Newsweek Magazine Sold to IBT Media
Daniel Gross on the economics behind the venerable title’s latest move.
On Saturday, IBT Media, publisher of the International Business Times, agreed to purchase Newsweek magazine from IAC. IBT, a global news publication founded by Etienne Uzac and Jonathan Davis in 2006, produces editions for ten separate countries in seven different languages. It reaches 13 million people around the world each month.
The sale marks the next step in the evolution of the weekly magazine. In May 2010, the Washington Post Company announced it was putting the title up for sale. Newsweek was ultimately sold to Sidney Harman, the philanthropist and founder of the Harman Kardon electronics company, for the symbolic price of $1 in the summer of 2010. In November of that year, Newsweek announced it would merge with The Daily Beast, bringing the magazine under the joint ownership of Harman and IAC. Harman died in the spring of 2011, and his family members decided in the summer of 2012 to cap their investment in the venture, making IAC the controlling owner.
Under new ownership, Newsweek reversed ad-page sales from a 40-percent decline to a 6-percent increase between 2010 and 2012, and saw a 20-percent increase in renewal rates. But with the economics of publishing continuing to shift, and the advertising-supported model of weekly news magazines facing challenges, Newsweek announced it would transition to an all-digital magazine last fall. The last print edition appeared in December 2012. At the end of April, IAC announced it was putting Newsweek up for sale.
The publication being sold this summer is significantly different than the one put up for sale in May 2010. (I worked at Newsweek from the summer of 2007 through the summer of 2010.) The business the Washington Post sold was much larger—it had a staff of hundreds of reporters and editors around the world, and multiple bureaus. It also faced the operational difficulty of printing, manufacturing, and delivering a paper magazine each week at a significant loss.
Three years later, Newsweek is a much different publication—and business. In January, the domestic and global print issues were combined into a single digital product, produced by a small staff to high editorial standards and an increased social media presence. The magazine has a growing base of digital subscribers, and foreign licensees continue to publish print Newsweek editions around the world in languages such as Korean, Japanese, and Spanish. Moreover, the digital Newsweek had reduced its losses significantly.
“Newsweek is a powerful brand, and we believe we can continue to build on that legacy,” said Jonathan Davis, co-founder and chief content officer at IBT Media. “We’re looking forward to building this into a successful enterprise.”
Ironically, IBT is based at 7 Hanover Square, the same building where Newsweek’s offices were housed after the Harman purchase.
The transaction is expected to close within a week, and IAC will continue to publish the digital magazine during a transition period.