Aug 02 2010
Riddle Me This – What’s the market value of a liberal news magazine?
News Item: Newsweek Magazine Sold - for $1.00?    http://tiny.cc/kj3an
And we’re not talking about a newstand copy – this is reportedly what the Entire Magazine went for, 285 employees included!
A deal to sell Newsweek to a 91-year-old stereo equipment magnate will be announced later this afternoon, a move that will signal the end of a half-century of ownership by the Washington Post Company….
According to several people who have been briefed on the process, Mr. Harman’s bid appealed to Mr. Graham and the Post Company because Mr. Harman has said he would retain a significant number of the magazine’s 325 employees. The financial details of the sale were not known, though one person with knowledge of Mr. Harman’s bid said last week that he would pay $1 in exchange for absorbing Newsweek’s considerable financial liabilities.
So let’s be fair, $1.00 isn’t exactly the market value, it’s actually much less than that since apparently Mr. Harman is going to take on significant financial liabilities in exchange for the right to lose money from here to eternity on this white elephant. The Washington Post is quite literally giving the entire operation away just to be out from under the obligations – and that tells you all you need to know about what they think the future holds for Newsweek.
But in a fascinating twist, the Post appears to have several offers that were much better than this, offers which would have given their own shareholders a much better return on these assets and on all the money that’s been wasted this past year.  So why did they turn down those offers and instead, make their own shareholders take a beating by giving Newsweek away for free? Because those nasty high bidders might have actually fired some employees and <gasp> CHANGED the editorial direction of the Magazine! We can’t have that, oh heaven forbid, we can’t have that! So better to take a huge loss and  auger this entire operation into the dirt before even considering whether maybe, just maybe, they’ve been doing things wrong.
And that right there pretty much sums up the current state of liberal thought in this country.  They’re never going to change – liberals are going to powerdive anything they run straight into the ground before they even consider doing anything differently.  How did they come to this state of affairs? We probably all remember Newsweek as that somewhat left-leaning newsweekly that used to mostly print straight news without too much editorializing. Then – well, the article softpedals what happened last year:
The magazine’s top editors and managers redesigned it last year in hopes of attracting more readers and advertisers. But the updated magazine, which contained more commentary and analysis on the news of the week, failed to catch on.
Actually what they did was to cut out most of the straight news reporting and turn it into All Obama, All the time! And rather than reporting actual news anymore, everyone in charge felt it would be a lot more fun if they just editorialized about whatever caught their fancy that week, or more precisely whatever they thought the Administration needed help with that week. The cover hyping America’s! Great! Economic! Recovery! a couple months back stands out as a particularly notable piece of disinformation.
Newsweek’s dedication to the Cause undoubtedly would have put Pravda to shame.
Surprise, surprise, surprise – they found that they couldn’t even give those magazines away, and circulation figures crashed. But did they change their strategy? Oh hell no.  The losses got so great that even the Washington Post couldn’t look the other way anymore, so they went on the auction block.  But even at the End of All Things, they can’t give up their hold on their precious Ideology, and they’ll gladly dance their way into the pit as long as they know they’ve got it safely grasped in their hand.
Newsweek’s  attitude towards their readers and towards the idea of having to compete in a market at all was probably best summed up by Franz Liebkind:Â
“I am the Author! You are the Audience! I OUTRANK YOU!!!!”
Come to think of it, he should be their Patron Saint. They resemble him more and more every day.
So, who would willingly walk into this snakepit of guaranteed disaster? Enter Sidney Harman, 91 year old multimillionaire, of Harman Industries, maker of JBL and Infinity sound systems, among other things. What else is a guy like that going to do for fun at that age? (Well actually I think J. Howard Marshall made a much better choice in similar circumstances than Sidney Harman just did, but that’s just me) Lest you think that he’s going to actually apply some business sense to this operation, allow me to point out that his wife is Jane Harman, noted Congressional Democrat from California, an on and off ally of Nancy Pelosi.  So, essentially Newsweek just got farmed out to the Democrat Party for free, with a donor who will run it as they see fit because he’s old and bored and doesn’t mind throwing $20 or $30 million a year away in exchange for the chance to feel that he’s important again. See why Democrats love campaign finance limits? When you own the media, all that spending limits ever do is shut out the competition. But that’s another story.
As one of the commenters in the original story noted, the plan is for a 91 year old man from ‘Old Media’ who is not interested in streamlining operations to revitalize a dying magazine.
Oh yeah, that’ll work.
“the plan is for a 91 year old man from ‘Old Media’ who is not interested in streamlining operations to revitalize a dying magazine.”
Or to jump into the magazine business just before the Demrats stimulate the economy some more by propping up the dinosaur media with bailouts for losing publications like newsweek!
These clowns don’t make money the old fashioned way they have figured out its’ easier to steal it especially if the Federal Gov’t helps you, ala Feinstein D-rat CA, Maxine Waters D-Rat CA! They got Govt supplier to military and a bank this guy gets a Newsrag to turn into NPR of magazines!
Of course hes’ got to hope the Rats hold onto power for this stealth theft to work. I don’t think even Juan McCain or Lindsay Grahamnasty are dumb enough to go along with a dinosaur media bailout! Are They?
Yup. Newsweek will be the organ of the DNC that it always has been anyway. Well, Jane is half owner now. As long as people know what their buying, I suppose they can buy whatever they want.
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I subscribed to it thirty years ago for about two years before non-renewal. I’m glad that I did not renew it. Sounds like they had to find a way to get rid of it as fast as they could.
Who bought it?
Ah…Sidney Harmon…
I think he overpaid.
Congratulations WWS! You’ve made it to Powerline:
http://www.powerlineblog.com/archives/2010/08/026904.php
There is a couple of lesson with Newsweek.
First, both the Obama Administration and the Main Stream Media failed to realize that the more the MSM played “State Run Media Silence” game to protect Obama. The more credibility they ceded to the alternate internet media in hounding Obama.
Especially since the alternate media types are using Google type internet searches available to, and repeatable by, anyone to do it.
You can ask Candidate for President Al Gore about what that meant for his carrying Tennessee in 2000.
That is the reason why Newsweek sales tubed. They abandoned the “Killer Ap” of hard news for the dual role being a propaganda organ for Democrats & especially Obama et al while also doing a poor imitation of People magazine besides.
The reason that the Democrats want to keep Newsweek a going concern is demographic.
It is one of their remaining press organs that still reaches seniors, since seniors have abandoned the network broadcast news for Fox News Channel, and they need reach that voting block between now and both the 2010 and 2012 elections.
The problem with that choice is that Democratic health care and tax programs have so turned off White American seniors that nothing the MSM says anymore is listened too by them.
This is the MSM’s epitaph:
“They ain’t listenin’ to you any more, Laddie.”
Good points, Trent. The great tragedy of this choice is that there actually *was* a chance to revitalise this magazine with a new, market oriented direction – failure of the old methods opens the door for the new. Someone is going to figure out how to combine a traditional name with a succesful digital format, and the opportunity was right here for anyone to seize. It would have been painful and involved hard choices, but creating something new from the ashes of the old always does.
However, since Ideology is the only controlling factor, that door of opportunity has now been slammed shut. In exchange for a couple of years free ride Newsweek has just chosen a death sentence. While a foolish old man may have fun tossing money away, his heirs certainly won’t (heirs never do) and so the very life of Newsweek is now cojoined with the fading life of a 91 year old man. Here’s the blunt truth – when he goes, so do they, since they will have wasted all the years in which they could have been figuring out how to survive on something besides charity. You may be right, DHunter, they may be banking on holding out till they get permanent govm’t subsidies, but I don’t think that’s a very realistic plan, either.
And if you think my characterization of Harman as a foolish old man is harsh, consider what the Post’s own staff thought of him:
“Harman was someone who was taken less seriously by the staff who worked on the deal because he had no plan,” says a person close to the deal. “He won the bid because he had the lowest number of layoffs.”
http://www.thedailybeast.com/blogs-and-stories/2010-08-03/newsweek-losses-revealed
Oh, and Wilbur, what you said about Harman overpaying may sound like a joke, but you’re exactly right, and at least one CEO publicly agrees with you:
“Those are the kind of realities that prompted Fred Drasner, the former CEO of Daily News and US News and World Report who also bid on Newsweek, to sum up Harman’s $1 acquisition this way: “I think he paid a very full price.” “
Don’t the WaPo shareholders have a cause for action, since they lost a considerable profit by giving the rag away?
I hate this! I knew inflation was bad but now your telling me a roll of toilet paper is $1.00. That’s depressing!
Oh my!
President Obama Job Approval
RCP Average
Approve 44.9
Disapprove 49.7