Harman Media buys Newsweek from Washington Post Co. for undisclosed amount
Iconic but troubled Newsweek magazine has been sold by one Washington power family to another.
Washington philanthropist, education innovator and hi-fidelity stereo pioneer Sidney Harman will buy Newsweek from The Washington Post Co., the company said Monday, three months after Post Co. Chairman Donald E. Graham admitted that his company could not lead the struggling newsweekly back to profitability.
The Post Co. did not release the sale price of Newsweek. The cash component of the purchase is minimal, but the total obligations taken on by Harman -- assuming leases, satisfying subscribers who have already paid to receive the magazine -- run into the tens of millions of dollars, according to a source close to the deal who spoke on condition of anonymity. The Post Co. will continue to pay the Newsweek staffers' pensions.
Four-year Newsweek editor Jon Meacham, who tried to assemble a bid to buy the magazine, will resign when the deal closes, which is expected by early September. A majority of the remaining 350 employees will be retained, the company said, but no decisions have been made on when or how many employees may be let go.
"I do this because I see working hands-on at Newsweek as the culmination of a lifetime career in industry and government and education," Harman said Monday in an interview. "I see it as both the culmination and synthesis of everything I've ever learned, . . . and I find it extraordinarily meaningful to be entrusted with carrying on the legacy of the Graham family."
Harman, 91, made his name in high-fidelity stereo equipment, founding Harman Kardon premium audio company in 1952. But he became a high-profile philanthropist and author on such topics as quality of working life, productivity and education. He earned a PhD in education in 1973 and founded the Program on Technology, Public Policy and Human Development at Harvard University. In Washington, he is a trustee of Shakespeare Theatre Company. He is married to Rep. Jane Harman (D-Calif.).
"My wife has absolutely nothing to do with this, other than wishing me the best," Harman said. Harman's lawyer -- Robert Barnett, of Washington's Williams & Connolly -- said Newsweek will be owned by Harman Media, which is solely owned by Sidney Harman. His wife will have no ownership stake.
Harman added that his "primary responsibility" will be building a succession plan for Newsweek to hand it over to his children or an outside owner upon his death.
The Post Co. bought Newsweek in 1961, after former executive editor Benjamin C. Bradlee -- then Newsweek's Washington bureau chief -- brought the deal to former Post publisher Philip Graham. The magazine was a jewel of The Post Co. for several decades but has been in decline in recent years, struggling with shrinking readership and advertising sales, like most print publications. The Post Co.'s magazine division -- chiefly, Newsweek -- earned $31.4 million in 2007 but reported a $47.5 million operating loss in 2009. Newsweek has 1.5 million subscribers, down from its high of 3.2 million.
American newsweekly magazines, once a voice of authority in the United States and overseas, have fallen on hard times as readers and advertisers have fled to faster-paced forms of media, especially on the Internet. Newsweek, Time and U.S. News & World Report were once the mighty three of newsweeklies. But the magazines have shrunk in size in recent years, as have their subscriber bases, and they have slashed budgets while trying to remain relevant in a Facebook-and-Twitter world.
Now there seems to be one of two ways for a newsweekly to survive: as part of a much-larger conglomerate, such as Time and Businessweek, which was purchased by Bloomberg last year; or as the vanity project of a wealthy owner who may be willing to trade financial losses, at least in the short term, for a high-profile media platform. In that category, Harman's Newsweek now joins U.S. News & World Report, which was purchased by New York media tycoon Mortimer Zuckerman in 1984. U.S. News, however, makes significant revenue from its college rankings publications.
At Newsweek, Meacham tried but failed to remake the magazine into what some termed an American version of the United Kingdom's Economist: heavy on opinion, high-brow and, he hoped, attractive to affluent readers who would attract advertisers.
"I am pleased with the outcome for the magazine," Meacham wrote in an e-mail. "I think Newsweek is an important force but no one can minimize the challenges facing magazines in particular and the news business in general."
Graham was picky about Newsweek's buyer. The Post Co. turned away Newsmax, a monthly conservative magazine, as well as a hedge fund manager, according to several sources familiar with the process. Harman also bested bids by Avenue Capital Partners, publisher of the National Enquirer, and OpenGate Capital, which owns TV Guide, the sources said.
"In seeking a buyer for Newsweek, we wanted someone who feels as strongly as we do about the importance of quality journalism," Graham said in a statement. "We found that person in Sidney Harman."
In addition to its flagship newspaper, The Post Co. owns Kaplan education company, which provides more than half of The Post Co.'s revenue, six television stations, Cable One cable company and several smaller print and online publications, including Express and Slate.