Is Washington Post Next to Be Ripped?

It's deemed a member of the liberal media establishment by free marketeers on Wall Street, but unlike New York Times (NYT Quote) and other so-called nattering nabobs of negativity in the newspaper industry, Washington Post Co. (WPO Quote) has yet to be fingered by investors as a dinosauric enterprise in need of a restructuring.

The Beltway publisher has diversified successfully away from publishing, with a for-profit education arm responsible for the bulk of its revenue and profits, as well as broadcast TV properties and a cable business.

Still, the stock is down 18% since early 2005, and its publishing assets are dragging down valuations. With the New York Times Co. dealing with calls to overhaul its structure, and publishing counterparts E.W. Scripps (SSP Quote) and Belo(BLC Quote) splitting up their businesses, it would seem that Washington Post would also face pressure to create more value.

Washington Post is controlled through a dual-class share structure by the Grahams, a family devoted to the ideals of 20th century American journalism. Its largest non-family shareholder, who happens to be the legendary investor Warren Buffett, has publicly proclaimed that the newspaper part of its business model is eroding.

"Buffett is very familiar with newspaper publishing, and he correctly and long ago saw that the Internet was going to destroy the economic model for the industry," says Whitney Tilson of T2 Partners, a shareholder of Buffett's holding company, Berkshire Hathaway (BRK-A Quote). "That said, he would never sell his position in Washington Post."