Money Matters - Simplified

Washington Post Co. to seek bids for Newsweek

Due to fall in advertising revenue, the company dropped Newsweek’s guaranteed circulation to 1.5 million from 2.6 million and even laid-off workers at the magazine.

Seeing no way for the troubled magazine to return to profitability, The Washington Post Company is putting Newsweek, the 77-year-old weekly magazine, up for sale.

Despite the three year plan aimed at overhauling the loss making magazine, the company has failed to turnaround Newsweek.

Announcing the decision to Newsweek employees during a meeting Wednesday morning, Chairman Donald E. Graham said that the decision is purely economic.

“It was a hard decision for me, but it's a lot harder for the people who work here," Graham told The Washington Post.

Reeling under losses
The move by The Post Co. comes at a time when the company has been revamping its various magazines, which have been reeling under losses due to sharp drop in readers, and advertisers.

For instance, the company has recently sold TV Guide to a private equity firm, and BusinessWeek to Bloomberg. Further, it has revamped Readers’ Digest, to counter magazine’s declining circulations.

The company’s magazine group reported a loss of $29.3 million in the last fiscal year and it posted loss of $16.1 million in 2008.

According to Publishers Information Bureau, Newsweek sold 26 percent fewer ad pages last year.

To facilitate the sale of the troubled magazine, the company has hired Allen & Co, the investment bank, which specializes in media deals.

Due to fall in advertising revenue, the company dropped Newsweek’s guaranteed circulation to 1.5 million from 2.6 million and even laid-off workers at the magazine.

Newsweek currently has a staff of 150, a 30 percent drop over the last four years.

Seeking bids to keep magazine afloat
To facilitate the sale of the troubled magazine, the company has hired Allen & Co, the investment bank, which specializes in media deals.

Though The Post Co. has not divulged the names, the company has received calls from two likely bidders, who have shown interest in taking over the troubled magazine.

In an interview to Newsweek, Graham stated, “We expect to listen to what people call expressions of interest for about a month, and then send a complete package of information. And then because it's good for the business we'll try to find a good buyer in the shortest possible period of time.”

Jon Meacham, the magazine's editor, is looking for all possible means to keep the magazine in business.

The magazine could attract similar bidders to those who showed interest in taking over BusinessWeek.