Why Newsweek has been sold (and how it will become stronger)

The Washington Post Co. said Thursday it has closed its sale of Newsweek magazine to Harman Newsweek LLC, led by pioneer of the high-fidelity industry Sidney Harman. During the last months Newsweek's financial situation has been often described by media as disastrous, leaving few hopes for Harman to keep the magazine alive without selling Newsweek's soul and replace the most prominent staffers who began jumping ship after the announcement the magazine was up for sale.

But some sources told Il Foglio that Newsweek's problems weren't just about money.

In fact, Newsweek has been treated as a scapegoat and the source of all the problems of The Washington Post Co., which it certainly is not. At the time the decision to sell was announced, a few days before the second quarter results were published, it was clear the newspaper itself was losing more money than the magazine. Newsweek lost $30 million last year. The Washington Post newspaper lost $54 million in just the first quarter of last year. In the first quarter of 2010, Newsweek lost just $2.3 million, while the newspaper, on the other hand, lost $13.8 million.
 
The board of directors had been pushing the Graham family – who controls The Washington Post Co. – to dump its publishing assets for some time, but there is no question of giving up the flagship newspaper, so Newsweek took the fall. The great hope of the company is in its education division, Kaplan, which has moved from test preparation to a whole wide range of for-profit educational businesses. But in August, Kaplan took a major hit, too, when it came under government investigation.

When the announcement was made that Newsweek was up for sale, Don Graham presented it as if he were sending a hopelessly ill member of the family to hospice, rather than as a salesman with a hot property, and the media reacted accordingly. All sorts of vultures moved in looking to pick Newsweek apart. But part of the issue confronting them was a wall of about $60 million of paid subscriptions – contracts that need to be fulfilled by the new owner by continuing to print and distribute paper magazines. Many of those potential buyers who just wanted a name to slap on the Web and bury the print edition backed off. They saw the whole print operation as a liability, nothing more.

Sidney Harman believes that print magazines still have a future and, indeed, a bright one, and also understands the power of the Web and the need to develop a somewhat different identity there. Those who've met with Harman say he's not out to prove that he can “re-invent” anything, he just wants a magazine with more of a sense of humanity and, indeed, of humor, that can “connect the dots”, as Harman likes to say. He wants also to return to higher quality paper, which is better for photographs and better for ads.

Despite Harman's commitment to keep Newsweek alive, the editorial board experienced an exodus of its most famous staffers, first of them editor-in-chief Jon Meacham and international editor Fareed Zakaria, the backbone of the magazine. “The departure of Jon Meacham and Fareed Zakaria, as well as some other prominent journalists at Newsweek, has been reported as if it is a disaster”, one veteran reporter at the magazine told Il Foglio.

“In fact, it is likely to be helpful. Over the last year and a half, since the re-design, the conflicting egos and intellectual aspirations of Meacham and Zakaria have tended to dominate the magazine, as if they were the only talent there, and as if they could never take themselves seriously enough. The result was predictable, heavy, humorless, sometimes utterly out of sync with the readers' interests, and often rather drab. All this was summed up in the ridiculously pretentious slogan they agreed on, ‘What matters most'. One reason other talents left is that they had become so demoralized by the Meacham-Zakaria regime, they felt they just needed a change”.

Not just money, indeed.

Harman team is about to announce the new editor-in-chief, and Tina Brown nomination is gaining momentum. It would certainly make an interesting match, since she successfully transformed Tattler in England, then Vanity Fair and The New Yorker in the United States. At present she is running The Daily Beast on the Web backed by Barry Diller. The negotiations could lead to a combo between the two organizations, even if it's not clear what role Diller would play in that case, and whether he would have a stake in Newsweek. Harman seems to see this very much as his personal project and might not want to share it with another tycoon, even if that meant reducing his financial exposure.

“Not everybody would be happy to see Brown come aboard” says one of her former writers. “She is a hard taskmaster and, in her way, an artist. She is perfectly capable of waking up some morning, thinking through the magazine or a story, and deciding it just doesn't work, then tearing everything up. For those who have to implement those sorts of changes, there is a lot of stress. But the results can be wonderfully interesting and good, as she proved in most of her previous projects”.