Washington Post Co. puts Newsweek magazine up for sale
Thursday, May 6, 2010
The Washington Post Co. is putting Newsweek up for sale because the company can foresee no path to profitability for the money-losing magazine, The Post Co. said Wednesday.
Though no buyer is imminent, company officials said, The Post Co. hopes to execute a "rapid sale," Chairman Donald E. Graham told Newsweek employees during a Wednesday morning meeting at the magazine's office in New York.
The Post's magazine group, of which Newsweek is the biggest piece, lost $29.3 million last year after losing $16.1 million the previous year. Graham said he expects it to lose money this year.
Many newsweeklies have racked up similar losses as readers and advertisers abandon the magazines for the Internet's frequently updated news offerings. But even with the shift to the Web, online advertising revenue still represents pennies on the dollar compared with print advertising. Newsweek brought in only $8 million in online ad revenue last year, Graham said.
Newsweek, which was founded in 1933, has been part of The Post's DNA since the paper bought the magazine in 1961 at the urging of Newsweek's Washington bureau chief Benjamin C. Bradlee, who went on to a storied career as executive editor of The Post.
Bradlee said Wednesday that he hated to see any change because he was so deeply involved with Newsweek. "I loved it. It gave me my first shot," he said. "It was a great magazine. It is a great magazine." But, he added, "nobody says you have to keep a magazine that is costing an arm and a leg. I understand why Don put it on the market."
Asked if it was a difficult call to sell the magazine bought by his father, Philip L. Graham, Donald Graham said: "Yes. It was a hard decision for me, but it's a lot harder for the people who work here."
Graham told Newsweek employees he accepted responsibility "for not seeing early enough and reacting in the right way to the changes that have come to our industry."
In addition to Newsweek, The Post Co. owns Kaplan education company, small cable company CableOne, six television stations, the flagship newspaper and other small print and online publications, including Slate.
The Post Co. hired boutique investment bank Allen & Co. to seek buyers for the magazine. The Post Co. would not reveal the price it hopes Newsweek will bring, but Bloomberg's purchase of BusinessWeek magazine last October may have set the market. Though terms were not disclosed by either side, reporting at the time pegged the sale price at between $2 million and $5 million.
Post Co. Vice President Ann McDaniel told Newsweek staffers: "I suspect you might be asking yourself: What if there isn't a buyer? I believe there will be. The Philadelphia Inquirer just sold for tens of millions of dollars. But if you think my confidence is misplaced, know this: Every one of you will get a job offer" from the new owners or severance benefits.
Newsweek has a staff of about 150, a figure that is down 30 percent over the past four years, as the magazine has cut staff to slash costs.