At Hoover’s, editors cover a wide array of industries and provide expertise in how companies are responding to the recession. In particular, most of us are well aware of the current trials and pitfalls facing news magazine publishers.
It seems now like a preordained law: As online daily news journals sprout all over the digital landscape, more and more tombstones are being constructed for those stodgy, outdated weekly news publications. People today want to consume their news daily – heck, hourly. They’re less likely to receive their news and commentary from a magazine published last week. It’s just part of the “give-it-to-me-now” society in which we live.
But even I was surprised last week when Newsweek, one of the top three newsweeklies in the US, was reportedly sold for the purchase price of $1.
Although some sources dispute the $1 claim, the facts are these: Last week, Newsweek’s owner, The Washington Post Company, agreed to sell the magazine to Sidney Harman, the billionaire founder of audio equipment maker Harman International Industries. At the time of the announcement, much was made about how Harman was reportedly paying a small amount of cash for the company. Some sources included the $1 purchase price, some did not. They at least agreed that in addition to the controversial purchase price, Harman will be assuming millions of dollars of Newsweek‘s financial liabilities.
Newsweek is the second largest US news weekly magazine (trailing Time, for most of its existence). It shouldn’t shock you to know the company has been in a financial downfall for years. Its revenue dropped 38% from 2007 to 2009, and the magazine cut base circulation by more than 40% last year. In facing the crisis, the company did what all other industry peers have done – it made sweeping changes to its magazine format and accelerated its strategy for providing online content.
In 2009 the company began producing a less print-focused publication, shifting resources to Newsweek.com. Its print product adopted a new strategy as well. It began catering to a smaller, more affluent audience instead of targeting the wide masses. Rather than reporting the week’s events, Newsweek’s content now features more columns, commentary, photography, and long reporting pieces, as well as a more premium price tag.
“Newsweek is a national treasure. I am enormously pleased to be succeeding The Washington Post Company … and look forward to this great journalistic, business and technological challenge.”
The Washington Post Company reportedly turned away several buyers “whom they believed would lead the magazine in a markedly different editorial direction or make deep staff cuts.” So it looks like Harman was chosen because he promised not to make any radical changes and maintain stable staff levels. But amid the changing landscape of print journalism, is this the kind of hands-off approach the magazine needs to survive?
I guess if someone comes along in a few years and buys the company for 50 cents, we’ll have our answer.