WaPo Unloads Newsweek for $1; Buyer Clearly Overpaid
It's official: Sidney Harman, the businessman who made his fortune selling stereo equipment, has secured a deal to buy Newsweek from the Washington Post Co. and will announce the deal later Monday afternoon.
The New York Times and others have previously reported that Mr. Harman was the front-runner to come away with the news weekly, but have cautioned that no deal was certain. Politico's Playbook e-mail newsletter this morning said a deal with Mr. Harman was imminent, but also cautioned that "no deal like this is done until it's done." The deal is now done, according to people familiar with the process.Mr. Harman and the Washington Post Co. declined to comment.
The Times quoted one person briefed on Mr. Harman's bid who said his plan would retain 250 of Newsweek's employees. Newsweek counted 379 full-time staffers at the end of March, according to the sale book posted by PaidContent, but a significant number have left in the time since. Losses at the magazine could approach $70 million this year, this person told the Times. Mr. Harman reportedly bid $1 for the magazine but agreed to assume the magazine's liabilities; those details could not be confirmed on Monday.
Last week, we mentioned the story by the Politico's Michael Calderone regarding JournoList member Dave Weigel effectively being laterally transferred from the Washington Post to Slate, a Website owned by the Post, a seemingly rather important fact not mentioned by Calderone until the 11th paragraph, and then, only in passing. While Calderone certainly buried the lead, the above Ad Age story on Newsweek deletes it entirely, never mentioning Newsweek's horrendous redesign efforts which helped to accelerate its plummeting sales -- and more importantly, fails to note whom Sidney Harman is married to.
It seems safe to assume that Newsweek's odd niche as "a liberal opinion magazine written by liberals who don’t want to admit they’re liberals", as Andrew Ferguson brilliantly dubbed it last year, will continue for the magazine's foreseeable future.
Update: The New York Post adds, "Newsweek editor Meacham expected to leave after sale:"
Newsweek Editor-in-Chief Jon Meacham is expected to exit after the deal to sell the magazine to stereo-mogul Sidney Harman is completed, The Post has learned.
"Meacham has told [Harman] he should look for a new editor and is ready to leave when one is found," said a source close to the situation.
Considering that Meacham made Newsweek's appeal about as "selective" as Spinal Tap's, that seems like a very wise decision for all concerned.
Update: The Wall Street Journal adds:
The Wall Street Journal reports that Harman won out among the small group of bidders because of his commitment to retaining more employees than anyone else eyeing the weekly news magazine.
Harman is still working out the terms of the deal with The Washington Post Co. His wife’s Republican opponent, Mattie Fein, wrote an open letter to Newsweek editor Jon Meacham voicing concerns over whether the lawmaker would exert influence over the publication. Harman is expected to win re-election in November.
[I]n a fascinating twist, the Post appears to have several offers that were much better than this, offers which would have given their own shareholders a much better return on these assets and on all the money that's been wasted this past year. So why did they turn down those offers and instead, make their own shareholders take a beating by giving Newsweek away for free? Because those nasty high bidders might have actually fired some employees and CHANGED the editorial direction of the Magazine! We can't have that, oh heaven forbid, we can't have that! So better to take a huge loss and auger this entire operation into the dirt before even considering whether maybe, just maybe, they've been doing things wrong. ...
Meanwhile, in the latest issue of Commentary, Andrew Ferguson explores how Newsweek augured itself so deeply into the ground: "Don't Give the Readers What they Want."