UPDATE: This piece was updated at 6:32 p.m.

Tina Brown, the famed editor who launched the online Daily Beast and oversaw its ill-fated merger with Newsweek, is leaving the New York-based company to form her own media operation.

Brown started the Beast — which combined news reporting with cultural and political commentary from big name bloggers — amid much buzz in 2008. Brown herself was the primary reason for all the interest in the publication: As the one-time editor of Vanity Fair, the New Yorker and Talk magazine, she had a demonstrated record of editing publications that attracted readers, advertisers and attention from other media.

But despite her touch, the Daily Beast has rarely stood out in the crowded online news field. The publication hasn’t been able to achieve sustained profitability, in part because of Brown’s penchant for attracting well-known writers with pricey contracts. Among those Brown hired were Washington Post writers Howard Kurtz and Robin Givhan, both of whom have since left the site.

Brown was also unable to resuscitate Newsweek, which merged with the Daily Beast in late 2010 in a joint venture between Newsweek’s owner, the late Sidney Harman, and Daily Beast owner IAC/InterActive Corp., the media company headed by Barry Diller (Diller is a member of the Washington Post Co.’s board of directors).

In a cost-cutting move, Newsweek ended its print edition in January after 80 years in existence.

The British-born Brown had tried to revive the long-ailing newsmagazine with flashy covers and cover stories, such as a photoshopped image of the late Princess Diana with Kate Middleton, a controversial photo of Rep. Michele Bachmann (R) appearing dazed in August 2011, and one declaring President Obama as “The First Gay President” after he endorsed same-sex marriage last year.

Brown will leave the Daily Beast before her contract expires in January, sources close to her said, confirming news first reported by Buzzfeed.com.

“I am enormously proud of what our brilliant editorial team has achieved at the Beast,” Brown said in a statement. “And I am proud, too, of what we did with Newsweek in the battle we waged to save it from the overwhelming forces of media change.”

She will start Tina Brown Live Media, a conference and live events company, a source said. Brown started the foreign-affairs oriented Women in the World summit in 2010, and has co-hosted the event each year with Diane von Furstenberg and Meryl Streep. It has attracted such speakers as Hillary Clinton, Angelina Jolie, Christine Lagarde, Condoleezza Rice, Madeleine Albright, Oprah Winfrey and Susan Rice.

The Beast said it had nearly 16 million unique visitors in August, and that it had recorded advertising growth of 23 percent in the past year. In a statement, the Daily Beast said it will continue to operate under managing director Deidre Depke and executive editor John Avlon.