Newsweek has been on death’s door for the past several years as a result of plummeting advertising revenue and lower circulation. Some of its problems are similar to other print media savaged by the effects of recession, the rise of the internet as a primary source of news, and frankly, a declining interest in what the publications had to offer readers.
The agony ended for Newsweek in August 2010 when it was sold for one dollar to Sidney Harman, of Harman audio speaker fame. Newsweek lost $28 million in 2009 and Harman assumed about $47 million in debt but the other shoe dropped for Newsweek this week when Harman announced he was effectively merging it into the Daily Beast which is itself owned by Barry Diller’s IAC Corp.
Why does this deal make any sense?
Daily Beast plans to keep Newsweek as a print magazine for the time being but will take over operation on its online presence. The Daily Beast has scored with its online presence providing news over its first two years but now it has gravitas with the Newsweek name salvaged from the junk heap. But will readers like the Daily ‘Newsweek’ Beast any better than the original parts that make it up? That remains to be seen.
For legacy print media the survival of the fittest means that the most valuable thing left of the business is often the brand name. That may be what Harman and Daily Beast are buying. They don’t need Newsweek to be a news gathering organization to give them an online presence but it sure is a cheap way of gaining a great, albeit tarnished brand, and no doubt some good people who stuck it out to the bitter end.