the Graphic Communications Conference of the International Brotherhood of Teamsters (November 16, 2011); and 17 electricians represented by the International Brotherhood of Electrical Workers (March 12, 2012). The agreement covering 383 mailroom workers represented by the Communications Workers of America expired on May 18, 2003; the parties reached a Comprehensive Tentative Agreement that was subject to ratification on December 16, 2009. On January 10, 2010, the unit failed to ratify the Comprehensive Tentative Agreement. The agreement covering 23 engineers, carpenters and painters represented by the International Union of Operating Engineers expired on April 12, 2008; negotiations have yet to produce a successor agreement. In April and May 2009, WP Company announced that Voluntary Retirement Incentive Programs would be offered to some employees of The Washington Post newspaper. The programs resulted in 221 employees retiring from positions across the newspaper.

Of the approximately 228 full-time and 85 part-time employees at The Daily Herald Company, about 54 full-time and 24 part-time employees are represented by one or another of three unions. The newspaper’s collective bargaining agreement with the Graphic Communications Conference of the International Brotherhood of Teamsters, which represents press operators, expires on March 15, 2011; its agreement with The Newspaper Guild—Communications Workers of America, which represents printers and mailers, expires on October 31, 2010; and its agreement with the International Brotherhood of Teamsters, which represents bundle haulers, expires on September 22, 2010.

The Company’s broadcasting operations have approximately 875 full-time employees, of whom about 180 are union-represented. Of the eight collective bargaining agreements covering union-represented employees, four have expired and are being renegotiated. Two collective bargaining agreements will expire in 2010.

Newsweek, Inc. has approximately 427 full-time employees as of December 31, 2009, including 74 editorial employees represented by the Communications Workers of America under a collective bargaining agreement that expires on January 1, 2013.

Post–Newsweek Media, Inc. has approximately 405 full-time and 183 part-time employees. Robinson Terminal Warehouse Corporation (the Company’s newsprint warehousing and distribution subsidiary), Greater Washington Publishing, Inc., Express Publications Company, LLC and El Tiempo Latino LLC each employs fewer than 100  persons. None of these units’ employees is represented by a union.

Forward-Looking Statements

All public statements made by the Company and its representatives that are not statements of historical fact, including certain statements in this Annual Report on Form 10-K and elsewhere in the Company’s 2009 Annual Report to Stockholders, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include comments about the Company’s business strategies and objectives, the prospects for growth in the Company’s various business operations and the Company’s future financial performance. As with any projection or forecast, forward-looking statements are subject to various risks and uncertainties, including the risks and uncertainties described in Item 1A of this Annual Report on Form 10-K, that could cause actual results or events to differ materially from those anticipated in such statements. Accordingly, undue reliance should not be placed on any forward-looking statement made by or on behalf of the Company. The Company assumes no obligation to update any forward- looking statement after the date on which such statement is made, even if new information subsequently becomes available.

Available Information

The Company’s Internet address is washpostco.com. The Company makes available free of charge through its website its Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such documents are electronically filed with the Securities and Exchange Commission. In addition, the Company’s Certificate of Incorporation, its Corporate Governance Guidelines, the Charters of the Audit and Compensation Committees of the Company’s Board of Directors and the codes of conduct adopted by the Company and referred to in Item 10 of this Annual Report on Form 10-K are each available on the Company’s website; printed copies of such documents may be obtained by any stockholder upon written request to the Secretary of the Company at 1150 15th Street, NW, Washington,  DC 20071.

Item 1A. Risk Factors.

The Company faces a number of significant risks and uncertainties in connection with its operations. The most significant of these are described below. These risks and uncertainties may not be the only ones facing the Company. Additional

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risks and uncertainties not presently known, or currently deemed immaterial, may adversely affect the Company in the future. In addition to the other information included in this Annual Report on Form 10-K, investors should carefully consider the following risk factors. If any of the events or developments described below occurs, it could have a material adverse effect on the Company’s business, financial condition or results of operations.

To maintain Title IV eligibility, each group of schools combined into an OPEID unit must comply with the extensive statutory and regulatory requirements of the Federal Higher Education Act relating to its financial aid management, educational programs, financial strength, facilities, recruiting practices and various other matters. Failure to comply with these requirements could result in the loss or limitation on the eligibility of one or more of the schools in Kaplan Higher Education to participate in Title IV programs, a requirement to pay fines or to repay Title IV program funds, a denial or refusal by the Department of Education to consider a school’s application for renewal of its certification to participate in the Title IV programs, civil or criminal penalties or other sanctions. No assurance can be given that the Kaplan schools currently participating in Title IV programs will maintain their Title IV eligibility, accreditation and state authorization in the future or that the Department of Education might not successfully assert that one or more of such schools have previously failed to comply with Title IV requirements. The loss of Title IV eligibility by either (a) the single OPEID unit that includes Kaplan University or (b) a combination of two or more other OPEID units would have a materially adverse effect on Kaplan’s operating results.

The Kaplan Higher Education division schools are subject to program reviews, audits, investigations and other compliance reviews conducted by various regulatory agencies and auditors, including, among others, the Department of Education, the Department of Education’s Office of Inspector General, accrediting bodies and state and various other agencies, as well as annual audits by an independent certified public accountant of each OPEID unit’s compliance with Title IV statutory and regulatory requirements. These compliance reviews can result in findings of noncompliance with statutory and regulatory requirements that can, in turn, result in proceedings to impose fines, liabilities, civil or criminal penalties or other sanctions against the school, including loss or limitation of its eligibility to participate in Title IV programs. Certain Kaplan Higher Education division schools are the subject of ongoing compliance reviews and lawsuits related to their compliance with statutory and regulatory requirements and may be subject to future compliance reviews. The Kaplan Higher Education division schools also may be subject to complaints and lawsuits by present or former students or employees or other persons related to school compliance with statutory and regulatory requirements, that, if successful, could result in requirements to pay monetary liabilities or fines or result in other sanctions.

During the Company’s 2009 fiscal year, funds provided under the student financial aid programs created under Title IV accounted for approximately $1,283 million of the net revenues of the schools in Kaplan Higher Education. Any legislative, regulatory or other development that has the effect of materially reducing the amount of Title IV financial assistance or other funds available to the students of those schools would have a significant adverse effect on Kaplan’s operating results. In addition, any development that has the effect of making the terms on which Title IV financial assistance or other funds are available to students of those schools materially less attractive could have an adverse effect on Kaplan’s operating results.

On September 9, 2009, the Department of Education established negotiated rulemaking committees to help prepare proposed regulations that would amend or add to existing Title IV regulations. In late January 2010, the negotiated rulemaking committee failed to reach consensus on proposed regulations. As a result of this lack of consensus, the Department of Education is not bound by the proposed regulations presented to the committee and may therefore publish proposed regulations for public comment that may differ from those presented to the committee. The proposed regulations are expected to address areas including, but not limited to, revised standards governing the payment of incentive compensation to admissions and financial aid advisors; a new definition of “gainful employment” that may take into account student tuition and debt levels or other factors to determine whether educational programs prepare students for “gainful employment” in a recognized occupation and thereby qualify as Title IV eligible educational programs, and other changes to Title IV eligibility requirements for institutions, programs and students. The changes ultimately proposed to the Title IV regulations could adversely affect, among other things, Kaplan’s ability to retain admissions and financial aid

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advisors and the ability of Kaplan Higher Education division’s programs and students to qualify for Title IV financial assistance, could require the schools to change their tuition or educational programs in order to comply with new “gainful employment requirements,” and could otherwise have a material adverse effect on Kaplan’s operating results. The Department of Education has stated its intent to publish any new final regulations developed through this process by November 1, 2010, which is the deadline for the regulations to take effect by July 1, 2011.

A Kaplan Higher Education OPEID unit would lose its eligibility to participate in certain Title IV programs if the default rate of its students on the repayment of Title IV loans exceeds specified default rates, referred to as “cohort default rates.” The Department of Education calculates a cohort default rate for each of Kaplan Higher Education’s OPEID reporting units. Any OPEID unit that has a cohort default rate in excess of 40% for any single year may lose its eligibility to participate in the Federal Family Education Loan (“FFEL”) and Direct Loan programs for at least two fiscal years. Any OPEID unit that has a cohort default rate equal to or in excess of 25% for three consecutive years may lose its Title IV eligibility to participate in FFEL, Direct Loan and Federal Pell Grant programs for at least two fiscal years. The loss of Title IV eligibility by either (a) the single OPEID unit that includes Kaplan University or (b) a combination of two or more other OPEID units would have a materially adverse effect on Kaplan’s operating results.

A Kaplan Higher Education OPEID unit would lose its eligibility to participate in the Title IV programs for a period of at least two fiscal years if it derives more than 90% of its receipts from the Title IV programs for two consecutive fiscal years, commencing with the unit’s first fiscal year that ends after August 14, 2008. Any OPEID reporting unit with receipts from the Title IV programs exceeding 90% for a single fiscal year ending after August 14, 2008 would be placed on provisional certification and may be subject to other enforcement measures. The loss of Title IV eligibility by either (a) the single OPEID unit that includes Kaplan University or (b) a combination of two or more other OPEID units would have a materially adverse effect on Kaplan’s operating results.

Kaplan Higher Education’s online university and all of its ground campuses are institutionally accredited by one or another of a number of national and regional accreditors recognized by the U.S. Department of Education. Accreditation by an accrediting agency recognized by the U.S. Department of Education is required for an institution to become and remain eligible to participate in Title IV programs. The loss of accreditation would, among other things, render the affected Kaplan schools and programs ineligible to participate in Title IV programs and would have a material adverse effect on its business.

Kaplan Higher Education ground campuses and online university are authorized to operate and to grant degrees, certificates or diplomas by the applicable state agency of each state where such authorization is required. Such state authorization is required for each campus located in the state or, in the case of states that require it, for Kaplan University online to offer postsecondary education. Each school must be licensed or otherwise authorized to offer its educational programs by the appropriate governmental body in the state in which the school is physically located in order to be eligible to participate in Title IV programs. The loss of such authorization would preclude the campuses or online university from offering postsecondary education and render students ineligible to participate in Title IV programs. Loss of authorization at those state campus locations, or, in states that require it, for Kaplan University online, could have a material adverse effect on Kaplan Higher Education’s business.

Department of Education regulations require schools participating in Title IV programs to calculate correctly and return on a timely basis unearned Title IV funds disbursed to students who withdraw from a program of study prior to completion. These funds must be returned in a timely manner, generally within 45 days of the date the school determines that the student has withdrawn. Under Department of Education regulations, failure to make timely returns of Title IV program funds for 5% or more of students sampled in a school’s annual compliance audit in either of its two most recently completed fiscal years could result in a requirement that the school to post a letter of credit in an amount equal to 25% of its prior year returns of Title IV program funds. If unearned funds are not properly calculated and returned in a timely manner, an institution is also subject to monetary liabilities, fines, or other sanctions. Six of the Kaplan Higher Education reporting units currently have letters of credit outstanding to the Department of Education as a result of this requirement, with a collective total face value of approximately $3.3

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million. The requirement to post additional letters of credit or the imposition of other sanctions by the Department of Education would increase Kaplan’s regulatory compliance costs and could have a materially adverse effect on its results of operations.

An institution participating in the Title IV programs must comply with certain measures of financial responsibility under the Federal Higher Education Act and under Department of Education regulations. Among other things, the applicable regulations require an institution to achieve a composite score of at least 1.5 as calculated under Department of Education regulations based on data in annual financial statements submitted to the Department of Education. If an institution fails to achieve a composite score of 1.5, or fails to comply with other financial responsibility standards, the Department of Education may place conditions on the institution’s participation in the Title IV programs and may require the institution to submit to the Department of Education a letter of credit in an amount of at least 10% to 50% of the institution’s annual Title IV participation for its most recent fiscal year. The Department of Education has measured the compliance of Kaplan’s Higher Education division’s schools based on the composite score of the division. If one or more of the institutions in Kaplan’s Higher Education division fails to meet the composite score standard, or any of the other financial responsibility standards, those institutions may be required to post a letter of credit in favor of the Department of Education and possibly may be subject to other sanctions, including limitation or termination of its participation in Title IV programs. A requirement to post a letter of credit or the imposition of any one or more other sanctions by the Department of Education could have a material adverse effect on Kaplan’s results of operations.

Department of Education regulations specify extensive criteria an institution must satisfy to establish that it has the required “administrative capability” to participate in Title IV programs. These criteria include, but are not limited to, requirements relating to the institution’s compliance with all applicable Title IV requirements, the institution’s administration of Title IV programs, the institution’s compliance with certain reporting, disclosure, and record keeping obligations, and maintaining cohort default rates below prescribed thresholds. Failure to comply with these criteria could result in the loss or limitation of the eligibility of one or more of the schools in Kaplan’s Higher Education division to participate in the Title IV programs, a requirement to pay fines or to repay Title IV program funds, a denial or refusal by the Department of Education to consider a school’s application for renewal of its certification to participate in the Title IV programs, civil or criminal penalties, or other sanctions. Any one or more of these actions by the Department of Education could have a material adverse effect on Kaplan’s results of operations.

A substantial portion of Kaplan’s operating income is generated by Kaplan Text Preparation. The source of this income is fees charged for courses that prepare students for a broad range of admissions examinations that are required for admission to colleges and graduate schools. Historically, colleges and graduate schools have required standardized tests as part of the admissions process. There has been some movement away from this historical reliance on standardized admissions tests among a small number of colleges that have adopted “test-optional” admissions policies. Any significant reduction in the use of standardized tests in the college or graduate school admissions process could have an adverse effect on Kaplan’s operating results.

A substantial portion of Kaplan Test Preparation’s and Kaplan International’s revenue comes from preparing individuals for licensing or technical proficiency examinations in various fields. Any significant relaxation or elimination of licensing or technical proficiency requirements in those fields served by Kaplan Test Preparation’s and Kaplan International’s businesses could negatively impact Kaplan’s operating results.

The Company’s Kaplan subsidiary has historically been an active acquirer of businesses that provide educational services. Consistent with this historical trend, during 2009 Kaplan completed two acquisitions. Acquisitions involve various inherent risks and uncertainties, including difficulties in efficiently integrating the service offerings, accounting and other administrative systems of an acquired business; the challenges of assimilating and retaining key personnel; the consequences of diverting the attention of senior management from existing operations; the possibility that an acquired

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business does not meet or exceed the financial projections that supported the purchase price; and the possible failure of the due diligence process to identify significant business risks or undisclosed liabilities associated with the acquired business. A failure to effectively manage growth and integrate acquired businesses could have a material adverse effect on Kaplan’s operating results.

Kaplan has operations and investments in a growing number of foreign countries, including Canada, Mexico, the U.K., Ireland, France, Israel, Australia, New Zealand, Singapore, India and China. Operating in foreign countries presents a number of inherent risks, including the difficulties of complying with unfamiliar laws and regulations, effectively managing and staffing foreign operations, successfully navigating local customs and practices, preparing for potential political and economic instability and adapting to currency exchange rate fluctuations. The failure to effectively manage these risks could have a material adverse effect on Kaplan’s operating results.

A substantial portion of Kaplan International’s revenue comes from programs that prepare international students to study and travel to English-speaking countries, principally the U.S., the U.K., Australia, and Singapore. Any significant changes to the regulatory environment, or a natural disaster or pandemic, in either the students’ counties of origin or the countries to which they desire to travel or study, could negatively affect Kaplan’s ability to attract and retain such students, which could negatively impact Kaplan’s operating results.

A significant portion of the Company’s revenues in its publishing and broadcasting businesses comes from advertising. The demand for advertising is sensitive to the overall level of economic activity, both nationally and locally. The financial market crisis and economic downturn has reduced advertising expenditures of many of our advertisers, which has had a negative impact on the operating results of the Company’s newspaper and magazine publishing and television broadcasting businesses. A continued decline in general economic conditions in the United States may have a material adverse effect on the operating results of the Company’s businesses.

The rates that the Company’s print publishing and television broadcasting businesses can charge for advertising are directly related to the number of readers and viewers of its publications and broadcasts. There is tremendous competition for readers and viewers from other media. The Company’s publishing and television broadcasting businesses will be adversely affected to the extent that individuals decide to obtain news, entertainment, classified listings and local shopping information from Internet-based or other media to the exclusion of the Company’s print publications and broadcasts.

Historically, newspaper and magazine publishing and television broadcasting have been viewed as cost-effective methods of delivering various forms of advertising. There can be no guarantee that this historical perception will guide future decisions on the part of advertisers. To the extent that advertisers shift advertising expenditures to other media outlets, the profitability of the Company’s publishing and television broadcasting businesses will suffer.

The development of direct broadcast satellite systems has significantly increased the competition faced by the Company’s cable television systems. In addition, the continuing growth and technological expansion of Internet-based services has increased competitive pressure on the Company’s media businesses. The development and deployment of new technologies has the potential to negatively and dramatically affect the Company’s businesses in ways that cannot now be reliably predicted and that may have a material adverse effect on the Company’s operating results.

The Company’s television broadcasting and cable television businesses operate in highly regulated environments. The Company’s VoIP services business also is subject to a growing degree of regulation. Complying with applicable regulations has significantly increased, and may continue to increase, the costs and reduced the revenues of these

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businesses. Changes in regulations have the potential to further negatively impact those businesses, not only by increasing compliance costs and reducing revenues through restrictions on certain types of advertising, limitations on pricing flexibility or other means, but also by possibly creating more favorable regulatory environments for the providers of competing services. More generally, all of the Company’s businesses could have their profitability or their competitive positions adversely affected by significant changes in applicable regulations.

Providers of services similar to those offered by Cable ONE have been the target of patent infringement claims from time to time relating to such matters as cable system architecture, electronic program guides, cable modem technology and VoIP services. Although we cannot predict the impact at this time, if any such claims are successful, the outcome would likely affect Cable ONE and could have a material adverse effect on its operating results.

The Company’s newspaper publishing businesses collectively spend significant amounts each year on newsprint. Increases in the cost of newsprint or significant disruptions in the supply of newsprint could have a material adverse effect on the operating results of the Company’s newspaper publishing businesses.

Item 1B. Unresolved Staff Comments.

Not applicable.

Item 2. Properties.

Directly or through subsidiaries, Kaplan owns a total of 11 properties: a 30,000-square-foot six-story building located at 131 West 56th Street in New York City, which serves as an educational center primarily for international students; a redeveloped 47,410-square-foot four-story brick building in Lincoln, NE, which is used by Kaplan University; a 4,000-square-foot office condominium in Chapel Hill, NC, which it utilizes for its Test Prep business; a 15,000-square-foot three- story building in Berkeley, CA, used for its Test Prep and English-language businesses; a 25,000-square-foot one-story building in Omaha, NE, and an 18,000-square-foot building in Dayton, OH, which are currently vacant; a 131,000-square-foot five-story brick building in Manchester, NH, used by Hesser College; a 25,000-square-foot building in Hammond, IN, used by Kaplan Career College (formerly Sawyer College); a 45,000-square-foot three-story brick building in Houston, TX, used by the Texas School of Business; and a 34,000-square-foot building in London, U.K., and a 2,200-square-foot building in Oxfordshire, U.K., each of which is used by Holborn College. Kaplan, Inc. and Kaplan University maintain corporate offices, together with a data center, call center and employee-training facilities, in two 97,000-square-foot leased buildings located on adjacent lots in Fort Lauderdale, FL. Both of those leases will expire in 2017. In December 2009, Kaplan Higher Education entered into an agreement to lease 76,515 square feet of corporate office space to house its corporate headquarters in Chicago, IL. This lease will expire in 2022. In December 2008, Kaplan University entered into an agreement to lease a two-story, 124,500-square-foot building in Orlando, FL, to house an additional call center. In June 2009, Kaplan, Inc. and Kaplan Higher Education began sharing corporate office space in a 78,000-square-foot office building in Alpharetta, GA, under a lease that expires in 2019. In October 2009, Kaplan University entered into an agreement to lease 88,845 square feet of corporate office space in Plantation, FL. This lease expires in 2021 and includes an option to lease an additional 29,898 square feet. Kaplan’s distribution facilities for most of its domestic publications are located in a 291,000-square-foot warehouse in Aurora, IL, under a lease expiring in 2017. Kaplan, Inc. maintains corporate offices at 888 7th Avenue in New York City, where Kaplan rents space on three floors under a lease that will expire in 2017. Overseas, DBS’s facilities in Dublin, Ireland, are located in nine buildings aggregating approximately 79,000 square feet of space that have been rented under leases expiring between 2010 and 2029. Kaplan Publishing has an office and distribution warehouse in Wokingham, Berkshire, U.K., of 25,000 square feet, under a lease expiring in 2016. Kaplan Financial’s largest leaseholds are office and instructional space in London of 33,000 square feet (which will expire in 2033), 21,000 square feet (which will expire in 2015) and 28,000 square feet (comprising six separate leases, which will expire in 2015); office and instructional space in Birmingham of 23,500 square feet (comprising two separate leases, which will expire in 2017); office and instructional space in Manchester of 26,000 square feet (comprising of five separate leases, which will expire in 2027); and office and instructional space in Wales of 34,000 square feet (on an open-ended lease with termination on 12 months’ notice). Kidum has 19 locations throughout Israel, all of which are occupied under leases expiring between 2010 and 2015. All other Kaplan facilities in the U.S. and overseas (including administrative offices and instructional locations) occupy leased premises.

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The headquarters offices of Cable ONE are located in a three-story office building in Phoenix, AZ, that was purchased by Cable ONE in 1998. Cable ONE purchased an adjoining two-story office building in 2005; that building is currently leased to third-party tenants. The majority of the offices and head-end facilities of the division’s individual cable systems are located in buildings owned by Cable ONE. Most of the tower sites used by the division are leased. In addition, the division houses call-center operations in 60,000 square feet of rented space in Phoenix under a lease that will expire in 2013.

WP Company owns the principal offices of The Washington Post in downtown Washington, DC, including both a seven-story building in use since 1950 and a connected nine-story office building on contiguous property completed in 1972 in which the Company’s principal executive offices are located. WP Company also owns and occupies a small office building on L Street that is connected to the Post‘s office building. Additionally, WP Company owns land on the corner of 15th and L Streets, NW, in Washington, DC, adjacent to the Post‘s office building. This land is leased on a long-term basis to the owner of a multistory office building that was constructed on the site in 1982. WP Company rents one floor in this building, which it has subleased to a third party.

WP Company owns a printing plant in Fairfax County, VA, which was built in 1980 and expanded in 1998. That facility is located on 19 acres of land owned by WP Company. In July 2009, WP Company closed a printing plant and distribution facility in Prince George’s County, MD, that was built in 1998 on a 17-acre tract of land owned by WP Company. This property was sold in 2010.

The Daily Herald Company owns its plant and office building in Everett, WA; it also owns two warehouses and a small rental building adjacent to its plant, as well as a small office building in Lynnwood, WA.

Post–Newsweek Media, Inc. owns a two-story combination office building and printing plant on a seven-acre plot in Laurel, MD. Post–Newsweek Media, Inc. also owns a one-story brick building in St. Mary’s County used by editorial and sales staff and office space in Montgomery and Charles counties, MD. In addition to these owned properties, Post–Newsweek Media leases editorial and sales office space in Alexandria, VA, and in Frederick, Carroll, Calvert and Prince George’s counties, MD, and Fairfax County, VA.

The headquarters offices of the Company’s broadcasting operations are located in Detroit, MI, in the same facilities that house the offices and studios of WDIV. That facility and those that house the operations of each of the Company’s other television stations are all owned by subsidiaries of the Company, as are the related tower sites (except in Houston, Orlando, Jacksonville and Miami, where the tower sites are 50% owned).

The principal offices of Newsweek, Inc. are located at 395 Hudson Street in New York City, where Newsweek rents space on two floors. The lease on this new space, subject to renewal rights, will expire on April 30, 2024. During the second half of 2009, Newsweek implemented a restructuring plan that resulted in the recognition of lease exit costs associated with the closing of certain domestic and international offices and bureaus, as well as the write-off of fixed assets located at the facilities that have been vacated.

Robinson Terminal Warehouse Corporation owns two wharves and several warehouses in Alexandria, VA. These facilities are adjacent to the business district and occupy approximately seven acres of land. Robinson also owns two partially developed tracts of land in Fairfax County, VA, aggregating about 20 acres. These tracts are near The Washington Post‘s Virginia printing plant and include several warehouses. Robinson also owns 23 acres of undeveloped land on the Potomac River in Charles County, MD.

WPNI leases 85,000 square feet of office space in Arlington, VA, under a lease that will expire in 2015. WP Company is marketing the space for sublease because the employees have been relocated following the integration of Washington Post Digital’s business into WP Company in Washington, DC. In addition, WPNI leases space in Washington, DC, and Los Angeles and subleases space from Newsweek in New York City for Slate’s offices in those cities. WP Company leases office space for sales representatives in Los Angeles and Detroit and subleases space from Newsweek, Inc. for sales representatives in New York City, Chicago and San Francisco. In January of 2008, WP Company entered into a two-year sublease for office space in Washington, DC, to house Foreign Policy magazine.

Greater Washington Publishing’s offices are located in leased space in Vienna, VA, while El Tiempo Latino’s offices are located in leased space in Arlington, VA.

Avenue100 leases space in an office building in Woburn, MA. This lease expires in 2015.

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Item 3. Legal Proceedings.

Kaplan, Inc., a subsidiary of the Company, is a party to a previously disclosed class action antitrust lawsuit filed on April 29, 2005, by purchasers of BAR/BRI bar review courses from fall 1997 through July 2006 in the U.S. District Court for the Central District of California. On February 2, 2007, the parties filed a settlement agreement with the court, together with documents setting forth a procedure for class notice. The court approved the terms of the settlement on July 9, 2007. Certain class members filed an appeal to the case to the U.S. Court of Appeals for the Ninth Circuit. On April 23, 2009, the Ninth Circuit affirmed the approval of the settlement. The Ninth Circuit also vacated the district court’s award of attorney’s fees to class counsel and counsel to various objectors to the settlement and remanded to the U.S. District Court to consider the attorney’s fees issue anew. That issue continues to be litigated; however, the attorney’s fees award will be paid from the escrowed settlement funds, so Kaplan should not be affected by the ultimate determination of the attorney’s fees issue. Effectiveness of the settlement is subject to court approval. On February 6, 2008, Kaplan was served with another purported class action lawsuit in the U.S. District Court for the Central District of California alleging claims substantially similar to those alleged in the previously settled lawsuit but on behalf of a putative class that included all persons who purchased a bar review course from BAR/BRI in the United States after the July 2006 cut-off for class membership in the prior action. West Publishing Corporation, which owns BAR/BRI, is a co-defendant. On April 15, 2008, the court granted defendants’ motion to dismiss. On May 20, 2008, the plaintiffs filed an appeal. The appeal is pending in the U.S. Court of Appeals for the Ninth Circuit. On November 20, 2009, Kaplan entered into a stipulation of settlement with the plaintiffs that would resolve the case as to Kaplan on a class-wide basis. The stipulation of settlement requires court approval to become effective. On April 29, 2009, Kaplan was served with a purported class action lawsuit by a purchaser of Kaplan’s LSAT preparation course, alleging that in 1997, BAR/BRI and Kaplan entered into a market allocation agreement in violation of U.S. antitrust laws. Kaplan has moved to dismiss this complaint and will continue to vigorously defend this lawsuit.

On June 17, 2008, teachers at Kaplan Aspect, which is now operated within Kaplan International Colleges, filed a complaint in California Superior Court in San Francisco against Kaplan, Inc. and Aspect Education, Inc. alleging wage and hour violations on behalf of a putative class of California teachers. In January 2009, the parties reached an agreement to settle the claims in the action, as well as similar claims for a class of Kaplan Aspect teachers in states outside California. On January 21, 2010, the parties received preliminary approval of that settlement in the California Superior Court and will seek approval of the non-California claims in a separate action that has not yet been filed.

In 2007, the Company became aware of several state attorneys general who have opened inquiries or investigations into arrangements between lenders and institutions of higher education. Subsidiaries of the Company received requests for information from the Attorneys General of the states of Arizona, Iowa and Maryland regarding relationships with student loan providers. The Company also became aware of similar requests from members of the U.S. Congress to at least one lender with regard to its relationship with the Company and its subsidiaries, as well as other institutions of higher education. The Company believes that these governmental authorities are conducting wide-ranging inquiries of student lending practices generally, which, among other things, led to new legislation and other regulatory proposals and changes in 2008. The Company believes that it was not the sole recipient of this type of information request. The Company’s subsidiaries responded to these information requests and cooperated fully with these inquiries. The Company’s subsidiaries received no further requests for such information during 2009.

On or about January 17, 2008, an Assistant U.S. Attorney in the Civil Division of the U.S. Attorney’s Office for the Eastern District of Pennsylvania contacted Kaplan Higher Education’s CHI-Broomall campus and made inquiries about the Surgical Technology program, including the program’s eligibility for Title IV federal financial aid, the program’s student loan defaults, licensing and accreditation. The inquiry is presently proceeding on an “informal, voluntary basis.” Kaplan responded to the information requests and is fully cooperating with the inquiry. The U.S. Department of Education is also conducting a Program Review at the CHI-Broomall campus. CHI-Broomall and Kaplan have responded to a preliminary report issued by the Department of Education, are responding to a February 12, 2010 request by the Department of Education for additional information and are fully cooperating with its Program Review. The U.S. Attorney’s Office has informed Kaplan Higher Education that it may make further information requests upon the completion of the Department of Education Program Review.

Several Kaplan subsidiaries are also subject to four complaints that include, among other allegations, claims under the federal False Claims Act (31U.S.C. § 3729, et seq.), relating to eligibility for Title IV funding. The U.S. Government declined to intervene in all four cases, which are captioned:

United States of America ex rel. Carlos Urquilla-Diaz, et al. v. Kaplan University et al. (unsealed March 25, 2008); United States of America ex rel. Jorge Torres v. Kaplan Higher Education Corp. (unsealed April 7, 2008); United States of America ex rel. Victoria Gatsiopoulos et al. v. ICM School of Business & Medical Careers et al. (unsealed September 2, 2008); and United States of America ex rel. Charles Jajdelski v. Kaplan Higher Education Corp. et al. (unsealed January 6, 2009).

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The Diaz, Torres and Gatsiopoulos cases have been transferred to the U.S. District Court for the Southern District of Florida, where motions to dismiss have been filed in each case and await decision by the court. The Jajdelski case is pending in the U.S. District Court for the District of Nevada, where a motion to dismiss also has been filed and awaits decision by the court. The Company will continue to vigorously defend each of these actions.

The Company and its subsidiaries are also subject to administrative proceedings and are defendants in various other civil lawsuits that have arisen in the ordinary course of their businesses, including contract disputes, actions alleging libel, invasion of privacy, patent infringement, violations of applicable wage and hour laws and claims involving current and former students and employees. While it is not possible to predict the outcomes of these lawsuits, in the opinion of management, their ultimate dispositions should not have a material adverse effect on the Company’s business or financial condition.

Item 4. Reserved.

PART II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information and Holders

The Company’s Class B Common Stock is traded on the New York Stock Exchange under the symbol “WPO.” The Company’s Class A Common Stock is not publicly traded.

The high and low sales prices of the Company’s Class B Common Stock during the last two years were:

At January 31, 2010, there were 28 holders of record of the Company’s Class A Common Stock and 756 holders of record of the Company’s Class B Common Stock.

Dividend Information

Both classes of the Company’s Common Stock participate equally as to dividends. Quarterly dividends were paid at the rate of $2.15 per share during 2009 and 2008.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table and the footnote thereto set forth certain information as of January 3, 2010, concerning compensation plans of the Company under which equity securities of the Company are authorized to be issued.

This table does not include information relating to restricted stock grants awarded under The Washington Post Company Incentive Compensation Plan, which plan has been approved by the stockholders of the Company. At January 3, 2010, there were 9,565 shares of restricted stock outstanding under the 2007–2010 Award Cycle and 27,025 shares of restricted stock outstanding under the 2009 – 2012 Award Cycle that had been awarded to employees of the Company and its subsidiaries under that Plan. In addition, the Company has from time to time awarded special discretionary grants of restricted stock to employees of the Company and its subsidiaries. At January 3, 2010, there were a total of 29,430 shares of restricted stock outstanding under special discretionary grants approved by the Compensation Committee of the Board of Directors. At January 3, 2010, a total of 85,375 shares of restricted stock were available for future awards.

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Purchases of Equity Securities by the Issuer and Affiliated Purchasers

During the quarter ended January 3, 2010, the Company purchased shares of its Class B Common Stock as set forth in the following table:

Performance Graph

The following graph is a comparison of the yearly percentage change in the Company’s cumulative total shareholder return with the cumulative total return of the Standard & Poor’s 500 Stock Index, the Standard & Poor’s Publishing Index and a custom peer group index comprised of education companies. The Standard & Poor’s 500 Stock Index is comprised of 500 U.S. companies in the industrial, transportation, utilities and financial industries and is weighted by market capitalization. The Standard & Poor’s Publishing Index is comprised of Gannett Co., Inc., The McGraw-Hill Companies, The Meredith Corporation, The New York Times Company and The Washington Post Company and also is weighted by market capitalization. The custom peer group of education companies includes American Public Education, Apollo Group Inc., Capella Education Co., Career Education Corp., Corinthian Colleges, Inc., DeVry Inc., Education Management Corp., ITT Educational Services Inc. and Strayer Education Inc. The Company is using a custom peer index of education companies because the Company is a diversified education and media company. Its largest and fastest growing business is Kaplan, Inc., a leading global provider of educational services to individuals, schools and businesses. The graph reflects the investment of $100 on December 31, 2004, in the Company’s Class B Common Stock, the Standard & Poor’s 500 Stock Index, the Standard & Poor’s Publishing Index and the custom peer group index of education companies. For purposes of this graph, it has been assumed that dividends were reinvested on the date paid in the case of the Company and on a quarterly basis in the case of the Standard & Poor’s 500 Index, the Standard & Poor’s Publishing Index and the custom peer group index of education companies.

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Item 6. Selected Financial Data.

See the information for the years 2005 through 2009 contained in the table titled “Ten-Year Summary of Selected Historical Financial Data,” which is included in this Annual Report on Form 10-K and listed in the index to financial information on page 37 hereof (with only the information for such years to be deemed filed as part of this Annual Report on Form 10-K).

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

See the information contained under the heading “Management’s Discussion and Analysis of Results of Operations and Financial Condition,” which is included in this Annual Report on Form 10-K and listed in the index to financial information on page 37 hereof.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

The Company is exposed to market risk in the normal course of its business due primarily to its ownership of marketable equity securities, which are subject to equity price risk; to its borrowing and cash-management activities, which are subject to interest rate risk; and to its foreign business operations, which are subject to foreign exchange rate risk. Except for insignificant activity in short-term forward foreign exchange contracts, neither the Company nor any of its subsidiaries is a party to any derivative financial instruments.

Equity Price Risk

The Company has common stock investments in several publicly traded companies (as discussed in Note E to the Company’s Consolidated Financial Statements) that are subject to market price volatility. The fair value of these common stock investments totaled $353,884,000 at January 3, 2010.

Interest Rate Risk

The Company’s long-term debt consists of $400,000,000 principal amount of 7.25% unsecured notes due February 1, 2019 (the “Notes”). At January 3, 2010, the aggregate fair value of the Notes, based upon quoted market prices, was $443,120,000. An increase in the market rate of interest applicable to the Notes would not increase the Company’s interest expense with respect to the Notes since the rate of interest the Company is required to pay on the Notes is fixed, but such an increase in rates would affect the fair value of the Notes. Assuming, hypothetically, that the market interest rate applicable to the Notes was 100 basis points higher than the Notes’ stated interest rate of 7.25%, the fair value of the Notes at January 3, 2010, would have been approximately $374,750,000. Conversely, if the market interest rate applicable to the Notes was 100 basis points lower than the Notes’ stated interest rate, the fair value of the Notes at such date would have been approximately $427,360,000.

Foreign Exchange Rate Risk

The Company is exposed to foreign exchange rate risk at its Kaplan and Newsweek international operations, and the primary exposure relates to the exchange rate between the U.S. dollar and both the British pound and the Australian dollar. This exposure includes British pound and Australian-dollar denominated intercompany loans on U.S. based Kaplan entities with a functional currency in U.S. dollars. Gains and losses arising from foreign currency transactions affecting the Consolidated Statements of Income have historically not been significant; however, unrealized foreign currency gains on intercompany loans of $16.9 million were recorded in 2009 arising from the weakening of the U.S dollar during the year. Comparing exchange rates in effect at December 31, 2009, versus December 31, 2008, the U.S. dollar weakened against the British pound and the Australian dollar by approximately 10% and 29%, respectively. In 2008, the Company reported unrealized foreign currency losses of $46.3 million as a result of the significant strengthening of the U.S. dollar against the British pound and the Australian dollar. In 2007, the Company reported unrealized foreign currency gains of $8.8 million as a result of the weakening of the U.S. dollar against the British pound and the Australian dollar.

If the values of the British pound and the Australian dollar relative to the U.S. dollar had been 10% lower than the values that prevailed during 2009, the Company’s pre-tax income for fiscal 2009 would have been approximately $17 million lower. Conversely, if such values had been 10% greater, the Company’s reported pre-tax income for fiscal 2009 would have been approximately $17 million higher.

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Item 8. Financial Statements and Supplementary Data.

See the Company’s Consolidated Financial Statements at January 3, 2010, and for the periods then ended, together with the report of PricewaterhouseCoopers LLP thereon and the information contained in Note R to said Consolidated Financial Statements titled “Summary of Quarterly Operating Results and Comprehensive Income (Unaudited),” which are included in this Annual Report on Form 10-K and listed in the index to financial information on page 37 hereof.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Not applicable.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

An evaluation was performed by the Company’s management, with the participation of the Company’s Chief Executive Officer (the Company’s principal executive officer) and the Company’s Senior Vice President–Finance (the Company’s principal financial officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), as of January 3, 2010. Based on that evaluation, the Company’s Chief Executive Officer and Senior Vice President–Finance have concluded that the Company’s disclosure controls and procedures, as designed and implemented, are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to management, including the Chief Executive Officer and Senior Vice President–Finance, in a manner that allows timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

Management’s report set forth on page 53 is incorporated herein by reference.

Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting during the quarter ended January 3, 2010, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information.

Not applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information contained under the heading “Executive Officers” in Item 1 hereof and the information contained under the headings “Nominees for Election by Class A Shareholders,” “Nominees for Election by Class B Shareholders,” “Audit Committee” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the definitive Proxy Statement for the Company’s 2010 Annual Meeting of Stockholders is incorporated herein by reference thereto.

The Company has adopted codes of conduct that constitute “codes of ethics” as that term is defined in paragraph (b) of Item 406 of Regulation S-K and that apply to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller and to any persons performing similar functions. Such codes of conduct are posted on the Company’s Internet website, the address of which is www.washpostco.com, and the Company intends to satisfy the disclosure requirements under Item 5.05 of Form 8-K with respect to certain amendments to, and waivers of the requirements of, the provisions of such codes of conduct applicable to the officers and persons referred to above by posting the required information on its Internet website.

In addition to the certifications of the Company’s Chief Executive Officer and Chief Financial Officer filed as exhibits to this Annual Report on Form 10-K, on May 22, 2009, the Company’s Chief Executive Officer submitted to the New York Stock Exchange the annual certification regarding compliance with the NYSE’s corporate governance listing standards required by Section 303A.12(a) of the NYSE Listed Company Manual.

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Item 11. Executive Compensation.

The information contained under the headings “Director Compensation,” “Compensation Committee Interlocks and Insider Participation,” “Executive Compensation” and “Compensation Committee Report” in the definitive Proxy Statement for the Company’s 2010 Annual Meeting of Stockholders is incorporated herein by reference thereto.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information contained under the heading “Stock Holdings of Certain Beneficial Owners and Management” in the definitive Proxy Statement for the Company’s 2010 Annual Meeting of Stockholders is incorporated herein by reference thereto.

Item 13. Certain Relationships and Related Transactions and Director Independence.

The information contained under the headings “Transactions with Related Persons, Promoters and Certain Control Persons” and “Controlled Company” in the definitive Proxy Statement for the Company’s 2010 Annual Meeting of Stockholders is incorporated herein by reference thereto.

Item 14. Principal Accounting Fees and Services.

The information contained under the heading “Audit Committee Report” in the definitive Proxy Statement for the Company’s 2010 Annual Meeting of Stockholders is incorporated herein by reference thereto.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

The following documents are filed as part of this report:

As listed in the index to financial information on page 37 hereof.

As listed in the index to exhibits on page 89 hereof.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 1, 2010.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on March 1, 2010:

An original power of attorney authorizing Donald E. Graham, Hal S. Jones and Veronica Dillon, and each of them, to sign all reports required to be filed by the Registrant pursuant to the Securities Exchange Act of 1934 on behalf of the above-named directors and officers has been filed with the Securities and Exchange Commission.

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INDEX TO FINANCIAL INFORMATION

THE WASHINGTON POST COMPANY

All schedules have been omitted either because they are not applicable or because the required information is included in the consolidated financial statements or the notes thereto referred to above.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

This analysis should be read in conjunction with the consolidated financial statements and the notes thereto.

OVERVIEW

The Washington Post Company is a diversified education and media company, with education as the largest and fastest growing business. Through its subsidiary Kaplan, Inc., the Company provides educational services for individuals, schools and businesses. The Company also operates principally in four areas of the media business: cable television, newspaper publishing, television broadcasting and magazine publishing. The Company’s business units are diverse and subject to different trends and risks.

The Company’s education division is the largest operating division of the Company, accounting for 58% of the Company’s consolidated revenues in 2009. The Company has devoted significant resources and attention to this division, given the attractiveness of investment opportunities and growth prospects. The growth of Kaplan in recent years has come from both rapid internal growth and acquisitions. Kaplan completed a reorganization of its organizational and internal reporting structure in 2009 into the following four operating segments: Higher Education, Test Preparation, Kaplan International and Kaplan Ventures. Higher Education showed significant revenue growth in 2009, while the other segments reported revenue declines. Kaplan’s Higher Education division showed strong operating income growth, for both its online and fixed-facility operations, due to increased enrollment in both online and residential programs. Operating results for Kaplan’s Test Preparation division were adversely impacted by continued weakness in the Score businesses and declines at the traditional programs, offset by improved results at its professional training businesses due to expense reductions. Kaplan International results declined in 2009 primarily from weaknesses in financial education programs in the U.K. and English-language programs. Kaplan Ventures’ losses increased primarily from development costs incurred at Kaplan Virtual Education, a group of online high schools. The restructuring of Score was completed in 2009. The Company decided to offer tutoring services, previously provided at Score, in Kaplan Test Preparation centers; 14 Score centers were converted into Kaplan test preparation centers and the remaining 64 Score centers were closed. Restructuring activities at Kaplan’s professional domestic businesses were also completed in 2009.

Kaplan made two acquisitions in 2009, nine acquisitions in 2008 and nine acquisitions in 2007; the largest of these are mentioned below. In 2007, Kaplan Ventures acquired EduNeering Holdings, Inc., a Princeton, NJ-based provider of knowledge management solutions for organizations in the pharmaceutical, medical device, health care, energy and manufacturing sectors. In August 2007, Kaplan International completed the acquisition of the education division of Financial Services Institute of Australasia. Over the past several years, Kaplan’s revenues have grown rapidly, while operating income has fluctuated due largely to restructuring activities, various business investments and stock compensation charges.

The cable division has also been a source of recent growth and capital investment. Cable ONE’s industry has experienced significant technological changes that have created new revenue opportunities, such as digital television, broadband and, more recently, telephony. Cable ONE has also experienced increased competition, particularly from satellite television service providers and, to a smaller extent, other telephony providers. The cable division’s subscriber base was down in 2009 (decrease of 30,500 subscribers to approximately 669,000 at the end of 2009) due to the challenging economic environment in 2009 and competition from satellite and telephone companies. Cable telephone subscribers and high-speed data subscribers grew 17% and 5%, respectively, to approximately 109,600 and 392,800, respectively, at the end of 2009. The cable division continues to provide monthly discounts for subscribers who take at least three offered services (basic service, digital service, high-speed data service and/or telephony service). Promotional discounts are offered for new subscribers or existing subscribers adding new services.

The Company’s newspaper publishing, broadcast television and magazine publishing divisions derive revenue from advertising and, to a lesser extent, circulation and subscriptions. The results of these divisions tend to fluctuate with the overall advertising cycle, among other business factors.

Like many other large newspapers, The Washington Post has experienced a significant continued downward trend in print advertising revenue, which declined 23% in 2009, reflecting a large decline in classified, zones and retail advertising. This follows a 17% print advertising decline at The Washington Post in 2008 and a 13% decline in 2007. Circulation volume also continued a downward trend, although revenues increased 7% due to home-delivery price increases and significant single-copy sales in January 2009 during the Presidential Inauguration. The Company’s online publishing businesses, primarily washingtonpost.com and The Slate Group, reported an 8% revenue decline in 2009, following a 7% revenue increase in 2008. The Washington Post is integrating the print and online operations and implemented cost savings initiatives in 2009, including a Voluntary Retirement Incentive Program in which 221 employees accepted early retirement and the July 2009 closing of the Post’s College Park, MD, printing plant.

The Company’s television broadcasting division reported a decline in revenues and operating income due largely to weakness in most of its markets and product categories and the absence of significant political and Olympics-related advertising revenue in 2009.

Newsweek magazine advertising revenue was down 37% in 2009 due to fewer ads at the domestic and international editions, following a 14% decline in 2008 due to fewer ad pages at the domestic edition. In 2008, Newsweek implemented a circulation rate base reduction at its domestic edition, from 3.1 million to 2.6 million, and in 2009, Newsweek implemented another rate base reduction, to 1.5 million in January 2010. Also in 2009, Newsweek completed a Voluntary Retirement Incentive Program, with 44 employees accepting early retirement.

The Company generates a significant amount of cash from its businesses that is used to support its operations, to pay down debt and to fund capital expenditures, share repurchases, dividends, acquisitions and other investments.

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RESULTS OF OPERATIONS — 2009 COMPARED TO 2008

Net income was $91.2 million ($9.78 per share) for the fiscal year ended January 3, 2010, up from $65.8 million ($6.87 per share) for the fiscal year ended December 28, 2008. The Company’s results for 2009 and 2008 include several unusual or one-time items, as described below.

Items included in the Company’s results in 2009:

Items included in the Company’s results in 2008:

Revenue for 2009 was $4,569.7 million, up 2% compared to revenue of $4,461.6 million in 2008. The increases are due primarily to strong revenue growth at the education division and increased revenue at the cable division, partially offset by revenue declines at the Company’s newspaper publishing, magazine publishing and television broadcasting divisions. In 2009, education revenue increased 13%, advertising revenue decreased 21%, circulation and subscriber revenue increased 3% and other revenue declined 2%. Revenue growth at Kaplan accounted for the increase in education revenue. The decrease in advertising revenue is due to declines in print advertising at The Washington Post, as well as to declines in the television broadcasting and magazine publishing divisions. The increase in circulation and subscriber revenue is due to a 5% increase in subscriber revenue at the cable division from continued revenue growth in all major product offerings and a 7% increase in circulation revenue at the Post. This increase was offset by a 14% decline in Newsweek circulation revenue due to circulation rate base reductions at the domestic edition of Newsweek.

Operating costs and expenses for the year increased 2% to $4,375.7 million, from $4,287.4 million in 2008. The increase is due to higher expenses from operating growth at Kaplan and Cable ONE, offset by reduced costs at the newspaper and magazine publishing divisions.

Operating income for 2009 increased to $194.0 million, from $174.2 million in 2008. Operating results were significantly impacted by the unusual or one-time operating items described above. Excluding these one-time or unusual items, results at the newspaper publishing, magazine publishing and television broadcasting divisions were down, generally due to weakness in advertising demand, offset by improved results at the Company’s education and cable television divisions.

The Company’s 2009 operating income includes $8.1 million of net pension credits, compared to $25.7 million in 2008. These amounts exclude $64.5 million and $111.1 million in charges related to early retirement programs in 2009 and 2008, respectively.

DIVISION RESULTS

Education Division. Education division revenue in 2009 increased to $2,636.6 million, a 13% increase from $2,331.6 million in 2008. Kaplan reported operating income of $194.8 million for 2009, compared to $206.3 million in 2008. Kaplan’s results for 2009 and 2008 were impacted by several unusual or one-time items (discussed below).

Kaplan completed a reorganization of its organizational and internal reporting structure during the third quarter of 2009 that resulted in changes to the composition of the Company’s reporting

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segments. A summary of Kaplan’s operating results reported under this structure for 2009 compared to 2008 is as follows:

Kaplan Higher Education (KHE) includes Kaplan’s domestic post-secondary education businesses, made up of fixed-facility colleges as well as online postsecondary and career programs. Higher education revenue grew by 33% for 2009 due mostly to strong enrollment growth. Operating income at KHE increased 59% in 2009 due to this strong enrollment growth, offset by increased marketing and advertising costs in the first quarter of 2009, including a $21.0 million national media campaign. At December 31, 2009, KHE’s enrollments totaled 104,900, a 32% increase compared to total enrollments of 79,800 at December 31, 2008. Enrollment growth was particularly strong at Kaplan University’s online offerings, which grew 47% in 2009. Beginning in 2008, KHE provided loans directly to some Kaplan students under an institutional loan program. Lending under Kaplan’s institutional loan program totaled approximately 1% of its higher education revenue in 2009.

Test Preparation includes Kaplan’s standardized test preparation and tutoring offerings, as well as the professional domestic training business, K12 and other businesses. Test Preparation revenue, excluding Score, declined 9% in 2009 due to continued revenue declines in the real estate and financial education businesses, declines at the traditional test preparation programs and softness in other programs. Test Preparation operating results, excluding Score, were also down in 2009 due to declines at the traditional test preparation programs and softness in other programs, along with a fourth quarter $4.6 million charge at the K12 business for product development and other write-downs. The declines were offset by improved results at Test Preparation’s professional domestic training businesses due to expense reductions.

At the end of March 2009, the Company approved a plan to offer tutoring services, previously provided at Score, in Kaplan test preparation centers. The plan was substantially completed by the end of the second quarter of 2009; 14 existing Score centers were converted into Kaplan test preparation centers, and the remaining 64 Score centers were closed. Score revenues declined to $8.6 million in 2009, from $28.7 million in 2008. Operating losses at Score increased to $36.8 million in 2009, inclusive of $24.9 million in restructuring-related charges, compared to $13.3 million in operating losses for 2008.

In 2007, Kaplan announced restructuring plans at its professional domestic training businesses that involved product changes and decentralization of certain operations, in addition to employee terminations. These businesses are now part of Kaplan’s Test Preparation division. In the fourth quarter of 2008, Kaplan expanded this restructuring to include additional operations. Total restructuring-related expenses of $8.3 million were recorded in 2009 related to lease termination costs, accelerated depreciation of fixed assets and severance costs, compared to $11.0 million in restructuring-related severance costs recorded in 2008.

Kaplan International includes professional training and post-secondary education businesses outside the United States, as well as English-language programs. Kaplan International revenue declined 1% in 2009. Excluding revenue from acquired businesses, Kaplan International revenue was down 6% in 2009. The decline for 2009 is primarily the result of unfavorable exchange rates in the U.K., Europe and Australia. These declines were offset by revenue growth at International’s Asian operations. Kaplan International operating income was down in 2009 largely due to weakness in the financial education programs in the U.K. and English-language programs, offset by improved operating results at International’s Asian operations.

Kaplan Ventures is made up of a number of businesses in various stages of development that are managed separately from the other education businesses. Kaplan Ventures includes Kaplan EduNeering, Kaplan Compliance Solutions, Kaplan IT Learning, Education Connection, Kaplan Virtual Education, Kidum and other smaller businesses. Revenues at Kaplan Ventures declined 2% in 2009. Kaplan Ventures reported operating losses of $16.3 million in 2009, compared to operating losses of $3.8 million in 2008, due primarily to increased losses at Kaplan Virtual Education, a developing group of online high school institutions. A goodwill and other long-lived assets impairment charge of $25.4 million was recorded at Kaplan in the third quarter of 2009 related to certain Kaplan Ventures’ businesses, as the book value of these businesses exceeded their estimated fair value.

Corporate represents unallocated expenses of Kaplan, Inc.’s corporate office and other minor activities. Corporate expenses in 2008 included expenses associated with the resignation of Kaplan’s former chief executive officer in 2008.

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Stock compensation (charges) credits relate to incentive compensation arising from equity awards under the Kaplan stock option plan, which was established for certain members of Kaplan’s management. Kaplan recorded stock compensation expense of $0.9 million in 2009, compared to a stock compensation credit of $7.8 million in 2008. The stock compensation credit in 2008 relates primarily to the forfeiture of 21,526 Kaplan stock options due to the resignation noted above.

Cable Television Division. Cable television division revenue of $750.4 million for 2009 represents a 4% increase from $719.1 million in 2008. The 2009 revenue increase is due to continued growth in the division’s cable modem and telephone revenues and a $4 monthly rate increase for most basic subscribers in June 2009.

Cable television division operating income in 2009 increased 4% to $169.1 million, from $162.2 million in 2008. The cable division’s operating results in 2009 included a $7.7 million gain arising from changes to the cable division retiree health care benefits program. Excluding this gain, the cable division’s operating income in 2009 was even with 2008, as revenue increases were offset by increased programming, depreciation and general and administrative costs. Operating margin at the cable television division was 23% in 2009 and 2008.

Revenue generating units (RGUs) were even with the prior year-end due to a reduction in basic and digital subscribers, offset by continued growth in high-speed data and telephony subscribers. A summary of RGUs is as follows:

RGUs include about 6,300 subscribers who receive free basic video service, primarily local governments, schools and other organizations as required by various franchise agreements.

Below are details of cable division capital expenditures for 2009 and 2008 in the NCTA Standard Reporting Categories:

Newspaper Publishing Division. At most of the newspaper publishing division, 2009 included 53 weeks compared to 52 weeks in 2008. Newspaper publishing division revenue in 2009 decreased 15% to $679.3 million, from $801.3 million in 2008. Print advertising revenue at the Post in 2009 declined 23% to $317.0 million, from $410.4 million in 2008. The print revenue decline in 2009 is from large decreases in classified, zones and retail advertising. Revenue generated by the Company’s newspaper online publishing activities, primarily washingtonpost.com, declined 8% to $99.6 million, from $108.3 million in 2008. Display online advertising revenue grew 2% in 2009 and online classified advertising revenue on washingtonpost.com declined 24%. Daily circulation at the Post declined 5.9%, and Sunday circulation declined 4.7% in 2009; average daily circulation at the Post totaled 595,800 (unaudited) and average Sunday circulation totaled 831,300 (unaudited).

The Company offered a Voluntary Retirement Incentive Program to certain employees of The Washington Post newspaper in the first quarter of 2009. A total of 221 employees accepted the offer, and early retirement program expense of $56.8 million was recorded in the second quarter of 2009, which is being funded primarily from the assets of the Company’s pension plans. In the third quarter of 2009, the Company offered a Voluntary Retirement Incentive Program to certain employees at Robinson Terminal Warehouse Corporation, and $1.1 million in early retirement program expense was recorded, also to be funded from the assets of the Company’s pension plans. In the first quarter of 2008, a Voluntary Retirement Incentive Program was offered at The Washington Post, with 231 employees accepting the offer; $79.8 million in early retirement program expense was recorded in the second quarter of 2008, also funded primarily from the assets of the Company’s pension plans.

The Post closed its College Park, MD, printing plant in July 2009 and consolidated its printing operations in Springfield, VA. The Post is also in the process of consolidating certain other operations in Washington, DC. In connection with these activities, accelerated depreciation of $33.8 million and $22.3 million was recorded in 2009 and 2008, respectively. The Post incurred additional costs related to the shutdown of the College Park, MD, printing plant of $1.7 million in 2009. The Post expects to incur additional costs in 2010 that will be recorded as incurred. In the fourth quarter of 2009, the Company recorded a $2.2 million loss on an office lease in conjunction with the consolidation of operations. An additional loss will be recorded in 2010, depending on the timing of the consolidation. Also in 2008, as a result of the challenging advertising environment at the Company’s community newspapers, The Herald and other operations included in the newspaper publishing division, the Company recorded goodwill impairment charges of $65.8 million.

The newspaper division reported an operating loss of $163.5 million in 2009, compared to an operating loss of $192.7 million in 2008. Excluding early retirement program charges, accelerated depreciation and goodwill impairment losses, operating results declined in 2009 due to the significant decline in division advertising revenue, offset by expense reductions and a 19% reduction in newsprint expense due to a decline in newsprint consumption and prices.

Television Broadcasting Division. Revenue for the television broadcasting division decreased 16% to $272.7 million in 2009, from $325.1 million in 2008. The decrease in revenue is due to weaker advertising demand in most markets and product

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categories, particularly automotive, and a $19.4 million decrease in political advertising revenue in 2009. Additionally, in the third quarter of 2008, the television broadcasting division benefited from $6.3 million in incremental summer Olympics-related advertising at the Company’s NBC affiliates.

In 2008, the television broadcasting division recorded $6.9 million in noncash property, plant and equipment gains as a reduction to expense due to new digital equipment received at no cost from Sprint/Nextel in connection with an FCC mandate reallocating a portion of the broadcast spectrum.

Television broadcasting division operating income for 2009 declined 43% to $70.5 million, from $123.5 million in 2008. The operating income decline for 2009 is due to the revenue decreases discussed above and the noncash gains in 2008. Operating margin at the television broadcasting division was 26% in 2009 and 38% in 2008.

Competitive market position remained strong for the Company’s television stations. KSAT in San Antonio, WPLG in Miami and WJXT in Jacksonville ranked number one in the November 2009 ratings period, Monday through Friday, sign-on to sign-off; WDIV in Detroit and WKMG in Orlando ranked second; and KPRC in Houston ranked third.

Magazine Publishing Division. Revenue for the magazine publishing division totaled $184.2 million in 2009, a 27% decline from $250.9 million in 2008. The decrease in revenue for 2009 is due to advertising revenue declines at Newsweek of 37%, resulting from fewer ad pages at both the domestic and international editions. In February 2009, Newsweek announced a circulation rate base reduction at its domestic edition, from 2.6 million to 1.5 million, by January 2010. Subscription revenue also declined at the domestic edition in 2009 due to the rate base reduction.

Newsweek offered a Voluntary Retirement Incentive Program to certain employees in November 2008, and 44 employees accepted the offer in the first quarter of 2009; early retirement program expense of $6.6 million was recorded in the first quarter of 2009, which is being funded primarily from the assets of the Company’s pension plans. In the first quarter of 2008, Newsweek also offered a Voluntary Retirement Incentive Program to certain employees and 117 employees accepted the offer. The early retirement program expense in 2008 totaled $28.3 million, also funded primarily from the assets of the Company’s pension plans. Additional cost savings initiatives were implemented at Newsweek’s operations in 2009, and $8.4 million in severance and lease termination costs were recorded.

The division had an operating loss in 2009 of $29.3 million, compared to an operating loss of $16.1 million in 2008. Excluding early retirement program expense, the division’s operating results declined in 2009 due to the revenue reductions discussed above and a reduced pension credit, offset by a decline in subscription, editorial and manufacturing expenses at the domestic edition of Newsweek.

In December 2009, Newsweek sold its Newsweek Budget Travel magazine and realized a gain on the transaction. Budget Travel revenues for 2009 were $18.7 million, compared to $23.5 million in 2008. Including the gain on the sale, Budget Travel incurred operating losses of $1.2 million in 2009 and $0.7 million in 2008.

Other Businesses and Corporate Office. Other businesses and corporate office include the expenses of the Company’s corporate office and the operating results of Avenue100 Media Solutions (formerly CourseAdvisor). In the fourth quarter of 2008, a goodwill and other intangible assets impairment charge of $69.7 million was recorded to write down the intangible assets of Avenue100 Media Solutions to their estimated fair values. The 2008 results also include $3.0 million in early retirement program expense at the corporate office.

Equity in Losses of Affiliates. The Company’s equity in losses of affiliates for 2009 was $29.4 million, compared to $7.8 million in losses for 2008. Results for 2009 included $29.0 million in write-downs at two of the Company’s affiliate investments. Most of the loss relates to an impairment charge recorded on the Company’s interest in Bowater Mersey Paper Company as a result of the challenging economic environment for newsprint producers. Results in 2008 include $6.8 million in impairment charges at two of the Company’s affiliates.

The Company holds a 49% interest in Bowater Mersey Paper Company and interests in several other affiliates.

Non-Operating Items. The Company recorded other non-operating income, net, of $13.2 million in 2009, compared to other non-operating expense, net, of $2.2 million in 2008. The 2009 non-operating income, net, primarily included $16.9 million in unrealized foreign currency gains, offset by $3.8 million in impairment write-downs on cost method investments. The 2008 non-operating expense, net, primarily consisted of $46.3 million in unrealized foreign currency losses, offset by $47.3 million in gains from sales of marketable equity securities.

As noted above, a large part of the Company’s non-operating income (expense) is from unrealized foreign currency gains or losses arising from the translation of British pound and Australian dollar-denominated intercompany loans into U.S. dollars. The unrealized foreign currency gains in 2009 were the result of a weakening of the U.S. dollar against the British pound and the Australian dollar in 2009, versus the exchange rates in effect at the end of 2008. The unrealized foreign currency losses in 2008 were the result of a strengthening of the U.S. dollar against the British pound and the Australian dollar in 2008, versus the exchange rates in effect at the end of 2007.

A summary of non-operating income (expense) for the years ended January 3, 2010 and December 28, 2008 follows:

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The Company incurred net interest expense of $29.0 million in 2009, compared to $19.0 million in 2008. The increases are due to higher average interest rates in 2009 compared to 2008, as well as a decline in interest income. At January 3, 2010, the Company had $399.3 million in borrowings outstanding at an average interest rate of 7.2%; at December 28, 2008, the Company had $553.8 million in borrowings outstanding at an average interest rate of 4.1%.

Income Taxes. The effective tax rate for 2009 was 38.7%. This effective tax rate was adversely impacted by $12.2 million in noncash valuation allowances provided against deferred state and local income tax benefits, net of U.S. Federal income taxes, and $3.3 million from nondeductible goodwill in connection with impairment charges recorded in 2009; these items were offset by favorable adjustments recorded for a reduction in state income taxes and for prior year permanent U.S. Federal tax deductions.

The effective tax rate for 2008 was 54.7%. This high effective tax rate was due to $31.1 million from nondeductible goodwill in connection with impairment charges recorded in 2008 and $9.5 million in noncash valuation allowances provided against deferred state and local income tax benefits, net of U.S. Federal income taxes; these were offset by a favorable $4.6 million provision to return adjustment from 2007.

RESULTS OF OPERATIONS—2008 COMPARED TO 2007

Net income was $65.8 million ($6.87 per share) for the fiscal year ended December 28, 2008, down from $289.0 million ($30.19 per share) for the fiscal year ended December 30, 2007. The Company’s results for 2008 and 2007 include several unusual or one-time items, as described below.

Items included in the Company’s results in 2008:

Items included in the Company’s results in 2007:

Revenue for 2008 was $4,461.6 million, up 7% compared to revenue of $4,180.4 million in 2007. The increase is due primarily to significant revenue growth at the education and cable divisions, partially offset by revenue declines at the Company’s newspaper publishing, magazine publishing and television broadcasting divisions. Advertising revenue decreased 12% in 2008, and circulation and subscriber revenue increased 10%. Education revenue increased 15% in 2008, and other revenue was up 49%. The decrease in advertising revenue is due to declines in print advertising at The Washington Post, as well as declines in the television broadcasting and magazine publishing divisions. The increase in circulation and subscriber revenue is due to a 16% increase in subscriber revenue at the cable division from continued growth in all major product offerings, and a 4% increase in circulation revenue at the Post. This increase was offset by a 12% decline in Newsweek circulation revenue due primarily to a circulation rate base reduction at the domestic edition of Newsweek, from 3.1 million to 2.6 million. Revenue growth at Kaplan (about 24% of which was from acquisitions) accounted for the increase in education revenue. Other revenues increased due to the CourseAdvisor acquisition in October 2007. CourseAdvisor is now known as Avenue100 Media Solutions.

Operating costs and expenses for the year increased 16% to $4,287.4 million, from $3,703.4 million in 2007. The increase is due to higher expenses from operating growth at Kaplan and Cable ONE, as well as goodwill and other intangible asset impairment charges, and early retirement program expenses as previously discussed.

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Operating income for 2008 declined to $174.2 million, from $477.0 million in 2007. Operating results were significantly impacted by the unusual or one-time operating items described above. Excluding these one-time or unusual items, results at the newspaper publishing, magazine publishing and television broadcasting divisions were down generally due to weakness in advertising demand, offset by improved results at the Company’s education and cable television divisions.

The Company’s 2008 operating income included $25.7 million of net pension credits, compared to $22.3 million in 2007. These amounts exclude $111.1 million in charges related to early retirement programs in 2008.

DIVISION RESULTS

Education Division. Education division revenue in 2008 increased 15% to $2,331.6 million, from $2,030.9 million in 2007. Excluding revenue from acquired businesses, education division revenue increased 11% in 2008. Kaplan reported operating income of $206.3 million for 2008, compared to $149.0 million in 2007. Kaplan’s results for 2008 and 2007 were impacted by several unusual or one-time items (discussed below).

Kaplan completed a reorganization of its organizational and internal reporting structure during 2009 that resulted in changes to the composition of the Company’s reporting segments. A summary of Kaplan’s operating results reported under this new structure for 2008 compared to 2007 is as follows:

Kaplan Higher Education (KHE) includes Kaplan’s domestic post-secondary education businesses, made up of fixed-facility colleges, as well as online postsecondary and career programs. Higher education revenue grew by 24% for 2008, and operating income increased 40% due to strong enrollment growth. At December 31, 2008, KHE’s enrollments totaled 79,800, a 21% increase compared to total enrollments of 65,700 at December 31, 2007, due to growth in the online and residential programs. Higher Education results in 2007 were adversely affected by $2.7 million in lease termination charges.

Test Preparation includes Kaplan’s standardized test preparation and tutoring offerings, as well as the professional domestic training business, K12 and other businesses. Test Preparation revenue, excluding Score, declined 4% in 2008 due to continued revenue declines in the real estate and financial education businesses. Test Preparation operating results, excluding Score, were down 41% in 2008 due to continued weakness in the real estate and financial education businesses, and higher payroll and marketing costs for the traditional test preparation programs.

Score revenues declined 48% in 2008 as a result of the Score restructuring in 2007 that included the closing of 75 Score centers. Score incurred approximately $11.2 million in expenses in 2007 related to lease obligations, severance and accelerated depreciation of fixed assets.

In 2007, Kaplan announced restructuring plans at its professional domestic training businesses that involved product changes and decentralization of certain operations, in addition to employee terminations. A charge of $6.0 million was recorded in 2007 related to the write-off of an integrated software product under development and severance costs in connection with the restructuring; an additional $3 million was anticipated to be incurred in 2008. In the fourth quarter of 2008, Kaplan expanded this restructuring to include additional operations. Total severance and other restructuring-related expenses of $11.0 million were recorded in 2008.

Kaplan International includes professional training and post-secondary education businesses outside the United States, as well as English-language programs. Kaplan International revenue increased 23% in 2008. Excluding revenue from acquired businesses, Kaplan International revenue increased 9% in 2008 due to revenue growth in English-language programs and at International’s Asian and Pacific businesses, offset by reductions in the U.K. due to unfavorable exchange rates. Kaplan International’s operating income increased 9% in 2008 due to growth in English-language programs and improved results in the Asian operations, offset by unfavorable exchange rates in the U.K. and investments in higher education international programs.

Kaplan Ventures is made up of a number of businesses in various stages of development that are managed separately from the other education businesses. Kaplan Ventures includes Kaplan EduNeering, Kaplan Compliance Solutions, Kaplan IT Learning, Education Connection, Kaplan Virtual Education, Kidum and other smaller businesses. Revenues at Kaplan Ventures increased 19% in 2008. Kaplan Ventures reported operating losses of $3.8 million in 2008, compared to operating income of $1.6 million in 2007, due primarily to additional costs associated with the expansion of Kaplan’s online high school.

Corporate represents unallocated expenses of Kaplan, Inc.’s corporate office and other minor activities. Kaplan corporate expenses increased in 2008 due to an increase in employee benefits costs in the fourth quarter of 2008 and expenses

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associated with the resignation of Kaplan’s former chief executive officer in November 2008.

Stock compensation credits (charges) relate to incentive compensation arising from equity awards under the Kaplan stock option plan, which was established for certain members of Kaplan’s management. Kaplan recorded a stock compensation credit of $7.8 million in 2008, compared to stock compensation expense of $41.3 million in 2007. The stock compensation credit in 2008 related primarily to the forfeiture of 21,526 Kaplan stock options due to the resignation noted above.

Cable Television Division. Cable television division revenue of $719.1 million for 2008 represents a 15% increase from $626.4 million in 2007. The 2008 revenue increase is due to continued growth in the division’s cable modem, telephone and digital revenues, as well as a rate increase in September 2007 for most high-speed data subscribers; a January 2008 basic video cable service rate increase at nearly all of its systems; and a rate increase in August 2008 for telephone subscribers. The last rate increase for most high-speed data subscribers had previously been in March 2003, and the last rate increase for basic cable subscribers had previously been in February 2006.

Cable television division operating income in 2008 increased 31% to $162.2 million, from $123.7 million in 2007. The increase in operating income is due to the division’s revenue growth, offset by higher depreciation and programming expenses and increases in Internet and telephony costs. Operating margin at the cable television division was 23% in 2008, compared to 20% in 2007.

Revenue generating units (RGUs) grew 5% in 2008 due to continued growth in high-speed data and telephony subscribers. The cable television division began offering telephone service on a very limited basis in the second quarter of 2006; at December 31, 2008, telephone service is being offered in all or part of systems representing 95% of homes passed. A summary of RGUs is as follows:

RGUs included about 6,900 subscribers who received free basic video service, primarily local governments, schools and other organizations as required by various franchise agreements.

Below are details of cable division capital expenditures for 2008 and 2007 in the NCTA Standard Reporting Categories:

Newspaper Publishing Division. Newspaper publishing division revenue in 2008 decreased 10% to $801.3 million, from $889.8 million in 2007. Print advertising revenue at the Post in 2008 declined 17% to $410.4 million, from $496.2 million in 2007. The decline in 2008 is primarily the result of a large decrease in classified advertising revenue, along with reductions in retail, general, supplements and zones. Revenue generated by the Company’s online publishing activities, primarily washingtonpost.com, increased 7% to $108.3 million, from $100.8 million in 2007. Display online advertising revenue grew 17%, and online classified advertising revenue on washingtonpost.com declined 3%. Daily circulation at the Post declined 2.6%, and Sunday circulation declined 3.3%; average daily circulation totaled 633,100 (unaudited), and average Sunday circulation totaled 872,500 (unaudited).

The newspaper publishing division reported an operating loss of $192.7 million in 2008, compared to operating income of $66.4 million in 2007. In March 2008, the Company offered a Voluntary Retirement Incentive Program to certain employees of The Washington Post newspaper, and 231 employees accepted the offer. Early retirement program expense of $79.8 million was recorded in the second quarter of 2008, which is being funded mostly from the assets of the Company’s pension plans. Also, the Post made plans to close its College Park, MD, printing plant in the second half of 2009. The Company reassessed the useful life of the presses and the fair value of the plant building and recorded accelerated depreciation beginning in June 2008; as a result, accelerated depreciation of $22.3 million was recorded in 2008. Also in 2008, as a result of the challenging advertising environment at the Company’s community newspapers, The Herald and other operations included in the newspaper publishing division, the Company recorded goodwill impairment charges of $65.8 million. The decline in operating results is due to reduced revenues and the unusual or one-time operating expense items noted above; excluding these charges, however, the newspaper publishing division still incurred an operating loss in 2008 due to revenue declines. Newsprint expense was down 3% for 2008.

Television Broadcasting Division. Revenue for the television broadcasting division decreased 4% to $325.1 million in 2008, from $340.0 million in 2007. The revenue decline is the result of weaker advertising demand in most markets and product categories, offset by a $22.3 million increase in political advertising and $6.3 million in incremental summer Olympics-related advertising at the Company’s NBC affiliates. Excluding the increased political and Olympics-related advertising, revenues were $296.5 million in 2008, a 13% decline from 2007.

In 2008, the television broadcasting division recorded $6.9 million in noncash property, plant and equipment gains as a reduction to expense due to new digital equipment received at no cost from Sprint/Nextel in connection with an FCC mandate reallocating a portion of the broadcast spectrum. In July 2007, the Company entered into a transaction to sell and lease back its current Miami television station facility; a $9.5 million gain was recorded as a reduction to expense in 2007.

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Operating income for 2008 declined 13% to $123.5 million, from $142.1 million in 2007. The decline in operating income is due primarily to overall weak advertising demand and the $9.5 million gain on the sale of property at the Miami television station in 2007, offset by the $6.9 million in noncash gains in 2008. Operating margin at the broadcast television division was 38% for 2008 and 42% for 2007; however, the operating margins in 2008 and 2007 would have been lower without the property, plant and equipment gains.

Competitive market position remained strong for the Company’s television stations. KSAT in San Antonio, WPLG in Miami and WJXT in Jacksonville ranked number one in the November 2008 ratings period, Monday through Friday, sign-on to sign-off; WDIV in Detroit and WKMG in Orlando ranked second; and KPRC in Houston ranked third.

Magazine Publishing Division. Revenue for the magazine publishing division totaled $250.9 million in 2008, a 13% decline from $288.4 million for 2007. The decrease in revenue is due to an advertising revenue decline of 14% at Newsweek as a result of fewer ad pages at the domestic edition and lower rates due to the previously announced circulation rate base reduction, from 3.1 million to 2.6 million. Subscription revenue also declined at the domestic edition in 2008 due to the rate base reduction. In February 2009, Newsweek announced another circulation rate base reduction at its domestic edition, from 2.6 million to 1.5 million by January 2010.

Newsweek offered a Voluntary Retirement Incentive Program to certain employees in the first quarter of 2008, and 117 employees accepted the offer. The early retirement program expense totaled $28.3 million, which is being funded mostly from the assets of the Company’s pension plans. In November 2008, Newsweek announced another Voluntary Retirement Incentive Program, which was offered to certain Newsweek employees.

The magazine publishing division had an operating loss in 2008 of $16.1 million, compared to operating income of $31.4 million for 2007, with the decline due primarily to $28.3 million in early retirement program expense and the revenue reductions discussed above, offset by a decline in subscription, manufacturing and distribution expenses at the domestic edition of Newsweek. The magazine publishing division reported an operating loss in 2008; operating margin was 11% in 2007, including the pension credit. Excluding the pension credit, the division would have reported an operating loss in 2007.

Other Businesses and Corporate Office. In October 2007, the Company acquired the outstanding stock of CourseAdvisor, Inc., an online lead generation provider. (CourseAdvisor is now known as Avenue100 Media Solutions.) In the fourth quarter of 2008, a goodwill and other intangible assets impairment charge of $69.7 million was recorded to write down the intangible assets of Avenue100 to their estimated fair values, which declined primarily due to lower than expected revenue and operating income growth.

In 2008, other businesses and corporate office included the expenses of the Company’s corporate office and the operating results of Avenue100. In 2007, other businesses and corporate office included the expenses associated with the Company’s corporate office and the operating results of Avenue100 from its October 2007 acquisition date through the end of 2007. Revenue for other businesses totaled $39.4 million in 2008, compared to revenue of $6.6 million in 2007 from the Avenue100 acquisition. Operating expenses were $148.4 million for 2008, from $42.2 million for 2007, due to the goodwill and other intangible assets impairment charge of $69.7 million and increased expenses at Avenue100. A corporate office early retirement program expense of $3.0 million recorded in the second quarter of 2008 also contributed to the overall expense increase in 2008.

Equity in (Losses) Earnings of Affiliates. The Company’s equity in losses of affiliates for 2008 was $7.8 million, compared to $6.0 million in earnings in 2007. Results in 2008 included $6.8 million in impairment charges at two of the Company’s affiliates. In the first quarter of 2007, the Company’s equity in earnings of affiliates included a gain of $8.9 million on the sale of land at the Company’s Bowater Mersey affiliate; however, operating losses at Bowater Mersey in 2007 largely offset the gain. The Company’s affiliate investments at the end of 2008 consisted primarily of a 49% interest in Bowater Mersey Paper Company Limited.

Non-Operating Items. The Company recorded other non-operating expense, net, of $2.2 million in 2008, compared to non-operating income, net, of $11.2 million in 2007. The 2008 non-operating expense, net, primarily consisted of $46.3 million in unrealized foreign currency losses, offset by $47.3 million in gains from sales of marketable equity securities. The 2007 non-operating income, net, included $8.8 million in unrealized foreign currency gains.

As noted above, a large part of the Company’s non-operating income (expense) is from unrealized foreign currency gains or losses arising from the translation of British pound and Australian dollar-denominated intercompany loans into U.S. dollars. The unrealized foreign currency losses in 2008 were the result of the significant strengthening of the U.S. dollar against the British pound and the Australian dollar; the unrealized foreign currency gains in 2007 were the result of the weakening of the U.S. dollar against the British pound and the Australian dollar.

A summary of non-operating (expense) income for the years ended December 30, 2008, and December 31, 2007, follows:

The Company incurred net interest expense of $19.0 million in 2008, compared to $12.7 million in 2007. The increase is due to

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a decline in interest income, as well as higher average borrowings in 2008 versus 2007. At December 28, 2008, the Company had $553.8 million in borrowings outstanding at an average interest rate of 4.1%; at December 30, 2007, the Company had $490.1 million in borrowings outstanding at an average interest rate of 5.3%.

Income Taxes. The effective tax rate was 54.7% for 2008 and 40.0% for 2007. The higher effective tax rate for 2008 is due to $31.1 million from nondeductible goodwill in connection with impairment charges recorded in 2008 and $9.5 million in noncash valuation allowances provided against deferred state and local income tax benefits, net of U.S. Federal income taxes; these were offset by a favorable $4.6 million provision to return adjustment from 2007. As previously discussed, results for 2007 included an additional $12.9 million in income tax expense related to the Company’s Bowater Mersey affiliate and a $6.3 million income tax benefit related to a change in certain state income tax laws enacted in the second quarter of 2007. Both of these were noncash items in 2007 that impacted the Company’s long-term net deferred income tax liabilities. Excluding the impact of these items, the effective tax rate for 2008 was 35.1%, compared to 37.7% for 2007. The decline is due to a reduction in state income taxes and a higher proportion of earnings in jurisdictions outside the U.S. with lower effective tax rates.

FINANCIAL CONDITION: CAPITAL RESOURCES AND LIQUIDITY

Acquisitions and Dispositions. The Company completed business acquisitions totaling approximately $26.1 million in 2009, $123.5 million in 2008 and $296.3 million in 2007. The assets and liabilities of the companies acquired have been recorded at their estimated fair values at the date of acquisition; the purchase price allocations mostly comprised goodwill and other intangibles, and property, plant and equipment. Any additional purchase consideration related to a 2008 acquisition is expected to be recorded as goodwill.

During 2009, the Company acquired three businesses for $22.9 million. Kaplan acquired one business in each of its International and Test Preparation divisions, and the newspaper division acquired a small local publication. The purchase price allocations for these acquisitions mostly comprised goodwill and other intangible assets. Also in 2009, the Company recorded $3.2 million of additional purchase consideration in connection with the achievement of certain operating results by a company acquired in 2007 and allocated the additional purchase consideration to goodwill.

In December 2009, the Company completed the sale of Newsweek’s Budget Travel, which was part of the Company’s magazine publishing segment, and recorded a gain.

During 2008, the Company acquired ten businesses within its education and newspaper segments, for a total of $93.1 million, financed with cash and $3.2 million in debt. Kaplan acquired nine businesses in its International, Test Preparation and Ventures divisions. These included Kaplan International’s acquisition of a majority interest in Shanghai Kai Bo Education Management Investment Co., Ltd. (“Kaplan China”), a provider of education in China that offers preparation courses for entry to U.K. universities, along with degree and professional training programs at campuses throughout China. In 2007, Kaplan purchased a 40% interest in Kaplan China. In the first quarter of 2008, Kaplan exercised an option to increase its investment in Kaplan China to an 85% majority interest. The transaction was completed in November 2008, and Kaplan China’s results from the transaction date forward have been included in the Company’s consolidated financial statements. The purchase price allocations for these acquisitions mostly comprised goodwill and other intangible assets.

Also in 2008, the cable television division acquired subscribers primarily in the Mississippi area for $15.3 million. The purchase price allocations for these transactions mostly comprised intangible assets and property, plant and equipment.

In connection with a 2008 acquisition, additional purchase consideration of approximately $1.5 million was contingent on the achievement of certain future operating results and was not included in the Company’s purchase accounting as of December 28, 2008. During 2008, the Company recorded $15.1 million of additional purchase consideration in connection with the achievement of certain operating results by a company acquired in 2007 and allocated the additional purchase consideration to goodwill.

During 2007, the Company acquired 11 businesses within its education, newspaper and other businesses and corporate office segments for a total of $292.0 million, financed with cash and $2.0 million in debt. Kaplan acquired 9 businesses in its International, Test Preparation and Ventures divisions, of which the largest two were Kaplan Ventures’ acquisition of EduNeering Holdings, Inc., a Princeton, NJ-based provider of knowledge management solutions for organizations in the pharmaceutical, medical device, health care, energy and manufacturing sectors; and Kaplan International’s acquisition of the education division of Financial Services Institute of Australasia. In October 2007, the Company acquired the outstanding stock of Avenue100 Media Solutions (formerly CourseAdvisor, Inc.), a premier online lead generation provider, headquartered in Wakefield, MA. Through its search engine marketing expertise and proprietary technology platform, Avenue100 generates student leads for the postsecondary education market. Avenue100 operates as an independent subsidiary of the Company. The purchase price allocations for these acquisitions mostly comprised goodwill and other intangible assets. Also in 2007, the cable television division acquired subscribers in the Boise, ID, area for $4.3 million. Most of the purchase price for this transaction was allocated to indefinite-lived intangible assets and property, plant and equipment.

In connection with certain 2007 acquisitions, additional purchase consideration of approximately $22 million was contingent on the achievement of certain future operating results; such amounts were largely funded in escrow in 2007 and were not included in the Company’s purchase accounting as of December 30, 2007.

In July 2007, the television broadcasting division entered into a transaction to sell and lease back its current Miami television station

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facility; a $9.5 million gain was recorded as a reduction to expense in the third quarter. An additional $1.9 million deferred gain was amortized over the leaseback period. The television broadcasting division purchased land and built a new Miami television station facility that was completed in 2009.

Capital Expenditures. During 2009, the Company’s capital expenditures totaled $257.8 million. The Company’s capital expenditures for 2009, 2008 and 2007 are disclosed in Note Q to the consolidated financial statements. The Company estimates that its capital expenditures will be in the range of $280 million to $320 million in 2010.

Investments in Marketable Equity Securities. At January 3, 2010, the fair value of the Company’s investments in marketable equity securities was $353.9 million, which includes $247.5 million in Berkshire Hathaway Inc. Class A and B common stock and $106.4 million in the common stock of a publicly traded education company.

At January 3, 2010, and December 28, 2008, the gross unrealized gain related to the Company’s Berkshire stock investment totaled $90.2 million and $72.4 million, respectively. During 2009, the Company invested $10.8 million in the Class B common stock of Berkshire. During 2008, the Company sold 420 and 5,975 shares of Berkshire Class A and Class B common stock, respectively. Total proceeds from the sale were $64.4 million, and the net realized gains were $26.0 million. The gross unrealized gain related to the Company’s other marketable equity security investments totaled $40.6 million and $48.7 million at January 3, 2010, and December 28, 2008, respectively.

Common Stock Repurchases and Dividend Rate. During 2009, 2008 and 2007, the Company repurchased 145,040 shares, 167,642 shares and 54,506 shares, respectively, of its Class B common stock at a cost of $61.0 million, $99.0 million and $42.0 million, respectively. At January 3, 2010, the Company had authorization from the Board of Directors to purchase up to 100,916 shares of Class B common stock. In January 2010, the Board of Directors increased the authorization to a total of 750,000 shares of Class B common stock. The annual dividend rate for 2010 was increased to $9.00 per share, from $8.60 per share in 2009 and 2008.

Liquidity. At January 3, 2010, the Company had $477.7 million in cash and cash equivalents, compared to $390.5 million at December 28, 2008. As of January 3, 2010, and December 28, 2008, the Company had money market investments of $327.8 million and $99.1 million, respectively, that are classified as cash and cash equivalents in the Company’s consolidated financial statements.

At December 28, 2008, the Company had $150.0 million in commercial paper borrowings outstanding at an average interest rate of 0.2% with various maturities through the first quarter of 2009. In addition, the Company had outstanding $399.9 million of 5.5% unsecured notes due February 15, 2009, and $3.9 million in other debt. On January 30, 2009, the Company completed the issuance of $400.0 million of 7.25% unsecured notes due February 1, 2019. The interest is payable semi-annually on February 1 and August 1, beginning August 1, 2009. The Company used the net proceeds from the sale of the notes and other cash to repay the Company’s $400.0 million unsecured notes that matured on February 15, 2009.

During 2009, the Company’s borrowings, net of repayments, decreased by $154.5 million, and the Company’s cash and cash equivalents increased by $87.2 million. There were no commercial paper borrowings outstanding at January 3, 2010.

The Company’s $500 million commercial paper program continues to serve as a significant source of short-term liquidity. The $500 million revolving credit facility that expires in August 2011 supports the issuance of the Company’s short-term commercial paper and provides for general corporate purposes. The Company continued to have access to and borrowed funds under its commercial paper program and has not borrowed funds under its revolving credit facility.

The Company’s credit ratings were affirmed by the rating agencies in October 2008 with a change in ratings outlook from stable to negative. In May 2009, Standard & Poor’s placed the Company’s “A+” long-term corporate credit and senior unsecured ratings, and the Company’s “A-1” short-term commercial paper rating on CreditWatch with negative implications. In June 2009, Standard & Poor’s lowered its long-term rating to “A” from “A+,” affirmed the “A-1” short-term rating and removed both ratings from CreditWatch. In December 2009, Standard & Poor’s revised the Company’s long-term outlook to stable. Moody’s rating outlook for the Company remains negative. The Company’s current credit ratings are as follows:

During 2009 and 2008, the Company had average borrowings outstanding of approximately $426.7 million and $492.3 million, respectively, at average annual interest rates of approximately 6.9% and 4.9%, respectively. The Company incurred net interest costs on its borrowings of $29.0 million and $19.0 million, respectively, during 2009 and 2008.

At January 3, 2010, and December 28, 2008, the Company had working capital of $398.5 million and $257.3 million, respectively. The Company maintains working capital levels consistent with its underlying business requirements and consistently generates cash from operations in excess of required interest or principal payments.

The Company’s net cash provided by operating activities, as reported in the Company’s Consolidated Statements of Cash Flows, was $653.0 million in 2009, compared to $535.8 million in 2008.

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The Company expects to fund its estimated capital needs primarily through existing cash balances and internally generated funds and, to a lesser extent, through commercial paper borrowings. In management’s opinion, the Company will have ample liquidity to meet its various cash needs in 2010.

The following reflects a summary of the Company’s contractual obligations as of January 3, 2010:

Other. The Company does not have any off-balance-sheet arrangements or financing activities with special-purpose entities (SPEs). Transactions with related parties, as discussed in Note E to the Company’s consolidated financial statements, are in the ordinary course of business and are conducted on an arm’s-length basis.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and judgments that affect the amounts reported in the financial statements. On an ongoing basis, the Company evaluates its estimates and assumptions. The Company bases its estimates on historical experience and other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.

An accounting policy is considered to be critical if it is important to the Company’s financial condition and results and if it requires management’s most difficult, subjective and complex judgments in its application. For a summary of all of the Company’s significant accounting policies, see Note B to the Company’s consolidated financial statements.

Revenue Recognition, Trade Accounts Receivable, Sales Returns and Allowance for Doubtful Accounts. Education tuition revenue is recognized ratably over the period of instruction as services are delivered to students, net of any refunds, corporate discounts, scholarships and employee tuition discounts. In 2009, Kaplan Higher Education modified its method of recognizing revenue ratably over the period of instruction as services are delivered to students from a weekly convention to a daily convention, on a prospective basis. At Kaplan’s Test Preparation and International divisions, estimates of average student course length are developed for each course, along with estimates for the anticipated level of student drops and refunds from test performance guarantees, and these estimates are evaluated on an ongoing basis and adjusted as necessary. As Kaplan’s businesses and related course offerings have expanded, including distance-learning businesses and contracts with school districts as part of its K12 business, the complexity and significance of management’s estimates have increased.

Revenue from media advertising is recognized, net of agency commissions, when the underlying advertisement is published or broadcast. Revenues from newspaper and magazine subscriptions and retail sales are recognized upon the later of delivery or cover date, with adequate provision made for anticipated sales returns. The Company records, as a reduction of revenue, the estimated impact of such returns. The Company bases its estimates for sales returns on historical experience and has not experienced significant fluctuations between estimated and actual return activity.

Accounts receivable have been reduced by an allowance for amounts that may be uncollectible in the future. This estimated allowance is based primarily on the aging category, historical trends and management’s evaluation of the financial condition of the customer. Accounts receivable also have been reduced by an estimate of advertising rate adjustments and discounts, based on estimates of advertising volumes for contract customers who are eligible for advertising rate adjustments and discounts.

Goodwill and Other Intangible Assets. The Company has a significant amount of goodwill and indefinite-lived intangible assets that are reviewed at least annually for possible impairment.

The Company performs its annual goodwill and intangible assets impairment test as of November 30. Goodwill and other intangible assets are reviewed for possible impairment between annual tests if an event occurred or circumstances changed that would more likely than not reduce the fair value of the reporting unit or other intangible assets below its carrying value. The Company tests its goodwill at the reporting unit level, which is an operating segment or one level below an operating segment. The Company tests the goodwill for impairment using a two-step process. The first step of the goodwill impairment test compares the estimated fair value of a reporting unit

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with its carrying amount, including goodwill. This step is performed to identify potential impairment, which occurs when the carrying amount of the reporting unit exceeds its estimated fair value. The second step of the goodwill impairment test is only performed when there is a potential impairment and is performed to measure the amount of impairment loss at the reporting unit. During the second step, the Company allocates the estimated fair value of the reporting unit to all of the assets and liabilities of the unit (including any unrecognized intangible assets). The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. The amount of the goodwill impairment is the difference between the carrying value of the reporting unit’s goodwill and the implied fair value determined during the second step. The other intangible assets impairment test compares the fair value of the asset with its carrying value. The Company records an impairment loss if the carrying value of the other intangible assets exceeds the fair value of the assets for the difference in the values.

The education division completed a reorganization of its organizational and internal structure during the third quarter of 2009. As a result, the education division reorganized its operations for the purpose of making operating decisions and assessing performance into four operating segments: Higher Education, Test Preparation, Kaplan International and Kaplan Ventures. The reorganization significantly changed the composition of the reporting units within the education division and resulted in the reassignment of the goodwill to the affected reporting units using a relative fair value approach.

The fair value of the previous reporting units and components transferred were generally determined utilizing a discounted cash flow model and, where appropriate, a market value approach to supplement the discounted cash flow model. The Company made estimates and assumptions regarding future cash flows, discount rates, long-term growth rates and market values to determine each reporting unit and component’s estimated fair value.

The assumptions about future cash flows and growth rates were based on forecasts and long-term business plans of each reporting unit and component. Such assumptions took into account numerous factors including historical experience; anticipated economic conditions; changes in the reporting unit and component’s cost structures; cost savings from recent restructuring activities and other initiatives; and expected revenues from current and future enrollments at the universities, campuses and education centers.

The discount rate assumptions for each reporting unit and component took into account the Company’s assessment of the risks inherent in the future cash flows of the respective reporting unit and component and the weighted-average cost of capital of market participants in businesses similar to each reporting unit and component.

The key assumptions used by the Company were as follows:

The effect of the reallocation of goodwill is included in Note G, “Goodwill and Other Intangible Assets,” of the consolidated financial statements of the Company for fiscal year 2009. Each postreorganization reportable segment is also a reporting unit, except for Kaplan Ventures, which consists of seven reporting units.

As a result of the reassignment, the Company performed an interim review of the carrying value of goodwill at the education division for possible impairment on a prereorganization and post-reorganization basis. The fair value of the prereorganization reporting units each exceeded their respective carrying value by a margin in excess of 15%. On a postreorganization basis, the estimated fair value of the reporting units within the education division with significant goodwill balances (Higher Education, Test Preparation and Kaplan International) exceeded their respective carrying values by a margin in excess of 50%.

Following the reorganization, two reporting units (Kaplan EduNeering and Kaplan Compliance Solutions, previously within Kaplan Professional) newly included in the Kaplan Ventures operating segment failed step one of the interim goodwill impairment review, and the Company performed a step two analysis. The Company recorded a goodwill and other long-lived assets impairment charge of $25.4 million related to these two reporting units. Following the impairment, the remaining goodwill balances at these two reporting units as of January 3, 2010, totaled $22.8 million.

The Company had 18 reporting units as of January 3, 2010. The reporting units with significant goodwill balances as of January 3, 2010, were as follows, representing 91% of the total goodwill of the Company:

As of November 30, 2009, in connection with the Company’s annual impairment testing, the Company used a discounted cash flow model, and where appropriate, a market value approach was also utilized to supplement the discounted cash flow model to determine the estimated fair value of its reporting units. The Company made estimates and assumptions regarding future cash flows, discount rates, long-term growth rates and market values to determine each reporting unit’s estimated fair value. The

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methodology used to estimate the fair value of the Company’s reporting units on November 30, 2009, was consistent with the one used during our 2008 annual goodwill impairment test. The Company made changes to certain of its assumptions utilized in the discounted cash flow models for 2009 compared with the prior year due largely to the adverse economic environment and its impact on our businesses. The key assumptions used by the Company were as follows:

The fair value of each of the reporting units exceeded its respective carrying value as of November 30, 2009.

In 2008, the Company recorded goodwill and other intangible asset impairment charges at three of its reporting units totaling $135.4 million. The remaining goodwill balances at these three reporting units as of January 3, 2010 totaled $38.4 million. Combined, the goodwill balance of $61.2 million at the five reporting units that have been subject to impairment charges in 2009 and 2008 represents less than 5% of the Company’s total goodwill balance of $1,423.5 million as of January 3, 2010. There exists a reasonable possibility that a decrease in the projected cash flows or long-term growth rate, or an increase in the discount rate assumptions used in the discounted cash flow model of these reporting units, could result in additional impairment charges.

The estimated fair value of the Company’s reporting units with significant goodwill balances exceeded their respective carrying values by a margin in excess of 25%. While less likely, additional impairment charges could occur at these reporting units as well, given the inherent variability in projecting future operating performance.

Pension Costs. Excluding special termination benefits related to early retirement programs, the Company’s net pension credit was $8.1 million, $25.7 million and $22.3 million for 2009, 2008 and 2007, respectively. The Company’s pension benefit costs are actuarially determined and are impacted significantly by the Company’s assumptions related to future events, including the discount rate, expected return on plan assets and rate of compensation increases. The Company’s expected return on plan assets assumption remained at 6.5% for fiscal years 2009, 2008 and 2007. At December 31, 2006, the Company raised its discount rate assumption from 5.75% to 6.0%, which resulted in the pension credit for 2007 increasing slightly for 2007 compared to 2006. At December 30, 2007, the discount rate assumption remained at 6.0%; the pension credit increased by $3.4 million as a result of higher than expected investment returns on plan assets in 2007. At December 28, 2008, the Company reduced its discount rate assumption from 6.0% to 5.75% and changed to a more current Mortality Table. The pension credit declined substantially in 2009 largely due to significant investment losses in 2008. At January 3, 2010, the Company increased its discount rate assumption from 5.75% to 6.0%. The Company estimates that it will record a net pension credit of approximately $2.0 million in 2010. This amount is lower than in 2009 as a result of significant investment losses on pension plan assets in 2008, offset to some extent by the investment gains in 2009. The Company’s actual return (loss) on plan assets was 14.7% in 2009, (25.0%) in 2008 and 7.7% in 2007, based on plan assets at the beginning of each year. For each 1% increase or decrease to the Company’s assumed expected return on plan assets, the pension credit increases or decreases by approximately $15 million. For each 1% increase or decrease to the Company’s assumed discount rate, the pension credit increases or decreases by approximately $10 million.

Note L to the Company’s consolidated financial statements provides additional details surrounding pension costs and related assumptions.

Income Tax Valuation Allowances. Deferred income taxes arise from temporary differences between the tax and financial statement recognition of assets and liabilities. In evaluating its ability to recover deferred tax assets within the jurisdiction from which they arise, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. These assumptions require significant judgment about forecasts of future taxable income.

As of January 3, 2010, the Company had state income tax net operating loss carryforwards of $525.6 million, which will expire at various dates from 2010 through 2029. Also at January 3, 2010, the Company had approximately $31.0 million of foreign income tax loss carryforwards, of which $28.0 million may be carried forward indefinitely and $3.0 million that, if unutilized, will start to expire in 2012. At January 3, 2010, the Company has established approximately $26.2 million in valuation allowances against these deferred state and foreign income taxes, net of U.S. Federal income taxes, as the Company believes that it is more likely than not that the benefit from certain state and foreign net operating loss carryforwards will not be realized. The Company has established valuation allowances against state income tax benefits recognized, without considering potentially offsetting deferred tax liabilities established with respect to prepaid pension cost and goodwill. Prepaid pension cost and goodwill have not been considered a source of future taxable income for realizing deferred tax benefits recognized since these temporary differences are not likely to reverse in the foreseeable future. The valuation allowances

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established against state income tax benefits recorded may increase or decrease within the next 12 months, based on operating results or the market value of investment holdings; as a result, the Company is unable to estimate the potential tax impact, given the uncertain operating and market environment.

Kaplan Stock Compensation. The Kaplan stock option plan was adopted in 1997 and initially reserved 15%, or 150,000 shares, of Kaplan’s common stock for awards to be granted under the plan to certain members of Kaplan management. Under the provisions of this plan, options are issued with an exercise price equal to the estimated fair value of Kaplan’s common stock, and options vest ratably over the number of years specified (generally four to five years) at the time of the grant. Upon exercise, an option holder may receive Kaplan shares or cash equal to the difference between the exercise price and the then fair value.

The amount of compensation expense varies directly with the estimated fair value of Kaplan’s common stock, the number of options and shares outstanding and the key assumptions used to determine the fair value of Kaplan stock options. The estimated fair value of Kaplan’s common stock is based upon a comparison of operating results and public market values of other education companies and is determined by the Company’s compensation committee of the Board of Directors (the “committee”), with input from management. Over the past several years, the value of education companies has fluctuated significantly, and consequently, there has been significant volatility in the amounts recorded as expense each year, as well as on a quarterly basis.

In November 2008, Kaplan’s then chief executive officer resigned. The executive exercised 40,805 Kaplan stock options, sold 6,572 Kaplan shares and forfeited 21,526 unvested Kaplan stock options at the time of his resignation. A Kaplan senior manager continues to hold the remaining 2,000 outstanding Kaplan stock options (representing about 0.2% of Kaplan’s common stock), which expire in 2011. In January 2010, the committee set the fair value price at $1,975 per share. Option holders have a 30-day window in which to exercise at this price, after which time the committee has the right to determine a new price in the event of an exercise. No options were awarded or exercised during 2009 or the first two months of 2010.

The committee awarded to a senior manager of Kaplan shares equal in value to $4.8 million for the 2007 fiscal year, and the expense of this award was recorded in the Company’s results of operations for the relevant fiscal year. As a result, in the first quarter of 2008, 1,778 Kaplan shares were issued related to the 2007 Kaplan share awards. In the fourth quarter of 2007, a Kaplan senior manager exercised Kaplan stock options and received 1,750 Kaplan shares that remain outstanding at January 3, 2010. In February 2010 and 2009, a Kaplan senior manager was granted 2,278 and 1,176 shares, respectively, of Kaplan restricted stock that vest over a three-year period.

Kaplan recorded stock compensation expense of $0.9 million for 2009, compared to a credit of $7.8 million for 2008 and expense of $41.3 million for 2007. There were no payouts in 2009. In 2008 and 2007, total net payouts were $85.1 million and $8.1 million, respectively. At December 31, 2009, the Company’s accrual balance related to Kaplan stock-based compensation totaled $9.2 million. Note K to the Company’s consolidated financial statements provides additional details surrounding Kaplan stock compensation.

Recent Accounting Pronouncements. See Note B to the Company’s consolidated financial statements for a discussion of recent accounting pronouncements.

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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of The Washington Post Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company‘s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of January 3, 2010. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control — Integrated Framework. Our management has concluded that, as of January 3, 2010, our internal control over financial reporting was effective based on these criteria.

The effectiveness of our internal control over financial reporting as of January 3, 2010 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report included herein.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Shareholders of The Washington Post Company:

In our opinion, the consolidated financial statements referred to under Item 15 (1) on page 35 and listed in the index on page 37 present fairly, in all material respects, the financial position of The Washington Post Company and its subsidiaries at January 3, 2010 and December 28, 2008, and the results of their operations and their cash flows for each of the three years in the period ended January 3, 2010 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 3, 2010, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers LLP

McLean, Virginia

March 1, 2010

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THE WASHINGTON POST COMPANY