Graham Holdings Company (GHC) is a diversified holding company with a rich history and a diverse portfolio of businesses spanning media, education, healthcare, automotive, and more. Founded in 1946 as The Washington Post Company, the organization has undergone a remarkable transformation, evolving from its roots in traditional media to become a dynamic conglomerate adapting to the changing tides of the modern business world.
Company History
The company's origins trace back to 1877 when The Washington Post Company was founded. In 1925, the company purchased The Washington Post newspaper, which would become a cornerstone of its operations for decades to come. Under the leadership of Eugene Meyer, a financier and former Federal Reserve governor, who purchased the newspaper at a bankruptcy auction in 1933, and later his son-in-law, Philip L. Graham, the newspaper grew into a respected media institution. Over the next several decades, the company expanded into other media businesses, including television broadcasting and magazine publishing.
In 1963, the company expanded its reach by acquiring the Kaplan educational services division, laying the foundation for its diversification beyond traditional media. This move would prove to be crucial in the company's future development and transformation into a diversified holding company.
In 2013, the company made a bold move, changing its name from The Washington Post Company to Graham Holdings Company to better reflect its evolving business model. This strategic shift signaled the organization's commitment to embracing new opportunities and adapting to the rapidly changing landscape of media, education, and beyond.
A key milestone in the company's history came in 2014 with the sale of The Washington Post newspaper to Amazon founder Jeff Bezos. This decision allowed Graham Holdings to focus on growing its other businesses and further diversify its portfolio.
Business Segments
Today, Graham Holdings Company operates through seven reportable segments: Kaplan International, Kaplan Higher Education, Kaplan Supplemental Education, Television Broadcasting, Manufacturing, Healthcare, and Automotive. This diverse portfolio provides the company with a degree of stability and resilience, allowing it to navigate the challenges and capitalize on the opportunities presented by the ever-evolving markets in which it operates.
Kaplan
Kaplan, the company's largest division, has been a driving force in the education sector, providing a wide range of academic and professional development programs, both domestically and internationally. The segment has demonstrated consistent growth, with revenue increasing by 8% year-over-year in the first nine months of 2024, reaching $1.28 billion. This strong performance can be attributed to the division's ability to adapt to changing student and industry needs, offering innovative educational solutions that cater to the evolving demands of the 21st-century workforce.
In the third quarter of 2024, the education division reported revenue of $438.09 million, up 6% from the same period in 2023. The division's operating income for the third quarter of 2024 was $34.89 million, compared to $29.86 million in the third quarter of 2023. For the first nine months of 2024, the education division reported operating income of $100.75 million, compared to $83.02 million in the first nine months of 2023, showcasing the segment's continued profitability and growth.
Television Broadcasting
The Television Broadcasting segment, which includes the Graham Media Group, has also proven to be a reliable contributor to the company's overall financial performance. Revenue in this segment grew by 8% in the first nine months of 2024, reaching $374 million, as the division capitalized on increased political advertising and the successful broadcast of the summer Olympics. The segment's resilience is a testament to the company's ability to navigate the challenges facing the traditional media industry, such as cord-cutting and the shift towards digital platforms.
Television broadcasting revenue was $145.42 million in the third quarter of 2024, up 25% from the same period in 2023. Operating income for the television broadcasting segment was $61.91 million in the third quarter of 2024, up 94% from the third quarter of 2023. For the first nine months of 2024, television broadcasting operating income was $122.67 million, up 31% from the first nine months of 2023, demonstrating the segment's strong performance and ability to generate substantial profits.
Manufacturing
In the Manufacturing segment, the company operates a diverse portfolio of businesses, including Hoover, a supplier of pressure-treated lumber and plywood products, Dekko, a manufacturer of electrical solutions, and JoyceDayton, a producer of screw jacks and other linear motion systems. While this segment faced some headwinds, with revenue declining by 12% in the first nine months of 2024, the company's management team has demonstrated its ability to adapt and optimize operations to mitigate the impact of market fluctuations.
Manufacturing revenue was $95.39 million in the third quarter of 2024, down 13% from the same period in 2023. Manufacturing operating income was $4.50 million in the third quarter of 2024, compared to $40.97 million in the third quarter of 2023. For the first nine months of 2024, manufacturing operating income was $11.83 million, compared to $21.66 million in the first nine months of 2023, reflecting the challenges faced by this segment in the current economic environment.
Healthcare
The Healthcare segment, led by Graham Healthcare Group, has been a standout performer, with revenue increasing by 30% in the first nine months of 2024 to $431 million. This growth can be attributed to the division's expansion of home health, hospice, and specialty pharmacy services, as well as its strategic investments in innovative healthcare technologies and services.
Healthcare revenue was $155.41 million in the third quarter of 2024, up 34% from the same period in 2023. Healthcare operating income was $14.26 million in the third quarter of 2024, compared to $5.97 million in the third quarter of 2023. For the first nine months of 2024, healthcare operating income was $33.09 million, compared to $17.28 million in the first nine months of 2023, highlighting the segment's strong growth trajectory and increasing profitability.
Automotive
The Automotive segment, which includes a network of eight automotive dealerships in the Washington, D.C. and Richmond, Virginia metropolitan areas, has also contributed to the company's overall success. Revenue in this segment grew by 18% in the first nine months of 2024, reaching $902 million, as the division capitalized on increased demand for both new and used vehicles, as well as its expansion into the Kia brand.
Automotive revenue was $289.39 million in the third quarter of 2024, up 6% from the same period in 2023. Automotive operating income was $9.06 million in the third quarter of 2024, compared to $8.24 million in the third quarter of 2023. For the first nine months of 2024, automotive operating income was $28.92 million, compared to $28.54 million in the first nine months of 2023, demonstrating steady growth and consistent profitability.
Other Businesses
Graham Holdings Company also operates a variety of other businesses, including an online art gallery and in-person art fair business, an online commerce platform, restaurants, a custom framing company, a marketing solutions provider, a customer data and analytics software company, Slate and Foreign Policy magazines, and a daily local news podcast and newsletter company. Revenue from other businesses was $83.46 million in the third quarter of 2024, down 4% from the same period in 2023. For the first nine months of 2024, other businesses revenue was $253.75 million, down 6% from the first nine months of 2023.
Financials
Despite the challenges presented by the COVID-19 pandemic, which impacted various aspects of the company's operations, Graham Holdings has demonstrated its ability to adapt and thrive. The company's diversified business model, coupled with its strategic investments and operational agility, have enabled it to weather the storm and emerge stronger, ready to seize new opportunities in the years ahead.
For the most recent fiscal year (2023), Graham Holdings reported revenue of $4.41 billion, net income of $205.29 million, operating cash flow of $259.88 million, and free cash flow of $166.43 million. In the most recent quarter (Q3 2024), the company reported revenue of $1.21 billion, representing a year-over-year growth of 9%. Net income for the quarter was $72.50 million, with operating cash flow of $237.57 million and free cash flow of $219.45 million.
The increase in revenue was driven by growth across the education, television broadcasting, healthcare, and automotive segments, partially offset by declines in manufacturing and other businesses. Overall, GHC reported total revenue of $3.55 billion for the first nine months of 2024, up 9% from the first nine months of 2023. The company reported operating income of $81.65 million in the third quarter of 2024, compared to an operating loss of $57.11 million in the third quarter of 2023. For the first nine months of 2024, operating income was $143.00 million, compared to $28.60 million in the first nine months of 2023, showcasing a significant improvement in profitability.
In terms of geographic performance, approximately 80% of revenue was generated from U.S. domestic sales, with the remaining 20% from non-U.S. sales, highlighting the company's strong presence in the domestic market while maintaining a significant international footprint.
Liquidity
Graham Holdings maintains a strong financial position, with a debt-to-equity ratio of 0.19 and cash and cash equivalents of $244.36 million as of September 30, 2024. The company has access to a $300 million revolving credit facility, of which $233.10 million was undrawn as of the same date, providing additional financial flexibility. The current ratio of 1.57 and quick ratio of 1.34 further underscore the company's solid liquidity position and ability to meet its short-term obligations.
Looking ahead, Graham Holdings Company remains focused on leveraging its core strengths, exploring new growth avenues, and continuously adapting to the evolving landscape of media, education, and beyond. With a strong balance sheet, a diversified portfolio, and a management team committed to innovation and resilience, the company is well-positioned to navigate the future and deliver value for its shareholders.
Conclusion
Throughout its history, Graham Holdings has faced various challenges, including the decline of traditional print media, increased competition in education, and volatility in certain manufacturing and automotive markets. The company has successfully navigated these challenges through strategic divestitures, acquisitions, and a focus on diversifying its portfolio of businesses. This adaptability and strategic vision have been key factors in the company's longevity and continued success as it evolves in an ever-changing business landscape.
As Graham Holdings continues to adapt to industry trends and market dynamics, its diverse portfolio of businesses provides a solid foundation for future growth and stability. The company's strong performance across its education, television broadcasting, healthcare, and automotive segments, coupled with its efforts to optimize operations in challenging areas such as manufacturing, demonstrates its ability to navigate complex market conditions and capitalize on emerging opportunities.
With no major scandals, short seller reports, or CEO departures reported during the period covered, Graham Holdings maintains a stable corporate environment conducive to long-term strategic planning and execution. As the company moves forward, it will likely continue to focus on leveraging its strengths in education and media while exploring new growth opportunities in healthcare, technology, and other emerging sectors.
The company's financial performance, marked by consistent revenue growth and improved profitability, positions it well to invest in future growth initiatives and return value to shareholders. As Graham Holdings continues to evolve and adapt to the changing business landscape, it remains a company to watch for investors interested in a diversified holding company with a proven track record of resilience and innovation.