This morning’s papers were full of hand-wringing about what will happen to Newsweek now that its savior, stereo magnate Sidney Harman, has passed away. After all, Harman bought the magazine for $1 and assumed a reported $47 million in debt — on top of whatever the magazine has lost since then. He did it because of a personal belief in the brand, and because he’d long wanted to own a magazine. But would his estate be so sentimental when faced with mounting losses? The Wrap reports that Harman was required to agree to a funding plan in the event of his death, and according to a lawyer for the Harman estate and spokesman for the Newsweek/Daily Beast company, he’s still into it. “The Harman family is totally committed to Newsweek and its future,” attorney Robert Barnett said. “They will continue to be active and supportive as Sidney would have wished and in Sidney’s memory.” Both editor Tina Brown and co-owner Barry Diller voiced similar reassurances. And Newsbeast spokesman Andrew Kirk clarified: “His estate will have the ability to appoint a replacement director to the board of the venture to represent its interests.”
There are indications that this person will be his 29-year-old son Daniel, who is the only family member that has visited the Newsweek offices with Harman, according to the Times’ Jeremy Peters. But there’s also his wife, Jane Harman, a former U.S. representative who gave up her seat around the time his family found out about his illness and is now free of that particular conflict of interest.
Still, each report expressed a sense of worry about the magazine’s future without Sidney. “Will Sidney Harman’s Family Continue to Support Newsweek?” the Wrap asked. “What Does Sidney Harman’s Death Mean for Newsweek?” wondered Forbes’s Jeff Bercovici. “Harman also said publicly that he was prepared to lose up to $40 million in the effort to turn Newsweek around. Will his heirs have that sort of commitment? And, if they don’t, will Diller be willing to take up the slack?”
That’s the real question here. Upon the death of Harman, Diller — who now owns 50 percent of the company alongside his estate — will assume Harman’s role as executive chairman of the company. Back when rumors of a potential Daily Beast merger with Newsweek were originally floated, there were reports that Diller was frustrated with the Beast’s steady losses and that he was looking for a partner to shoulder some of the burden. Harman was exactly such a partner — one who was heartily willing not only to chip in and streamline by combining resources, but also to actually swallow a vast amount of debt. There’s a difference between that kind of partner and one who is pledged to support a deal on a dead relative’s word — but who might not be so spiritually committed to future losses.
Diller is unlikely to want to split up the companies again — the Daily Beast’s traffic was slipping around the time of the merger, and he was reportedly salivating over newsweek.com’s massive following and related ad dollars. Still, Diller doesn’t have the best track records with business partners he doesn’t trust, even ones that were former close allies, like John Malone. He appears to be in the driver’s seat now, and if he’s indeed been tired of Tina’s losses before, who’s to say he won’t get tired again? It’s not that the death of Sidney Harman doesn’t raise some serious questions about his half of the company. But it is not without its effect on Diller’s half, too. Staffers should hope that now he’s more firmly steering the company ship, he’ll be an optimistic captain.