Newsweek Sold for $1

- - Magazines

The Daily Beast is reporting that Sidney Harman–-a 91 year old billionaire who made his fortune partially as the Harman in Harman/Kardon–purchased the magazine from the Washington Post Co., yesterday for a dollar. They’ve also gotten their hands on the 66 page sales memo that was given to prospective buyers and paints a clearer picture of the debt he assumed as well:

Revenue dropped 38 percent between 2007 and 2009, to $165 million. Newsweek’s negligible operating loss (not including certain pension and early retirement changes) of $3 million in 2007 turned into a bloodbath: the business lost $32 million in 2008 and $39.5 million in 2009. Even after reducing headcount by 33 percent, and slashing the number of issues printed and distributed to readers each week, from 2.6 million to 1.5 million, the 2010 operating loss is still forecast at $20 million.

Dig deeper into the document and the numbers get worse. Newsweek lost money in all three of its core areas in 2008 and 2009: U.S. publishing, foreign publishing and digital. Even with the smaller guaranteed circulation, it still retains $40 million in subscription liabilities owed to readers. And then there’s Newsweek’s lease foibles: last year, it paid $13 million in rent, a startling figure for a company of its size.

More here.

NY Magazine’s Daily Intel does a little head scratching at the logic of buying the magazine without a way to shore up back office expenses by combining it with another magazine like the recent BusinessWeek purchase by Bloomberg.

It’s quite possible this will remain a pet project for the new owner and a radical turnaround is not in the cards, but wouldn’t it be awesome if he hired someone to implode the business model and find a new path. My previous back of the napkin calculations into running a magazine tell me that a very tiny percentage of the expenses are the actual content.

[For fun, here’s what Newsweek had to say about the internet in 1995.]

There Are 5 Comments On This Article.

  1. /snark on

    What’s the worst he could do, lose several million dollars too? Its not like the experts were doing any better!

    /snark off

  2. I think that publications like Newsweek could really benefit from losing the noose of corporate ownership and get back to being run by a single person/family who has a deep interest in publication as a publication and not as a money well. So long as a publication is run by stockholders who expect their regular healthy dividends the publication will never become visionary or experimental. Instead it will be sucked dry of all the money that it can create and when they have killed off the earning potential they will walk away from the dead husk of a once serious, influential and creative venture. This is the current publishing paradigm. If a guy like Harman is willing to see what he can do with the old girl I’m excited to see the results. His background is in invention and finding what the customer wants. I just hope that other well heeled get the same idea and start buying floundering publications and setting them on a proper course.