Newsweek Changes Hands – Analyst Blog

The Washington Post Company (WPO), the diversified education and media conglomerate, recently announced that it has completed the sale of Newsweek to Dr. Sidney Harman, who founded the audio equipment maker company, Harman International Industries Inc. The terms of the deal announced on August 2, 2010, were not disclosed.

 

In May 2010, Washington Post had hired Allen & Company, an investment bank, to explore the possible sale of Newsweek. Apart from Dr. Sidney Harman, other potential bidders for the magazine were Avenue Capital Group, a global investment firm; Fred Drasner, the former publisher of New York Daily News and U.S. News & World Report; and OpenGate Capital, a private equity firm and the owner of TV Guide magazine.

 

Founded in 1933 and acquired by The Washington Post Company in 1961, the Newsweek magazine, like other print publications, had long been grappling with sinking advertising revenues, and the recent global economic meltdown had brought the situation to a head. This came in the wake of a longer-term secular decline as more readers choose to get news free online, thereby making the print-advertising model increasingly redundant.

 

Despite a moderate recovery in the print advertising environment, Newsweek struggled. Advertising revenues at the magazine dropped 38% in first-quarter 2010 due to fewer ad pages in the domestic and international editions. In fiscal 2009, Newsweek advertising revenues fell 37%, following a 14% decline in 2008.