By looking at the Washington Post Company's annual report, it was possible to tell that Newsweek was tanking (financially) even before the company announced that it was putting the venerable magazine on the block. But Daily Beast reporters Lloyd Grove and Peter Lauria today got their hands on the magazine's 66-page sales memorandum to prospective buyers, and it reveals some deeper weaknesses than just the known operating losses:
Even after reducing headcount by 33 percent, and slashing the number of issues printed and distributed to readers each week, from 2.6 million to 1.5 million, the 2010 operating loss is still forecast at $20 million ... Newsweek lost money in all three of its core areas in 2008 and 2009: U.S. publishing, foreign publishing and digital. Even with the smaller guaranteed circulation, it still retains $40 million in subscription liabilities owed to readers. And then there's Newsweek's lease foibles: last year, it paid $13 million in rent, a startling figure for a company its size.
This makes all the more head-scratching the decision by the WPC to sell to stereo magnate Sidney Harman, who owns no other media establishments and therefore can't shore up the magazine's back-office losses by combining it with a larger company's. This was an original quasi-stipulation in the sale, and something that got tossed by the wayside when Harman offered to assume the magazine's debts and yet still keep on most of the staff. "Harman was someone who was taken less seriously by the staff who worked on the deal because he had no plan," a source told the Beast. "He won the bid because he had the lowest number of layoffs."
For now the magazine and its staff are safe, but the organization still faces two hurdles. First, Harman's age: It's wonderful to be bought by someone who doesn't care if you lose money, but that makes your future all the more unclear in the event that he dies and someone else who actually cares about making money takes over. (Sadly, most people do care about making money, and also sadly, at 91 Harman is substantially closer to death than he is to, say, birth.)
Second, Newsweek's formerly steadfast leader Jon Meacham, who refashioned the magazine firmly in his own image, is leaving. In the Post this morning, Keith Kelly rattles off some potential replacements for the presidential historian and Pulitzer Prize winner.
With Meacham gone, the most logical inside candidate to be the public editorial face is Newsweek International editor Fareed Zakaria. Sources say it is not clear that Zakaria would want to tackle the task of trying to right the listing ship and stem the exodus of top-level talent from the magazine. If Zakaria passes and Harman stays inside for a replacement, sources say that Mark Miller, the editorial director of Newsweek and editor of newsweek.com, who is said to be close to Meacham, is believed to be the odds-on favorite.
Outside candidates include celebrity editors such as:
* Walter Isaacson, a best-selling author, ex-head of CNN and former top editor of Time magazine, who is now running the Aspen Institute.
* Tina Brown, a best-selling Princess Diana author; former editor of Talk, Vanity Fair and The New Yorker; now atop the Barry Diller-financed Daily Beast e-zine.
Neither has indicated any interest so far in leaving their current posts.
Also, Jacob Weisberg, the editor-in-chief of the Washington Post-owned Slate, has also been mentioned.
Zakaria is a natural bet, though Kelly's reservations as to whether he'd want the responsibility seem spot-on. Brown and Isaacson seem like long shots, both because their magazine eras seem to be firmly behind them. Miller, who was extremely close with Meacham, would be a good choice in terms of continuity. And Weisberg, whose Slate Group outlasted Newsweek at the WPC (with partial exceptions), is always on the top of these sorts of lists. There's also Bloomberg Businessweek's Hugo Lindgren, recently dethroned New York Times Magazine editor Gerry Marzorati, and Peter Kaplan of Condé Nast Traveler and formerly the Observer, among many others. The fact that the Times Magazine is simultaneously searching for a top editor will likely complicate things for the struggling Newsweek — for example, Atlantic editor James Bennet, if he is itching to leave his post, is more likely to head for the solid ground at the Times.