• by Gavin O'Malley  @mp_gavin, May 4, 2012

The Washington Post Company had a bad first quarter -- and, even worse, its new media division did little to offset its old media losses.

Indeed, first-quarter revenue generated by newspaper online publishing activities -- primarily WashingtonPost.com and Slate -- decreased 7% annually to $24.2 million.

In particular, display-advertising revenue declined 11% year-over-year, while online classified ad revenue on washingtonpost.com fell by a single percentage point.

Even in the face of depressed ad revenue, however, Washington Post Co. continues to invest in its digital future. Reports -- supported by an independent source -- suggest that the company is close to hiring key members of Digg.com’s technology team.  

According to an independent source, the company wants Digg’s talent -- not the social-news site’s technology -- because its tech group knows how to program custom graphs, and it has the knowledge to analyze the data.

In a deal that could close as early as next week, a source tells Online Media Daily, Digg’s technology team will likely be absorbed by Social Code, a division of the Washington Post Co. designed to support Facebook ads. 

The Washington Post Co.’s interest in Facebook is already well documented. Facebook CEO Mark Zuckerberg and Washington Post’s CEO Donald Graham have reportedly formed an unlikely relationship. Since 2009, Graham has served on Facebook's board.

Overall, the company’s newspaper publishing division generated $142.3 million in revenue for the first quarter -- down 8% from revenue of $155 million for the first quarter of 2011.

During the quarter, print ad revenue at The Washington Post declined 17% to $52.7 million, from $63.2 million in the first quarter of 2011. The company attributed the decline mostly to reductions in general, classified and preprint advertising.

Beyond the newspaper business, revenue for the first quarter of 2012 was $972.5 million -- down 7% from $1,041.9 million in the first quarter of 2011.

The Washington Post Co, reported operating income of $17.5 million in the first quarter of 2012, compared to operating income of $56.6 million in the first quarter of 2011.

Along with the newspaper publishing division, revenues were down at the education division, and flat at the cable television division, which was offset by an increase at the television broadcasting division.

That said, first quarter earnings doubled from a year earlier, but -- excluding one-time items -- profits fell.