EQUITY RESEARCH

August 06, 2007 United States of America

Internet & Media
Washington Post (WPO - US$ 825.50) 1-Overweight Publishing
Change of Price Target Craig A. Huber
1.212.526.5546
2Q; Remains Best Stock to Own in Group chuber@lehman.com
LBI, New York

Investment Conclusion
‰ Washington Post remains only Overweight-rated
EPS (US$) (FY Dec)
stock of the nine we cover in newspaper group 2006 2007 2008 % Change
(Negative sector rating). Education segment -- Actual Old New St. Est. Old New St. Est. 2007 2008
50% of revenue -- continues to shine; defensive 1Q 8.48A 5.81A 5.81A 5.81A N/A N/A 6.60E -31% N/A
characteristics in a weaker economy vs. S&P 500. 2Q 9.23A 7.74E 8.16E 8.33E N/A N/A 8.82E -16% N/A
Upping 12-month price target to $775 from $755. 3Q 7.96A 6.58E 6.33E 7.39E N/A N/A 8.79E -17% N/A
4Q 9.21A 9.63E 8.96E 9.65E N/A N/A 11.43E 5% N/A
Summary Year 34.87A 29.75E 29.25E 30.59E 35.00E 33.75E 35.38E -15% 18%
‰ Lowering 2007/08 EPS ests to $29.25/$33.75 from P/E 26.6 22.6
prior $29.75/$35.00 vs. $34.87 in 2006 due mostly
to lower expectations at traditional media assets.
Market Data Financial Summary
‰ Except TV, 2Q segment results better than
expected with EPS of $8.16 vs. our $7.74(E) and Market Cap (Mil.) 7868 Revenue FY07 (Mil.) 4159.1
down 11.6% from year-ago (excl. one-time items). Shares Outstanding (Mil.) 9.53 Five-Year EPS CAGR 7.7
‰ Total rev up 8.0% to $1.047 bil vs. $1.022 bil(E). Float (%) 44 Return on Equity 11.60
‰ Education EBITDA of $55.9 mil up 4.9% vs. yr-ago
Dividend Yield 0.98 Current BVPS 332.91
and $54.8 mil(E) despite stock comp expense of
$17.0 mil vs. $4.3 mil year-ago. Convertible No Debt To Capital (%) 11.30
‰ Education organic revenue growth accelerated, up 52 Week Range 800.00 - 690.00
14% vs. yr-ago vs. up 9% in 1Q and 11% in 4Q.
‰ Cable EBITDA up 6.8% to $59.0 mil vs. $56.6 Stock Overview
mil(E); top-line strong again at up 9.4%. WASHINGTON PST.'B'
Reuters WPO 6/8/07
840
‰ Newspaper EBITDA down 32.0% to $27.6 mil vs. Bloomberg WPO
820
$26.8 mil(E); print ad revenue down 13%.
ADR
‰ TV EBITDA down 12.7% to $37.6 mil vs. $39.6 800

mil(E); 1Q partly hurt by lack $1.5 mil political ads. 780

760

740
Stock Rating Target Price 720

New: 1-Overweight New: US$ 775.00 700

VOLUME
Old: 1-Overweight Old: US$ 755.00 100

50
Sector View: 3-Negative
0
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

We continue to rate Washington Post Overweight in the context of a Negative sector rating. We are adjusting our 12-month price
target higher to $775 per share vs. prior $755 due to a higher 2008(E) EBITDA multiple used for Education in our sum-of-the-parts analysis
(12.5x vs. prior 12.0x) and higher 2009(E) and forward EBITDA for Education used in our 10-year discounted cash flow (DCF) analysis.

Following 2Q07 earnings results, we are lowering our 2007 and 2008 EPS estimates to $29.25 and $33.75, respectively, vs prior
estimates of $29.75 and $35.00 and vs. $34.87 in 2006. Our 3Q07 EPS estimate is now $6.33 from a prior $6.58 and vs. $7.96 in prior
year which benefited from broadcasting political advertising revenue.

Lehman Brothers does and seeks to do business with companies covered in its research reports. As a result, investors should
be aware that the firm may have a conflict of interest that could affect the objectivity of this report.

Customers of Lehman Brothers in the United States can receive independent, third-party research on the company or companies
covered in this report, at no cost to them, where such research is available. Customers can access this independent research at
www.lehmanlive.com or can call 1-800-2LEHMAN to request a copy of this research.

Investors should consider this report as only a single factor in making their investment decision.

PLEASE SEE ANALYST(S) CERTIFICATION(S) ON PAGE 11 AND IMPORTANT DISCLOSURES BEGINNING

ON PAGE 12
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 EQUITY RESEARCH
For further details, please see our 2Q analysis table, detailed earnings model, education division breakdown table, newspaper
industry valuation table, sum-of-the-parts analysis, and Washington Post properties page.

Washington Post Lehman Brothers

2Q Analysis: Education Organic Revenue Accelerated to Up 14% Craig A. Huber (212) 526-5546
(Dollars in millions, except per share data) August 6, 2007

June % chg(A)
2006(A) 2007(E) 2007(A) vs. '05 Commentary
Revenue by Segment 2Q Washington Post print ad rev. down 13%; 1st six months daily / Sunday circulation volume both down 2.9%
Newspapers 245.6 223.5 227.9 -7.2% 2Q help wanted down 22%; online revenue up 11% (display up 13% and online classified up 11%)
Broadcasting 89.0 88.1 87.9 -1.2% Year-ago had $1.5 mil political ad revenue
Magazines 84.2 76.6 73.4 -12.8% 2Q06 $5.6 mil in rev. from PostNewsweek Tech Media (sold 12/06); Newsweek ad rev. down 6%
Cable 141.1 151.0 154.4 9.4% Basic cable subs 696,673 (up 1.6%) at 2Q-end; 2/06 $3 monthly rate increase for basic cable service; no 2007 increase
Education 409.2 483.1 503.5 23.0% Excl. acquisitions, up 14% (vs. up 9% in 1Q and 13% in 2006); higher ed. up 20% (enrollment up 6%)
Intersegment Elimination 0.0 0.0 (0.3) -- while Test Preparation up 31% (up 7% excluding acquisitions); Professional up 20% (up 11% excl. acquisitions)
Total Revenue 969.0 1,022.2 1,046.8 8.0%

EBITDA by Segment
Newspapers 40.6 26.8 27.6 -32.0% Newsprint costs down 22% (average price down 15% and consumption down 8%); non-newsprint costs up 1.5-2%(E)
Broadcasting 43.1 39.6 37.6 -12.7% Hurt by higher programming expenses
Magazines 11.8 8.4 13.5 13.8%
Cable 55.2 56.6 59.0 6.8% vs. revenue up 9.4%
Education 53.3 54.8 55.9 4.9% Includes stock comp expense of $17.0 mil vs. $4.3 mil year-ago
Corporate (8.8) (9.0) (9.9) 12.0%
Total EBITDA 195.2 177.3 183.6 -5.9% Four of five operating segments better than expected

EBITDA Margin (%)

Newspapers 16.5% 12.0% 12.1% --
Broadcasting 48.4% 45.0% 42.8% --
Magazines 14.1% 11.0% 18.4% --
Cable 39.1% 37.5% 38.2% --
Education 13.0% 11.3% 11.1% --
Corporate -0.9% -0.9% -0.9% --
Total EBITDA Margin (%) 20.1% 17.3% 17.5% --

Depreciation and Amortization 50.9 56.2 58.4 14.7%

Operating Profit 144.3 121.1 125.3 -13.2%

% Margin 14.9% 11.8% 12.0% --

Other Income/(Expense)
Equity in earnings of affiliates (0.6) 0.3 (0.1) -- Equity line is mostly newsprint mill investment (sold BrassRing in 4Q06)
Interest Income 2.5 4.0 2.7 6.5%
Interest Expense (6.4) (5.9) (6.2) -4.3% Debt at quarter-end totaled $405.6 mil vs. $405.3 million three months prior; 5.5% average interest rate
Other 2.1 0.3 4.3 --

Pre-tax Income 141.9 119.8 126.0 -11.2%

Income Taxes 53.0 45.6 48.0 -9.4% 1Q07 taxes adjusted for one-time items both years
Tax Rate (%) 37.3% 38.1% 38.1% --

Net Income before Preferred Dividends 88.9 74.2 78.0 -12.3%

Preferred Stock Dividends (0.2) (0.2) (0.2) -6.1%

Net Income 88.7 73.9 77.8 -12.3%

Earnings per Share - diluted 9.23 7.74 8.16 -11.6% vs. our down 16% estimate
Average Shares Outstanding (mil) - diluted 9.613 9.554 9.536 -0.8% Repurchased no shares in 2Q07 vs. 20.506K shares in 1Q07

Segment Costs (excl. D&A)

Newspapers 204.9 196.6 200.3 -2.3%
Broadcasting 45.9 48.4 50.3 9.5% Hurt by higher programming expenses
Magazines 72.3 68.2 59.9 -17.1% PostNewsweek Tech Media (sold 12/06)
Cable 85.9 94.4 95.4 11.1%
Education 356.0 428.3 447.6 25.7% Includes stock comp expense of $17.0 mil vs. $4.3 mil year-ago
Corporate 8.8 9.0 9.9 12.0%
Total Segment Costs 773.8 844.9 863.1 11.5%

E = Lehman Brothers estimates A = Actual

Note: Excludes one-time items
Source: Company reports and Lehman Brothers estimates

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 EQUITY RESEARCH
Washington Post Lehman Brothers
Quarterly Income Statement Craig A. Huber (212) 526-5546
(Dollars in millions, except per share data)
Up-dated 8/6/07

2005 2006(A) 2007(E) 2008(E)

March June Sept. Dec. Annual March June Sept. Dec. Annual March(A) June(A) Sept.(E) Dec.(E) Annual Annual
Revenue by Segment
Newspapers 233.0 236.3 235.5 252.2 957.1 243.5 245.6 225.6 247.2 961.9 219.2 227.9 211.0 232.4 890.4 837.0
Broadcasting 79.3 88.4 74.0 90.1 331.8 85.9 89.0 82.2 104.8 361.9 80.8 87.9 74.0 89.1 331.8 378.2
Magazines 69.9 97.9 78.1 99.0 344.9 74.8 84.2 76.1 96.0 331.0 61.2 73.4 68.5 84.0 287.1 269.9
Cable 126.4 129.1 123.2 129.0 507.7 135.2 141.1 142.3 147.3 565.9 149.0 154.4 154.4 156.9 614.7 657.8
Education 325.4 345.8 362.8 378.4 1,412.4 408.9 409.2 420.6 445.4 1,684.1 475.8 503.5 520.0 536.4 2,035.7 2,265.3
Intersegment Elimination 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (0.4) (0.3) 0.0 0.0 (0.7) 0.0
Total Revenue 833.9 897.6 873.7 948.7 3,553.9 948.3 969.0 946.9 1,040.7 3,904.9 985.6 1,046.8 1,027.9 1,098.8 4,159.1 4,408.2

EBITDA by Segment
Newspapers 40.3 36.8 38.3 47.7 163.0 41.2 40.6 24.7 38.3 144.8 24.5 27.6 16.3 28.5 96.9 73.2
Broadcasting 35.2 43.6 29.5 44.4 152.7 40.0 43.1 35.4 52.4 170.7 31.8 37.6 24.8 39.2 133.3 172.1
Magazines (4.4) 20.7 12.0 19.6 47.9 (0.2) 11.8 10.6 19.7 42.0 (5.4) 13.5 7.5 13.4 29.0 20.2
Cable 48.8 49.0 30.0 49.6 177.5 50.5 55.2 53.0 55.4 214.2 55.1 59.0 58.7 59.6 232.4 250.0
Education 42.3 44.4 59.2 57.0 202.9 65.6 53.3 52.1 38.9 209.9 50.7 55.9 59.8 67.0 233.3 280.5
Corporate (7.0) (7.4) (7.6) (9.1) (31.1) (8.8) (8.8) (7.9) (11.8) (37.4) (8.4) (9.9) (9.0) (10.0) (37.3) (38.6)
Total EBITDA 155.2 187.1 161.5 209.2 712.9 188.2 195.2 167.8 192.9 744.1 148.2 183.6 158.2 197.7 687.7 757.5

EBITDA Margin (%)

Newspapers 17.3% 15.6% 16.3% 18.9% 17.0% 16.9% 16.5% 10.9% 15.5% 15.1% 11.2% 12.1% 7.8% 12.3% 10.9% 8.8%
Broadcasting 44.4% 49.4% 39.8% 49.2% 46.0% 46.5% 48.4% 43.0% 49.9% 47.2% 39.3% 42.8% 33.5% 44.0% 40.2% 45.5%
Magazines -6.3% 21.1% 15.4% 19.8% 13.9% -0.3% 14.1% 14.0% 20.5% 12.7% -8.9% 18.4% 11.0% 16.0% 10.1% 7.5%
Cable 38.6% 38.0% 24.4% 38.5% 35.0% 37.3% 39.1% 37.3% 37.6% 37.8% 37.0% 38.2% 38.0% 38.0% 37.8% 38.0%
Education 13.0% 12.8% 16.3% 15.1% 14.4% 16.0% 13.0% 12.4% 8.7% 12.5% 10.6% 11.1% 11.5% 12.5% 11.5% 12.4%
Corporate -0.8% -0.8% -0.9% -1.0% -0.9% -0.9% -0.9% -0.8% -1.1% -1.0% -0.8% -0.9% -0.9% -0.9% -0.9% -0.9%
Total EBITDA Margin (%) 18.6% 20.8% 18.5% 22.1% 20.1% 19.8% 20.1% 17.7% 18.5% 19.1% 15.0% 17.5% 15.4% 18.0% 16.5% 17.2%

Depreciation and Amortization 47.2 49.4 49.1 52.4 198.0 50.4 50.9 51.6 59.4 212.3 56.2 58.4 57.2 57.4 229.2 232.8

Operating Profit 108.0 137.7 112.4 156.8 514.9 137.76 144.3 116.2 133.5 531.8 92.0 125.3 101.0 140.3 458.5 524.6
% Margin 12.9% 15.3% 12.9% 16.5% 14.5% 14.5% 14.9% 12.3% 12.8% 13.6% 9.3% 12.0% 9.8% 12.8% 11.0% 11.9%

Other Income/(Expense)
Equity in earnings of affiliates (0.5) 0.3 (1.0) 0.3 (0.9) (0.2) (0.6) (0.6) 2.2 0.8 0.2 (0.1) 0.0 1.5 1.5 2.0
Interest Income 0.6 0.6 0.6 1.6 3.4 1.6 2.5 3.0 3.3 10.4 3.3 2.7 3.0 3.0 12.0 16.4
Interest Expense (6.5) (6.4) (7.6) (6.2) (26.8) (6.3) (6.4) (6.4) (6.2) (25.3) (5.9) (6.2) (5.9) (5.9) (23.8) (23.3)
Other (1.6) (3.6) (1.7) (1.3) (8.3) (0.2) 2.1 2.7 6.2 10.9 0.8 4.3 0.0 (1.0) 4.1 1.3

Pre-tax Income 99.9 128.6 102.8 151.1 482.3 132.7 141.9 114.9 138.9 528.5 90.3 126.0 98.1 137.9 452.4 521.0

Income Taxes 38.7 49.8 41.4 48.7 178.6 50.8 53.0 38.1 50.7 192.6 34.4 48.0 37.4 52.5 172.3 198.5
Tax Rate (%) 38.7% 38.7% 40.3% 32.2% 37.0% 38.3% 37.3% 33.1% 36.5% 36.4% 38.1% 38.1% 38.1% 38.1% 38.1% 38.1%

Net Income before Preferred Dividends 61.2 78.8 61.4 102.4 303.7 81.9 88.9 76.8 88.2 335.9 55.9 78.0 60.7 85.4 280.0 322.5

Preferred Stock Dividends (0.5) (0.2) (0.2) 0.0 (1.0) (0.5) (0.2) (0.2) 0.0 (1.0) (0.5) (0.2) (0.2) 0.0 (1.0) (1.0)

Net Income 60.7 78.5 61.1 102.4 302.8 81.5 88.7 76.6 88.2 335.0 55.4 77.8 60.5 85.4 279.1 321.5

Earnings per Share - diluted 6.31 8.16 6.35 10.65 31.49 8.48 9.23 7.96 9.21 34.87 5.81 8.16 6.33 8.96 29.25 33.75
% Change 2.6% -7.5% -25.8% -3.4% -9.0% 34.3% 13.0% 25.3% -13.5% 10.8% -31.5% -11.6% -20.5% -2.7% -16.1% 15.4%
Average Shares Outstanding (mil) - diluted 9.617 9.618 9.618 9.616 9.616 9.606 9.613 9.617 9.581 9.606 9.547 9.536 9.554 9.529 9.541 9.527

Revenue - % Change
Newspapers 6.5% 1.0% 4.7% -3.1% 2.0% 4.5% 3.9% -4.2% -2.0% 0.5% -10.0% -7.2% -6.5% -6.0% -7.4% -6.0%
Broadcasting 3.9% -2.0% -19.0% -13.1% -8.3% 8.4% 0.6% 11.1% 16.3% 9.1% -5.9% -1.2% -10.0% -15.0% -8.3% 14.0%
Magazines -17.4% 7.6% -8.4% -6.0% -5.8% 7.1% -14.1% -2.5% -3.1% -4.0% -18.1% -12.8% -10.0% -12.5% -13.3% -6.0%
Cable 4.4% 2.1% -1.3% 1.6% 1.7% 7.0% 9.3% 15.5% 14.2% 11.5% 10.2% 9.4% 8.5% 6.5% 8.6% 7.0%
Education 26.0% 25.0% 23.6% 23.5% 24.5% 25.7% 18.4% 15.9% 17.7% 19.2% 16.3% 23.0% 23.6% 20.4% 20.9% 11.3%
Total Revenue 9.9% 9.7% 6.5% 5.1% 7.7% 13.7% 8.0% 8.4% 9.7% 9.9% 3.9% 8.0% 8.6% 5.6% 6.5% 6.0%

EBITDA by Segment - % Change

Newspapers -3.2% -21.9% -1.7% -8.8% -9.4% 2.2% 10.5% -35.6% -19.6% -11.2% -40.6% -32.0% -33.7% -25.7% -33.1% -24.4%
Broadcasting 3.6% -6.2% -36.1% -24.3% -17.6% 13.5% -1.3% 20.0% 18.0% 11.8% -20.5% -12.7% -29.9% -25.1% -21.9% 29.1%
Magazines -157.7% 12.3% -1.9% 10.3% -14.7% -94.9% -42.8% -11.5% 0.3% -12.5% -- -- -29.1% -31.8% -30.8% -30.2%
Cable 4.0% -2.2% -39.7% -6.2% -11.2% 3.4% 12.6% 76.5% 11.7% 20.6% 9.1% 6.8% 10.7% 7.5% 8.5% 7.6%
Education 44.3% 10.5% 27.4% 31.5% 27.4% 55.1% 20.1% -12.1% -31.7% 3.5% -22.8% 4.9% 14.9% 72.0% 11.2% 20.2%
Corporate -16.7% -3.0% 8.0% -6.5% -5.2% 25.4% 18.8% 5.2% 30.3% 20.4% -5.3% 12.0% 13.2% -15.4% -0.5% 3.5%
Total EBITDA 2.7% -3.9% -13.5% -2.8% -4.6% 21.3% 4.3% 3.9% -7.8% 4.4% -21.3% -5.9% -5.7% 2.5% -7.6% 10.1%

E = Lehman Brothers estimates A = Actual

Note: Excludes one-time items
Washington Post began expensing stock options in 2002.
Earnings model above includes extra week of operations in 4Q04 (company uses fiscal reporting to equalize number of Sundays most years).
Source: Company reports and Lehman Brothers estimates

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 EQUITY RESEARCH
Washington Post Lehman Brothers
Quarterly Education Breakout Craig A. Huber (212) 526-5546
(Dollars in millions, except per share data)
Up-dated 8/6/07

2005 2006(A) 2007(E) 2008(E)

March June Sept. Dec. Annual March June Sept. Dec. Annual March(A) June(A) Sept.(E) Dec.(E) Annual Annual

Revenue by Segment
Supplemental Education 156.5 172.6 181.2 180.5 690.8 193.4 201.4 203.5 206.8 805.2 223.8 253.5 259.5 258.5 995.2 1,094.7
Higher Education 168.9 173.2 181.6 197.9 721.6 215.5 207.8 217.1 238.6 879.0 252.0 250.0 260.5 277.9 1,040.5 1,170.5
Total Education Revenue 325.4 345.8 362.8 378.4 1,412.4 408.9 409.2 420.6 445.4 1,684.1 475.8 503.5 520.0 536.4 2,035.7 2,265.3

EBITDA by Segment
Supplemental Education 29.0 34.5 39.4 35.9 138.7 38.8 39.3 41.7 27.2 146.9 27.5 47.0 49.8 41.9 166.2 188.8
Higher Education 33.1 23.8 17.0 31.2 105.2 39.5 29.3 27.8 35.9 132.4 45.2 35.4 34.7 44.8 160.0 189.2
Kaplan Corporate Overhead (11.6) (10.0) (5.8) (4.9) (32.4) (9.9) (11.0) (10.4) (5.4) (36.6) (9.5) (9.5) (9.7) (9.7) (38.3) (40.2)
Other (8.2) (3.9) 8.7 (5.1) (8.6) (2.8) (4.3) (7.1) (18.7) (32.9) (12.5) (17.0) (15.0) (10.0) (54.5) (57.2)
Total Education EBITDA 42.3 44.4 59.2 57.0 202.9 65.6 53.3 52.1 38.9 209.9 50.7 55.9 59.8 67.0 233.3 280.5

EBITDA Margin (%)

Supplemental Education 18.5% 20.0% 21.7% 19.9% 20.1% 20.0% 19.5% 20.5% 13.1% 18.3% 12.3% 18.5% 19.2% 16.2% 16.7% 17.2%
Higher Education 19.6% 13.8% 9.4% 15.8% 14.6% 18.3% 14.1% 12.8% 15.0% 15.1% 17.9% 14.1% 13.3% 16.1% 15.4% 16.2%
Kaplan Corporate Overhead -3.6% -2.9% -1.6% -1.3% -2.3% -2.4% -2.7% -2.5% -1.2% -2.2% -2.0% -1.9% -1.9% -1.8% -1.9% -1.8%
Other -2.5% -1.1% 2.4% -1.4% -0.6% -0.7% -1.1% -1.7% -4.2% -2.0% -2.6% -3.4% -2.9% -1.9% -2.7% -2.5%
Total Education EBITDA 13.0% 12.8% 16.3% 15.1% 14.4% 16.0% 13.0% 12.4% 8.7% 12.5% 10.6% 11.1% 11.5% 12.5% 11.5% 12.4%

Total Education D&A 9.7 10.2 10.7 14.4 45.0 13.0 12.5 13.7 17.9 57.0 16.3 18.3 17.3 17.3 69.1 74.0

Operating Income
Supplemental Education 24.4 29.5 34.2 29.0 117.1 32.6 33.3 35.1 18.6 119.6 19.7 38.2 41.5 33.6 133.0 153.3
Higher Education 28.3 18.7 11.7 24.0 82.7 33.0 23.0 21.0 26.9 103.9 37.0 26.2 26.1 36.1 125.4 152.2
Kaplan Corporate Overhead (11.8) (10.2) (6.0) (5.2) (33.3) (10.1) (11.2) (10.6) (5.7) (37.7) (9.8) (9.9) (10.0) (10.0) (39.7) (41.7)
Other (8.2) (3.9) 8.7 (5.1) (8.6) (2.8) (4.3) (7.1) (18.7) (32.9) (12.5) (17.0) (15.0) (10.0) (54.5) (57.2)
Total Education Operating Income 32.6 34.1 48.5 42.6 157.8 52.6 40.8 38.4 21.1 152.9 34.3 37.5 42.6 49.7 164.2 206.5

Operating Profit Margin (%)

Supplemental Education 15.6% 17.1% 18.9% 16.0% 16.9% 16.8% 16.5% 17.3% 9.0% 14.8% 8.8% 15.1% 16.0% 13.0% 13.4% 14.0%
Higher Education 16.7% 10.8% 6.4% 12.1% 11.5% 15.3% 11.1% 9.7% 11.3% 11.8% 14.7% 10.5% 10.0% 13.0% 12.1% 13.0%
Kaplan Corporate Overhead -3.6% -3.0% -1.7% -1.4% -2.4% -2.5% -2.7% -2.5% -1.3% -2.2% -2.1% -2.0% -1.9% -1.9% -2.0% -1.8%
Other -2.5% -1.1% 2.4% -1.4% -0.6% -0.7% -1.1% -1.7% -4.2% -2.0% -2.6% -3.4% -2.9% -1.9% -2.7% -2.5%
Total Operating Profit 10.0% 9.9% 13.4% 11.3% 11.2% 12.9% 10.0% 9.1% 4.7% 9.1% 7.2% 7.5% 8.2% 9.3% 8.1% 9.1%

Revenue by Segment - % Change

Supplemental Education 15.4% 20.3% 19.9% 24.6% 20.1% 23.6% 16.7% 12.3% 14.5% 16.6% 15.7% 25.8% 27.5% 25.0% 23.6% 10.0%
Higher Education 37.7% 29.9% 27.4% 22.6% 28.9% 27.6% 20.0% 19.6% 20.6% 21.8% 16.9% 20.3% 20.0% 16.5% 18.4% 12.5%
Total Education Revenue % Change 26.0% 25.0% 23.6% 23.5% 24.5% 25.7% 18.4% 15.9% 17.7% 19.2% 16.3% 23.0% 23.6% 20.4% 20.9% 11.3%

Organic Revenue % Change

Supplemental Education 13.0% 13.0% 11.0% 15.0% 13.0% 11.0% 9.0% 7.0% 2.0% 7.0% 2.5% 9.0% -- -- -- --
Higher Education 33.0% 25.0% 21.0% 13.0% 23.0% 22.0% 15.0% 19.0% 18.0% 19.0% 17.0% 20.0% -- -- -- --
Total Education 23.0% 19.0% 16.0% 14.0% 18.0% 17.0% 12.0% 13.0% 11.0% 13.0% 9.0% 14.0% -- -- -- --

EBITDA - % Change
Supplemental Education 17.2% 13.9% 6.4% 33.0% 16.6% 33.7% 14.1% 5.9% -24.2% 6.0% -29.0% 19.6% 19.4% 54.1% 13.1% 13.6%
Higher Education 35.2% -17.0% -30.3% -10.0% -6.3% 19.2% 22.9% 63.5% 14.9% 25.9% 14.4% 20.8% 24.6% 24.8% 20.8% 18.3%
Kaplan Corporate Overhead 48.6% 43.5% -33.6% -31.3% 5.3% -15.0% 9.3% 78.0% 9.0% 12.9% -3.5% -13.5% -6.8% 79.1% 4.7% 4.9%
Other -32.2% -67.1% -241.0% -53.7% -79.1% -66.1% 11.4% -181.8% 263.6% 282.9% 349.5% 293.2% 111.7% -46.6% 65.6% 5.0%
Total Education EBITDA - % Change 44.3% 10.5% 27.4% 31.5% 27.4% 55.1% 20.1% -12.1% -31.7% 3.5% -22.8% 4.9% 14.9% 72.0% 11.2% 20.2%

Expenses
Supplemental Education 127.5 138.1 141.9 144.7 552.1 154.7 162.1 161.8 179.6 658.2 196.2 206.5 209.7 216.6 829.0 906.0
Higher Education 135.8 149.4 164.6 166.7 616.4 176.0 178.5 189.3 202.7 746.5 206.8 214.6 225.8 233.2 880.5 981.4
Kaplan Corporate Overhead 11.6 10.0 5.8 4.9 32.4 9.9 11.0 10.4 5.4 36.6 9.5 9.5 9.7 9.7 38.3 40.2
Other 8.2 3.9 (8.7) 5.1 8.6 2.8 4.3 7.1 18.7 32.9 12.5 17.0 15.0 10.0 54.5 57.2
Total Expenses (excl. D&A) 283.1 301.4 303.6 321.4 1,209.5 343.3 356.0 368.5 406.4 1,474.2 425.1 447.6 460.2 469.4 1,802.3 1,984.8

Expenses - % Change
Supplemental Education 15.0% 22.1% 24.3% 22.7% 21.1% 21.3% 17.4% 14.1% 24.1% 19.2% 26.9% 27.4% 29.6% 20.6% 26.0% 9.3%
Higher Education 38.3% 42.8% 39.3% 31.5% 37.7% 29.6% 19.5% 15.0% 21.6% 21.1% 17.5% 20.2% 19.3% 15.0% 17.9% 11.5%
Kaplan Corporate Overhead 48.6% 43.5% -33.6% -31.3% 5.3% -15.0% 9.3% 78.0% 9.0% 12.9% -3.5% -13.5% -6.8% 79.1% 4.7% 4.9%
Other -32.2% -67.1% -241.0% -53.7% -79.1% -66.1% 11.4% -181.8% 263.6% 282.9% 349.5% 293.2% 111.7% -46.6% 65.6% 5.0%
Total Expenses (excl. D&A) - % Change 23.6% 27.4% 22.8% 22.2% 24.0% 21.3% 18.1% 21.4% 26.4% 21.9% 23.8% 25.7% 24.9% 15.5% 22.3% 10.1%

E = Lehman Brothers estimates A = Actual

Note: Breakout of reported revenue and profits for 1Q07 forward is estimated.
Source: Company reports and Lehman Brothers estimates

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 EQUITY RESEARCH
Washington Post Lehman Brothers
Cash Flow Analysis Craig A. Huber (212) 526-5546
(Dollars in millions)
Up-dated 8/6/07

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006(A) 2007(E) 2008(E)
Sources of Cash
Net Income before Preferred Dividends 237.1 223.6 223.6 153.0 134.0 211.7 255.8 332.7 303.7 335.9 280.0 322.5
Depreciation/Amortization 105.0 139.1 162.8 180.6 138.9 172.6 175.3 184.7 198.0 212.3 229.2 232.8
Equity losses (7.0) 9.1 9.7 37.4 69.4 20.0 10.5 3.1 1.7 0.1 0.1 0.1
Deferred Income Taxes 3.1 27.0 30.0 (7.7) 97.3 50.1 30.7 44.3 29.3 (38.2) 0.0 0.0
Debt 296.4 157.0 431.7 35.1 10.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Proceeds from Sales of Securities 1.8 45.3 80.0 6.3 0.1 19.7 0.0 0.0 64.8 82.9 0.0 0.0
Proceeds from Stock Options 0.0 0.0 0.0 7.1 4.7 6.7 5.9 15.6 6.8 5.9 6.2 6.5
Divestitures 120.2 376.4 2.0 1.7 63.4 1.5 110.0 5.3 24.1 83.2 0.0 0.0
Other (8.8) (110.3) (7.7) 52.6 (103.8) 9.7 (50.5) (0.4) 20.0 1.5 0.0 0.0
Total Sources 747.8 867.2 932.1 466.0 414.0 492.0 537.7 585.4 648.5 683.7 515.5 562.0

Uses of Cash
Change in Working Capital (19.1) 3.4 29.3 (35.9) (90.1) (97.9) (0.9) (39.4) (10.5) (123.1) (1.4) 10.0
Capital Expenditures 214.6 244.2 130.0 172.4 224.2 153.0 125.6 204.6 238.3 284.0 300.0 250.0
Acquisitions 178.9 320.6 124.0 254.7 116.0 36.3 135.4 55.5 152.2 162.1 119.9 0.0
Purchases of Securities 0.0 165.0 23.3 0.0 0.0 0.0 0.0 94.6 0.0 42.9 0.0 0.0
Debt 0.0 0.0 0.0 0.0 0.0 276.2 71.7 157.4 57.2 27.8 2.0 5.2
Common Stock 368.6 20.5 425.9 0.1 0.4 0.8 0.7 0.0 0.0 56.6 60.0 0.0
Dividends 52.6 51.4 53.3 52.0 54.2 54.3 56.3 67.9 72.0 75.9 79.7 83.7
Investment in affiliates 0.0 0.0 0.0 12.4 21.1 7.6 6.0 0.0 5.0 3.3 0.0 0.0
Net Pension Benefit 30.2 62.0 84.4 65.3 76.9 64.4 55.1 42.0 37.9 21.8 0.0 0.0
Other 3.2 6.0 1.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total Uses 829.0 873.1 871.8 521.1 402.9 494.7 449.9 582.5 552.1 551.4 560.2 348.9

Net Increase (Decrease) in Cash (81.2) (5.9) 60.3 (55.1) 11.1 (2.7) 87.8 2.8 96.5 132.3 (44.6) 213.1

Year-end Debt 296.4 453.4 885.3 923.3 933.1 664.8 631.1 484.1 428.5 407.2 405.2 400.0
Year-end Cash 21.1 15.2 75.5 20.3 31.5 28.8 116.6 119.4 215.9 348.1 303.5 516.6

Free Cash Flow 127.5 118.5 256.3 160.1 47.6 230.2 304.5 311.8 262.4 263.3 208.3 304.4
% Change -45.9% -7.1% 116.4% -37.5% -70.3% 383.8% 32.3% 2.4% -15.8% 0.3% -20.9% 46.1%
Free Cash Flow per Share 11.88 11.70 25.39 16.92 5.01 24.17 31.86 32.50 27.29 27.41 21.83 31.95
% Change -44.7% -1.6% 117.0% -33.3% -70.4% 382.7% 31.8% 2.0% -16.0% 0.4% -20.4% 46.4%

E = Lehman Brothers estimates A = Actual

Note: Free cash flow = Net Income + D&A - Capital Expenditures
Source: Company reports and Lehman Brothers estimates

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 EQUITY RESEARCH
Lehman Brothers Craig A. Huber (212) 526-5546
August 6, 2007
Comparative Valuation - Newspaper Companies
Sector Rating - Negative
Small-Cap Newspapers
New York Scripps, Washington Journal Journal Average
Dow Jones Gannett McClatchy Times E.W. Tribune Post Comm. Register (Excl. DJ)
Stock Symbol DJ GCI MNI NYT SSP TRB WPO JRN JRC --
Rating 2-Equal weight 3-Underweight 3-Underweight 3-Underweight 3-Underweight 3-Underweight 1-Overweight 2-Equal weight 3-Underweight --

Recent Stock Price 58.21 49.09 22.79 22.35 40.32 27.49 825.50 10.13 2.98 --

52-week High 61.76 63.50 44.95 26.90 53.39 34.28 850.00 14.00 8.60 --
52-week Low 32.16 47.61 22.69 21.54 39.93 27.00 690.00 10.04 2.91 --

Stock Price Return - YTD 53.2% -18.8% -47.4% -8.3% -19.3% -10.7% 10.7% -19.7% -59.2% -21.6%
% Off 52-Week High -5.7% -22.7% -49.3% -16.9% -24.5% -19.8% -2.9% -27.6% -65.3% -28.6%

12-month Price Target 60.00 44.00 20.00 17.00 36.00 34.00 775.00 9.00 2.00 --
% Change 3.1% -10.4% -12.2% -23.9% -10.7% 23.7% -6.1% -11.2% -32.9% -10.5%

Dividend per Share 1.00 1.60 0.72 0.92 0.56 0.72 8.20 0.30 0.08 --
Dividend Yield (%) 1.7% 3.3% 3.2% 4.1% 1.4% 2.6% 1.0% 3.0% 2.7% 2.6%
Dividend Payout Ratio (vs. 2007E FCF) 67.1% 33.7% 29.0% 56.9% 26.1% 43.7% 37.6% 63.1% 17.2% 38.4%
Earnings per Share (excl. extra week in 4Q06)
2005 0.85 4.78 2.51 1.49 2.05 2.07 31.49 0.57 1.00 --
2006(A) 0.97 4.69 2.62 1.32 2.34 1.97 34.87 0.70 0.73 --
2007(E) 1.40 4.25 1.45 0.89 2.03 1.48 29.25 0.58 0.45 --
2008(E) 1.47 4.40 1.40 1.00 2.10 1.20 33.75 0.68 0.35 --

% Change 2005 vs. 2004 -14.1% -0.4% 2.9% -17.2% 17.1% -5.9% -9.0% -16.2% -9.9% -4.8%
% Change 2006(A) vs. 2005 14.1% -1.9% 4.4% -11.1% 14.1% -4.7% 10.7% 22.2% -27.4% 0.8%
% Change 2007(E) vs. 2006(E) 44.3% -9.4% -44.6% -32.8% -13.2% -25.0% -16.1% -16.7% -38.0% -24.5%
% Change 2008(E) vs. 2007(E) 5.0% 3.5% -3.4% 12.4% 3.4% -18.9% 15.4% 17.2% -22.2% 0.9%

Price / Earnings
2006(A) 60.0 10.5 8.7 16.9 17.2 13.9 23.7 14.5 4.1 13.7
2007(E) 41.6 11.6 15.7 25.1 19.9 18.6 28.2 17.5 6.6 17.9
2008(E) 39.6 11.2 16.3 22.4 19.2 22.9 24.5 14.9 8.5 17.5

P/E Relative - 2006(A) 3.41 0.60 0.49 0.96 0.98 0.79 1.35 0.83 0.23 0.78
P/E Relative - 2007(E) 2.58 0.72 0.97 1.56 1.23 1.15 1.75 1.08 0.41 1.11
P/E Relative - 2008(E) 2.74 0.77 1.13 1.55 1.33 1.59 1.69 1.03 0.59 1.21

Enterprise Value / EBITDA

2006(A) 19.91 P 6.92 P 6.10 P 7.85 9.27 P 8.40 P 10.17 5.92 P 7.03 P 7.71
2007(E) 16.95 P 7.59 P 6.71 8.69 10.26 10.04 11.00 7.32 8.40 8.75
2008(E) 16.68 7.79 7.35 8.54 10.03 10.57 9.99 6.82 9.08 8.77

Free Cash Flow per Share (excl. extra week in 4Q06)

2006(A) 1.19 4.98 3.12 1.98 2.42 1.99 27.41 0.78 0.66 --
2007(E) 1.49 4.74 2.48 1.62 2.15 1.65 21.83 0.48 0.47 --
2008(E) 1.63 4.82 2.38 1.58 2.23 1.44 31.95 0.57 0.43 --

Price / Free Cash Flow

2006(A) 49.1 9.9 7.3 11.3 16.7 13.8 30.1 13.0 4.5 13.3
2007(E) 39.1 10.3 9.2 13.8 18.8 16.7 37.8 21.3 6.4 16.8
2008(E) 35.8 10.2 9.6 14.2 18.1 19.2 25.8 17.9 7.0 15.2

Enterprise Value/Unlevered FCF - 2007(E) 39.9 12.0 11.4 15.2 19.7 19.9 35.5 27.3 18.6 20.0

Financial Data ($ mil; excl. extra week in 4Q06)

Revenue - 2006(A) 2,062 P 7,805 P 2,455 P 3,228 2,508 P 5,404 P 3,905 620 P 498 P --
EBITDA - 2006(A) 268 P 2,210 P 620 P 487 857 P 1,303 P 744 128 P 109 P --
EBITDA Margin (%) 13.0% 28.3% 25.3% 15.1% 34.2% 24.1% 19.1% 20.6% 22.0% 23.6%

Revenue - 2007(E) 2,080 P 7,497 P 2,270 3,142 2,483 5,100 4,159 578 465 --
EBITDA - 2007(E) 315 P 2,014 P 564 440 774 1,090 688 104 92 --
EBITDA Margin (%) 15.1% 26.9% 24.9% 14.0% 31.2% 21.4% 16.5% 17.9% 19.7% 21.6%

Market Capitalization ($ mil)

Shares Outstanding (mil) 83.8 234.7 82.0 143.9 163.6 117.0 9.5 67.5 39.1 --
Equity Market Capitalization 4,877 11,522 1,868 3,216 6,595 3,216 7,868 684 117 --
Total Debt 560 P 5,196 P 2,437 P 862 P 685 P 9,922 P 417 80 P 656 --
Cash 20 644 10 54 24 182 325 6 4 --
Minority Interests 0 23 0 0 906 0 0 0 0
Investments 75 800 511 200 215 2,015 395 0 0 --
Enterprise Value 5,342 15,296 3,784 3,824 7,948 10,941 7,565 759 769 --

Debt-to-Capital 50.1% 39.2% 46.7% 62.3% 22.3% 50.2% 11.3% 16.8% 74.3% 40.4%
Net Debt/EBITDA (2007E) 1.7 2.3 4.3 1.8 0.9 8.9 0.1 0.7 7.1 3.3

EPS CAGR (2006-08E) 23.1% -3.1% -26.9% -13.1% -5.3% -22.0% -1.6% -1.2% -30.6% -13.0%
EBITDA CAGR (2006-08E) 9.3% -5.7% -8.9% -4.1% -3.8% -10.9% 0.9% -6.8% -12.0% -6.4%
FCF/share CAGR (2006-08E) 17.1% -1.6% -12.7% -10.8% -3.9% -15.1% 8.0% -14.8% -19.8% -8.8%

E = Lehman Brothers estimates A= Actual P = Pro forma

Note: Revenue and EBITDA multiples are pro forma, as needed, for full year for acquisitions/divestitures. EPS and free cash flow estimates are from transaction closing date forward.
Free cash flow = Net Income + D&A - Capital Expenditures; capital expenditures, though, for New York Times, Journal Communications, and Journal Register exclude large one-time projects.
Figures for Gannett, McClatchy, New York Times, Tribune, Journal Communications, and Journal Register exclude extra week in 4Q06.
Includes stock option expensing beginning 1Q06. New York Times includes stock option expensing beginning 2005 (full-year).
Source: Lehman Brothers

6
 EQUITY RESEARCH

Washington Post Lehman Brothers

Sum-of-the-Parts Analysis Craig A. Huber (212) 526-5546
(Dollars in millions, except per share data)
Up-dated 8/06/07

Estimated Estimated
2008(E) EBITDA Stock EBITDA Private
EBITDA Multiples Market Value Multiples Market Value

Newspapers 73.2 7.0 512.7 12.0 878.8

Broadcasting (adjusted) 152.7 9.0 1,374.4 11.5 1,756.2
Magazines 20.2 7.5 151.8 11.0 222.7
Cable 250.0 8.0 1,999.6 11.0 2,749.5
Education 280.5 12.5 3,506.2 15.0 4,207.4
Corporate (38.6) 9.8 (375.9) 12.5 (481.9)
Total 738.1 9.7 7,168.8 12.6 9,332.6

Total 7,168.8 9,332.6

Debt (417.1) (417.1)
Cash 324.9 324.9
Investments 394.9 394.9

Equity Market Value - adjusted 7,471.5 9,635.4

Shares Outstanding (mil) 9.5 9.5

Potential Stock Price $783.92 $1,010.96

% Change from Current Price -5.0% 22.5%

E = Lehman Brothers estimates A = Actual

Note: Broadcasting EBITDA is adjusted to normalize for political and Olympic advertising
(uses average 2007E and 2008E EBITDA).
Source: Lehman Brothers

7
 EQUITY RESEARCH
Washington Post Lehman Brothers
Products and Services Craig A. Huber (212) 526-5546

Publishing (24.6% of 2006 total revenue)

Joined Daily Sunday

Newspaper Washington Post Circulation Circulation
Washington Post 1877 681,187 945,651
The Herald (Everett, Washington) 1978 49,847 55,157
Total 731,034 1,000,808

Express Publications Company

Publishes weekly tabloid newspaper named Express, which distributes free of charge approximately 185,000 copies

Post-Newsweek Media
The Gazette Newspapers and Southern Maryland Newspapers - 660,000 copies during 2006
Military newspapers (weeklies) - average circulation of 125,000 copies during 2006

Greater Washington Publishing

Free advertising periodicals, The Washington Post Apartment Showcase (monthly with circulation of 52,000) and New Homes Guide (six time a year with circulation of

El Tiempo Latino
Weekly Spanish-language newspaper that is distributed free of charge in northern Virginia, suburban Maryland and Washington, D.C. (circulation of 60,000)

Washingtonpost.Newsweek Interactive
www.washingtonpost.com
www.newsweek.com
www.budgettravelonline.com
www.slate.com

Broadcasting (9.3% of 2006 total revenue)

Joined
Network Washington FCC Lic. Rank
TV Stations (6) City State Affiliation Post Expir. of Mkt.
KPRC Houston Texas NBC 1994 2006 10
WDIV Detroit Michigan NBC 1978 2005 11
WPLG Miami Florida ABC 1969 2005 16
WKMG Orlando Florida CBS 1997 2013 19
KSAT San Antonio Texas ABC 1994 2006 37
WJXT Jacksonville Florida Ind. 1953 2013 50

Affiliation # TV Stations
NBC 2
ABC 2
CBS 1
Ind. 1

Magazines (8.5% of 2006 total revenue)

Newsweek Inc. Description

Newsweek Weekly news magazine published both domestically and internationally with average weekly domestic circulation rate of 3,100,000
Arthur Frommer's Budget Travel Published ten times during 2006 with average paid circulation of more than 600,000

Cable (14.5% of 2006 total revenue)

CableOne: 693,500 cable subscribers with 213,900 subscriptions to digital video service and 289,000 subscriptions to cable modem service in the following markets
Alabama Safford Oakley Louisiana Diamondhead Norfolk Ardmore Nowata Aransas Pass
Annison Show Low Pocatello Vidalia Grenada Sioux City Bartlesville Ponca City Borger
Columbus Winslow Twin Falls Minnesota Gulfport South Sioux City Clinton Sayre Dumas
Arizona Arkansas West Valley Fargo McComb New Mexico Cordell Sulphur Odessa
Bisbee Texarkana Iowa Mississippi Natchez Rio Rancho Duncan Vinita Pampa
Clifton Idaho Sioux City Batesville Pascagoula Roswell Elk City Oregon Port Lavaca
Cottonwood American Falls Kansas Biloxi Yazoo City North Dakota Elmore City Huntington Sherman
Globe Boise Chanute Brookhaven Missouri Fargo Frederick West Valley Texarkana
Holbrook Idaho Falls Emporia Clarksdale Joplin Oklahoma Hobart Tennessee
Page Lewiston Independence Cleveland Kirksville Ada Mangum Dyersburg
Prescott Marsing Parsons Columbus Nebraska Altus Miami Texas

Education (43.1% of 2006 total revenue)

Kaplan
Supplemental Education:
1) Test Preparation & Admissions Division -
Admissions and licensing examinations including SAT, LSAT, GMAT, MCAT, GRE, accounting, English-as-a-second language, and nursing and medical boards; 300,00
2) Professional Division -
Continuing education, certification, licensing, exam prep, and professional development to corporations and individuals seeking to advance their careers in a variety of d
3) Score! Educational Centers -
Computer-based learning and individualized tutoring for children from pre-K through 10th grade; 161 score centers
4) FTC Kaplan Limited -
Provider of training and test preparation services for accounting and financial services professionals

Higher Education:
4) Higher Education Division -
Consists of 74 schools in 22 states that provide classroom-based instruction and two institutions that specialize in distance education; 35,000 students
Dublin Business School - Undergraduate institution located in Dublin, Ireland

Equity Investments

Investment % Owned Description

Berkshire Hathaway -- 2,634 Class A shares; 9,845 Class B shares
Bowater Mersey Paper 49% Supplier of newsprint
Capitol Fiber 80% Handles and sells old newspapers and other paper to recycling industries
LA Times-Washington Post News 50% Syndication of articles to other news organizations worldwide

Source: Company Data ( 2006 10-K ) and BIA Television Market Report

8
 EQUITY RESEARCH
Price Target Methodologies

Our price target for shares of Dow Jones is $60 which is equal to the takeout price from News Corp.

Our 12-month price target on shares of Gannett is $44, which is derived as the average of the following three methodologies. 1) Our 10-
year DCF analysis places fair value at $40 (using a WACC of 10.1%, a long-term FCF growth rate of 1.5%, and a terminal FCF multiple of
11.7, or an implied terminal EBITDA multiple of 7.1). 2) A target multiple of 7.5x estimated 2008 EBITDA, or $47 per share (which works out
to 10.7x estimated 2008 EPS and 9.7x FCF). 3) Our sum-of-the-parts analysis places fair value at $45 based on applying an estimated
2008 EBITDA multiple of 7.0 for the newspaper division and a multiple of 9.5 for the TV station group (using blended 2007/08 EBITDA to
take into account political/Olympics advertising), adjusting down the overall valuation by $481 million for corporate expenses, and taking into
account net debt of $4.55 billion, an estimated $800 million in investments, and shares outstanding of 234.7 million.

Our 12-month price target on shares of McClatchy is $20, which is derived as the average of the following two methodologies: 1) Our 10-
year DCF analysis places fair value at $16 (using a WACC of 10.0%, a long-term FCF growth rate of 1.8%, and a terminal FCF multiple of
12.1x, or an implied terminal EBITDA multiple of 6.6x); and 2) a multiple target of 7.5x estimated 2008 EBITDA equates to $24 per share
(which is 17.1x estimated 2008 EPS and 10.1x FCF).

Our 12-month price target on shares of New York Times is $17, which is derived as the average of the following three methodologies: 1)
Our 10-year DCF analysis places fair value at $14 (using a WACC of 10.5%, a long-term FCF growth rate of 2.0%, and a terminal FCF
multiple of 11.8 or an implied terminal EBITDA multiple of 6.1). 2) A target multiple of 7.0x estimated 2008 EBITDA equates to $18 per
share (which works out to 18.0x estimated 2008 EPS and 11.4x FCF). 3) Our sum-of-the-parts analysis places fair value at $19 based on
applying an estimated 2008 EBITDA multiple of 7.0 for the newspapers, a multiple of 10.0 for About.com, adjusting down the overall
valuation by $356 million for corporate expenses, and taking into account pro forma net debt of $808 million, an estimated $200 million in
investments, and 143.9 million shares outstanding.

Our 12-month price target on shares of Scripps is $36, which is derived as the average of the following three methodologies. 1) Our 10-
year DCF analysis places fair value at $32 (using a WACC of 10.3%, a long-term FCF growth rate of 3.3%, and a terminal FCF multiple of
14.4, or an implied terminal EBITDA multiple of 7.4). 2) A target multiple of 9.25x estimated 2008 EBITDA equates to $37 per share (which
works out to 17.6x estimated 2008 EPS and 16.6x FCF). 3) Our sum-of-the-parts analysis places fair value at $39 based on estimated 2008
EBITDA multiples (7.0x for the newspapers, 8.5x for the TV stations using blended 2007/08 EBITDA to take into account political/Olympics
advertising, 10.0x for Home & Garden TV, 10.5x for Food Network, 7.5x for the interactive division, and 6.0x for licensing and other); a value
of $75 million for Do It Yourself, $157.5 million for Fine Living, $75 million for Great American Country Network; docking $595.7 million in
value for corporate expenses at a multiple of 8.8; and taking into account net debt of $661.6 million and shares outstanding of 163.6 million.

Our 12-month price target on shares of Tribune is $34 based on the price per share shareholders will receive in a transaction taking
Tribune private announced on April 2, 2007. The transaction is taking place in two parts with 126 million shares tendered on May 24, 2007,
at $34 per share and the remaining shareholders receiving $34 per share in 4Q07 (target time frame). Should the Tribune privatization deal
break and not occur, we believe that fair value on the stock, if it were to remain an ongoing public entity, would be significantly lower than
the current stock price. Given the recently added $7 billion in debt to repurchase 126 million shares in the tender offer, we think fair value
on the stock would be $4-5 per share based on our detailed sum of the parts analysis: Using estimated 2008 EBITDA multiples of 7.0x for
newspapers, 9.0x for the TV stations using blended 2007/08 EBITDA to take into account political advertising, 9.0x for radio/entertainment
excluding the Chicago Cubs, $400 million in value for the Chicago Cubs, docking $480 million in value for corporate expenses at a multiple
of 8.0x, taking into account debt of $8.6 billion, PHONES debt of $1.3 billion, cash of $182 million, valuing the investment portfolio at $2.0
billion, and 117.0 million shares outstanding.

Our 12-month price target on shares of Washington Post is $775, which is derived as the average of the following three methodologies.
1) Our 10-year DCF analysis places fair value at $786 per share (using a WACC of 10.0%, a long-term FCF growth rate of 3.5%, and a
terminal FCF multiple of 15.6, or an implied terminal EBITDA multiple of 7.4). 2) A target multiple of 9.25x estimated 2008 EBITDA equates
to $765 per share (which works out to 22.7X estimated 2008 EPS and 23.9x FCF). 3) Our sum-of-the-parts valuation places fair value at
$784 per share based on 2008 EBITDA multiples—7.0 for the newspaper division, 9.0 for broadcasting (using blended 2007/08 EBITDA to
take into account political/Olympics advertising), 7.5 for magazines, 8.0 for cable, and 12.5 for the education division. Docking the overall
valuation by $375.9 million for corporate expenses, and taking into account net debt of $92.2 million, $394.9 million for the equity investment
portfolio, and 9.53 million shares outstanding, gives us fair value.

Our 12-month price target on shares of Journal Communications is $9, which is derived as the average of the following three
methodologies. 1) Our 10-year DCF analysis places fair value at $7 (using a WACC of 10.1%, a long-term FCF growth rate of 2.0%, and a
terminal FCF multiple of 12.3, or an implied terminal EBITDA multiple of 5.1); 2) A target multiple of 7.25x estimated 2008 EBITDA equates
to $11 per share (which results in 16.2x estimated 2008 EPS and 19.4x FCF); and 3) Our sum-of-the-parts analysis places fair value at $11
based on the following 2008 EBITDA multiples by segment—7.0x for the newspapers, 8.5x for the TV stations, 8.5x for the radio stations,
(for both TV and radio stations, we use blended 2007/08 EBITDA to take into account political/Olympics advertising) and 4.5 for the printing
services operation. We also assign a value of $10 million to the company’s “other” segment. Also taking into account net debt outstanding
of $74.4 million and shares outstanding of 67.5 million, this works out to a blended 2008 estimated EBITDA multiple of 7.9.

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Our 12-month price target on shares of Journal Register is $2, which is derived as the average of the following two methodologies: 1)
Given the very high amount of debt at the company already, our 10-year discounted cash flow analysis puts fair value at $0 (using a WACC
of 10.0%, a long-term free cash flow growth rate of 1.5%, and a terminal free cash flow multiple of 11.8x, or an implied terminal EBITDA
multiple of 5.0x); and 2) a target multiple of 9.5x estimated 2008 EBITDA equates to $4 per share (which results in 11.4x 2008 estimated
EPS and 9.4x FCF).

Investment Risks

Risks that may impede the achievement of our price targets for the nine newspapers we cover, in our view, include the following
possibilities. 1) The U.S. economy slows in the next 12–18 months. 2) National and/or local advertisers make a secular shift out of
newspapers and move their advertising budgets to the TV networks/stations, cable networks, Internet, the trade press, business/weekly
magazines, and/or cut them altogether. 3) Secular deterioration occurs at a faster rate in newspaper classified advertising (help wanted, in
particular) and via a continued migration to third-party online sites. 4) Newsprint prices rise faster than we expect. 5) A company begins to
expand its cost base in anticipation of better economic times that do not occur in the coming years. 6) A company undertakes a large,
expensive acquisition and/or the integration of an acquisition does not proceed smoothly. 7) The proposed loosening of media ownership
rules and regulations fail or are tightened. 8) Circulation figures decrease more quickly than we anticipate. 9) Recent larger-than-normal
newspaper circulation volume drops, leading to lack of advertising pricing power and/or ad volume decreases.

Risks specific to each company that may impede the achievement of our price targets, in our view, which are not aforementioned, include
the following:

Dow Jones: 1) Wall Street employment levels deteriorate, pressuring Dow Jones Newswires; 2) tombstone advertising suffers from a lack
of public offerings and/or investment banks choose not to place tombstone advertising in The Wall Street Journal; 3) a stock market
downturn leads to fewer advertisements; 4) other advertisers look for alternative publications in which to place their ads; and 5) News
Corp.’s takeout deal with Dow Jones does not end up happening.

Gannett: 1) TV stations suffer from a slowdown in advertising; and 2) the large U.K. newspaper operation continues to be negatively
affected by the advertising slowdown in that market and/or currency hurts the overall performance in U.S. dollars.

New York Times: 1) Local economic trends in New York and/or Boston deteriorate more than the national average.

Scripps: 1) TV stations suffer from a slowdown in advertising; and 2) investors’ revenue and ratings expectations for Scripps Networks do
not materialize.

Tribune: 1) TV stations suffer from a slowdown in advertising, 2) ratings of the new CW network (launched in fall 2006) do not increase as
much as expected; and 3) risk the deal to take Tribune private does not materialize.

Washington Post: 1) TV stations and/or magazines suffer from an advertising slowdown; 2) the number of cable subscribers declines
sharply; and 3) revenue growth at the education division slows significantly and/or regulation changes affect the business.

Journal Communications: 1) TV stations suffer from a slowdown in advertising; 2) continued margin expansion in all segments,
particularly newspapers and broadcasting, does not materialize as expected; 3) the company loses some or all of its business from a major
client; and 4) there is continued pricing pressure in the commercial printing businesses.

Stocks in this report are priced as of the close of business, August 3, 2007.

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Analyst Certification:
I, Craig A. Huber, hereby certify (1) that the views expressed in this research Company Note accurately reflect my personal views about any
or all of the subject securities or issuers referred to in this Company Note and (2) no part of my compensation was, is or will be directly or
indirectly related to the specific recommendations or views expressed in this Company Note.

Company Description:
Washington Post is a diversified media company owning newspapers, 6 large market TV stations, magazines led by Newsweek, rural cable
systems, and education assets led by Kaplan.

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 EQUITY RESEARCH
Important Disclosures:
Washington Post (WPO) US$ 825.50 (05-Aug-2007) 1-Overweight / 3-Negative
Rating and Price Target Chart:
WASHINGTON POST
As of 31-Jul-2007
Currency = USD
1088.00

1056.00

1024.00

992.00

960.00

928.00

896.00

864.00

832.00

800.00

768.00

736.00

704.00

8-04 11-04 2-05 5-05 8-05 11-05 2-06 5-06 8-06 11-06 2-07 5-07
Closing Price Price Target
Recommendation Change Drop Coverage
Source: FactSet
Currency=US$
Date Closing Price Rating Price Target Date Closing Price Rating Price Target
09-May-07 763.27 755.00 09-Nov-05 735.30 900.00
05-Mar-07 755.61 810.00 29-Sep-05 791.00 900.00
16-Jan-07 769.00 825.00 08-Aug-05 810.60 950.00
07-Nov-06 735.00 830.00 09-May-05 839.75 1000.00
08-Aug-06 735.00 880.00 12-Oct-04 900.83 1075.00
02-Mar-06 760.00 920.00 12-Oct-04 900.83 1 -Overweight
FOR EXPLANATIONS OF RATINGS REFER TO THE STOCK RATING KEYS LOCATED ON THE PAGE FOLLOWING THE LAST PRICE CHART.
Lehman Brothers Inc and/or an affiliate trade regularly in the shares of Washington Post.
Valuation Methodology: Our 12-month price target on shares of Washington Post is $775, which is derived as the average of the following
three methodologies. 1) Our 10-year DCF analysis places fair value at $786 per share (using a WACC of 10.0%, a long-term FCF growth
rate of 3.5%, and a terminal FCF multiple of 15.6, or an implied terminal EBITDA multiple of 7.4). 2) A target multiple of 9.25x estimated
2008 EBITDA equates to $765 per share (which works out to 22.7X estimated 2008 EPS and 23.9x FCF). 3) Our sum-of-the-parts valuation
places fair value at $784 per share based on 2008 EBITDA multiples-7.0 for the newspaper division, 9.0 for broadcasting (using blended
2007/08 EBITDA to take into account political/Olympics advertising), 7.5 for magazines, 8.0 for cable, and 12.5 for the education division.
Docking the overall valuation by $375.9 million for corporate expenses, and taking into account net debt of $92.2 million, $394.9 million for
the equity investment portfolio, and 9.53 million shares outstanding, gives us fair value.
Risks Which May Impede the Achievement of the Price Target: Risks which may impede the achievement of the price target for
Washington Post, in our view, include: 1) The U.S. economy slows over the next 12-18 months. 2) National and/or local advertisers make a
secular shift out of newspapers and move their advertising budgets to the TV networks/stations, cable networks, the trade press,
business/weekly magazines, and/or cut them altogether. 3) Secular deterioration occurs at a faster rate in newspaper classified advertising
(help wanted, in particular) and via a continued migration to third-party online sites. 4) Newsprint prices rise faster than we expect. 5) A
company starts to expand its cost base again in anticipation of better economic times that do not occur in the coming years. 6) A company
undertakes a large, expensive acquisition and/or the integration of an acquisition does not go smoothly. 7) The proposed loosening of media
ownership rules and regulations fail or are tightened. 8) Circulation figures decrease more quickly than we anticipate. 9) Recent larger-than-
normal newspaper circulation volume drops lead to lack of advertising pricing power and/or ad volume decreases. 10) TV stations and/or its
magazines suffer from an advertising slowdown; 11) a major falloff in the number of cable subscribers occurs; and 12) revenue growth at
the education division slows significantly, and/or regulation changes affect the business.

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 EQUITY RESEARCH
FOR CURRENT IMPORTANT DISCLOSURES REGARDING COMPANIES THAT ARE
THE SUBJECT OF THIS RESEARCH REPORT, PLEASE SEND A WRITTEN REQUEST TO:
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Important Disclosures Continued:

The analysts responsible for preparing this report have received compensation based upon various factors including the firm's total
revenues, a portion of which is generated by investment banking activities

Company Name Ticker Price (05-Aug-2007) Stock / Sector Rating

Washington Post WPO US$ 825.50 1-Overweight / 3-Negative

Related Stocks Ticker Price (01-Aug-2007) Stock / Sector Rating

Dow Jones DJ US$ 58.37 2-Equal weight / 3-Negative
Gannett Inc. GCI US$ 50.50 3-Underweight / 3-Negative
Journal Communications JRN US$ 10.56 2-Equal weight / 3-Negative
Journal Register JRC US$ 2.94 3-Underweight / 3-Negative
McClatchy Company MNI US$ 23.24 3-Underweight / 3-Negative
New York Times NYT US$ 22.64 3-Underweight / 3-Negative
Scripps, E.W. SSP US$ 41.27 3-Underweight / 3-Negative
Tribune Co. TRB US$ 28.18 3-Underweight / 3-Negative

Guide to Lehman Brothers Equity Research Rating System:

Our coverage analysts use a relative rating system in which they rate stocks as 1-Overweight, 2-Equal weight or 3-Underweight (see
definitions below) relative to other companies covered by the analyst or a team of analysts that are deemed to be in the same industry
sector (the “sector coverage universe”). Below is the list of companies that constitute the sector coverage universe:

Dow Jones (DJ) Gannett Inc. (GCI)

Journal Communications (JRN) Journal Register (JRC)
McClatchy Company (MNI) McGraw-Hill (MHP)
New York Times (NYT) Scripps, E.W. (SSP)
Tribune Co. (TRB) Washington Post (WPO)

In addition to the stock rating, we provide sector views which rate the outlook for the sector coverage universe as 1-Positive, 2-Neutral or 3-
Negative (see definitions below). A rating system using terms such as buy, hold and sell is not the equivalent of our rating system.
Investors should carefully read the entire research report including the definitions of all ratings and not infer its contents from ratings alone.

Stock Rating
1-Overweight - The stock is expected to outperform the unweighted expected total return of the sector coverage universe over a 12-month
investment horizon.
2-Equal weight - The stock is expected to perform in line with the unweighted expected total return of the sector coverage universe over a
12- month investment horizon.
3-Underweight - The stock is expected to underperform the unweighted expected total return of the sector coverage universe over a 12-
month investment horizon.
RS-Rating Suspended - The rating and target price have been suspended temporarily to comply with applicable regulations and/or firm
policies in certain circumstances including when Lehman Brothers is acting in an advisory capacity in a merger or strategic transaction
involving the company.

Sector View
1-Positive - sector coverage universe fundamentals/valuations are improving.
2-Neutral - sector coverage universe fundamentals/valuations are steady, neither improving nor deteriorating.
3-Negative - sector coverage universe fundamentals/valuations are deteriorating.

Distribution of Ratings:
Lehman Brothers Equity Research has 2057 companies under coverage.
41% have been assigned a 1-Overweight rating which, for purposes of mandatory regulatory disclosures, is classified as Buy rating, 30% of
companies with this rating are investment banking clients of the Firm.
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 EQUITY RESEARCH
43% have been assigned a 2-Equal weight rating which, for purposes of mandatory regulatory disclosures, is classified as Hold rating, 39%
of companies with this rating are investment banking clients of the Firm.
12% have been assigned a 3-Underweight rating which, for purposes of mandatory regulatory disclosures, is classified as Sell rating, 26%
of companies with this rating are investment banking clients of the Firm.

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