Newsweek CEO Baba Shetty and editor in chief Tina Brown have sent out an internal memo to their staff they have decided to sell Newsweek so that they can focus entirely on the companion brand, The Daily Beast, reports Ted Johnson of Variety. The memo is now widely circulated on the Internet.
Baba Shetty told his staff that Newsweek remains a powerful brand, but it has taken the focus and attention away from The Daily Beast. The memo said that Newsweek owner IAC/InterActiveCorp (NASDAQ:IACI) will sell the newsweekly only if it gets a good price for the value it has created, otherwise IAC/InterActiveCorp (NASDAQ:IACI) will continue to run the magazine.
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The Fall of Newsweek
Newsweek has witnessed a rapid decline over the last decade. At the peak of its popularity in 1991, Newsweek had about 3.3 million subscribers, and it was a major rival of Time. The Washington Post Company (NYSE:WPO) sold it to the audio magnate Sidney Harman in 2010. Mr. Sidney Harman had merged it with The Daily Beast owned by IAC/InterActiveCorp (NASDAQ:IACI) before his death in 2011.
But the merger of the two brands didn’t go well. In October 2012, Tina Brown announced to close Newsweek’s print edition, which ran for over 80 years. IAC/InterActiveCorp (NASDAQ:IACI) chairman Barry Diller said that he regrets investing in Newsweek. People familiar with the matter told the Wall Street Journal that Newsweek has successfully shifted 470,000 of its subscribers to the digital edition so far. That’s a much better figure than 41,500 digital subscribers by the end of 2012. But it has lost most of its 1.4 million print subscribers after going digital.
Risk To Newsweek’s Potential Buyer
Potential suitors who chased the Newsweek last time are no longer interested. The buyer will have an added risk. Many of the former print subscribers still have time on their subscriptions, so they may ask for their money if they no longer want the digital edition. IAC/InterActiveCorp (NASDAQ:IACI) expects that liability to decline to $10 million by the end of 2013.
The only positive thing about Newsweek is that its losses have been controlled to some extent by killing the print edition. By laying off half of its 270- employees, the company has reduced Newsweek’s costs by about $40 million. The editor in chief Tina Brown said that Newsweek would break-even by the end of this year.
IAC/InterActiveCorp (NASDAQ:IACI) shares rose 1.80 percent to $50.38 at 9:58 AM EDT.