Wednesday, May 5, 2010
Washington Post Co. looking to sell Newsweek
NEW YORK – The Washington Post Co. is putting Newsweek up for sale in hopes that another owner can figure out how to stem losses at the 77-year-old weekly magazine.
The publishing industry has been struggling as businesses cut back on ad budgets during the recession. But Newsweek, along with Time magazine and U.S. News & World Report, faces a particular challenge finding a relevant niche in the age of up-to-the-second online news. Once handy digests of the week's events, they have been assailed by competitors on the Web that pump out a constant stream of news and commentary.
Despite staff cuts, Newsweek has remained a drag on its parent company, which is also struggling with ad declines at its namesake newspaper.
The Post Co. said Wednesday that it has retained the investment bank Allen & Co. to help find a buyer for the magazine.
With advertising revenue falling across the industry, Newsweek has been piling up losses since 2007 and expects those losses to continue this year. It did not reveal specifics, but results from the first quarter are due out Friday.
The Post Co.'s magazine division had an operating loss of $29.3 million in 2009, compared with a $16.1 million loss the year before. Newsweek sold about 26 percent fewer ad pages in 2009, according to the Publishers Information Bureau. That percentage decline was consistent with the industry average.
The magazine has lost about a quarter of its staff to voluntary buyouts over the past two years, ending 2009 with 427 full-time employees.
"Newsweek's staff has been remarkable in cutting expenses and putting out a great magazine," Post Co. Chairman Donald E. Graham said in an interview. "But we did not see a path to sustained profitability within the company."
Graham said he hopes a buyer with more resources will be able to get the magazine back to profitability.
The company said it has no deadline for selling the magazine. It would not comment on what would happen if no buyer steps up.
The punishing ad decline has forced near fire-sale prices for some titles, while others have shut down entirely. Bloomberg LP scooped up BusinessWeek from McGraw-Hill Cos. for just $5 million in cash last year. Losses at Gourmet forced Conde Nast to end the country's oldest food magazine.
Newsweek, which recently underwent a top-to-bottom redesign of both its print and online editions, was founded in 1933 and has been owned by the Post Co. since 1961. Its paid circulation averaged nearly 2 million copies in the last six months of 2009.
In December, the Post Co. said it was selling Arthur Frommer's Budget Travel magazine to Fletcher Asset Management Inc., a New York investment firm. Terms were not disclosed