Newsweek's secret search for salvation
Monday, June 7, 2010; 11:37 AM
While journalists get into the business for various reasons -- vicarious thrills, investigative zeal, outsized ego -- ultimately they're at the mercy of the marketplace. And that marketplace seems to have sent a very discouraging message to Newsweek.
But the picture is more complicated than the downbeat media reports last week, perhaps best captured by this Gawker headline: "Bunch of Wackos Bid on Newsweek."
Three companies have been identified as having submitted preliminary bids to The Washington Post Co. by Wednesday's deadline, and none of the firms is particularly impressive in national reach and resources. But a source familiar with the Newsweek situation, who would not be identified discussing private negotiations, says a number of other substantial suitors -- both corporations and wealthy individuals -- have formally expressed interest as well.
With Post Co. executives refusing to discuss the process, the other possible bidders remain shrouded in secrecy. They may or may not wind up pursuing a purchase, but for now, the discussion centers only on those who have confirmed their interest, perhaps for the publicity value.
One is Newsmax, a conservative Web site and monthly favored by Sarah Palin and founded by Christopher Ruddy, who once investigated conspiracy theories that Clinton administration officials Vince Foster and Ron Brown were murdered. Another is Thane Ritchie, an Illinois hedge-fund manager and Ross Perot fan who is angling to start a new political party. The third is OpenGate Capital, a private equity firm that two years ago bought TV Guide for $1. It's hard to imagine any of them supporting Newsweek as a vibrant weekly that could compete with Time.
Sidney Harman, founder of the stereo giant Harman Kardon and husband of Rep. Jane Harman (D-Calif.), says he is also exploring a potential bid.
"What you're reading isn't the complete story by any stretch of the imagination," says Ann McDaniel, Newsweek's managing director. She declines to provide details, saying: "Once we get to a point where it's clear, we'll be open about who's in the running."
Based on what has been made public, Michael Parker, managing director of AdMedia Partners, which specializes in media mergers, says: "I'm a little surprised that, shall we say, major players haven't come into this arena, at the very least to take a closer look. Newsweek has huge brand equity in the marketplace, a wonderful reputation editorially." But, he says, potential buyers must be asking: "Who's going to do it better if The Washington Post Company can't figure this out?" The company has owned the magazine since 1961.
The lack of information has bothered some Newsweek staffers, some of whom describe the mood as ranging from stunned to funereal to angry -- the latter emotion fueled by a sense that Editor Jon Meacham erred badly by transforming the newsweekly into an upscale, left-leaning opinion magazine. Meacham has said that in the face of mounting losses -- $44 million since 2007 -- he had no choice but to seek fewer subscribers who would be willing to pay more.
On one level, the situation is a paradox. Here you have a magazine loaded with talent -- from the Pulitzer-winning Meacham (who is pursuing his own bid to buy the magazine) to such media stars as Jonathan Alter, Howard Fineman, Mike Isikoff, Evan Thomas, Fareed Zakaria and Robert Samuelson -- and few seem willing to bet on its financial future. That amounts to a no-confidence vote not just on the category of newsweeklies, which have long been squeezed between daily papers and in-depth monthlies, but on print journalism itself. The lucrative properties these days are digital, and Newsweek's Web site has long been a flop, both creatively and commercially.
The best bet for Newsweek, whose losses dropped to $2.3 million in the first quarter of 2010, would be a savior such as Bloomberg News. The company founded by New York's mayor recently bought the ailing Business Week for $2.5 million to $5 million and is integrating the weekly into its business empire. The Post Co. publishes no other magazines -- unlike, say, Time Warner, which can sell advertising across multiple titles.
With their silence, Post executives are playing by the cloistered rules of investment bank Allen & Co., apparently concerned that premature disclosure might spook some bidders. The result is a conventional wisdom, to use a phrase popularized by Newsweek, that the magazine smells like a loser.