Newsweek Losses Revealed – The Daily Beast, 3 Aug 2010:
Yesterday’s purchase of a 77-year-old magazine, Newsweek, by a 91-year-old audio magnate, Sidney Harman, had all the makings of a feel-good story, even as editor Jon Meacham announced his departure. A venerable media franchise rescued from an uncertain future by someone who loves the printed word—Harman is the author of two books and has said that writing “enables the process of self-discovery”—and considers Newsweek a “national treasure.”
But make no mistake, Harman’s pocket change purchase of Newsweek—he paid $1, plus the assumption of liabilities for the magazine—has to be a passion play, because it certainly isn’t a financial one. The Daily Beast has obtained a copy of the 66-page sales memorandum that the Newsweek seller, the Washington Post Co., gave to prospective buyers, and it paints a picture of a media property given to someone unequipped to fundamentally change the current trajectory.
As with many weeklies, Newsweek’s financial freefall is jarring. Revenue dropped 38 percent between 2007 and 2009, to $165 million. Newsweek’s negligible operating loss (not including certain pension and early retirement changes) of $3 million in 2007 turned into a bloodbath: the business lost $32 million in 2008 and $39.5 million in 2009. Even after reducing headcount by 33 percent, and slashing the number of issues printed and distributed to readers each week, from 2.6 million to 1.5 million, the 2010 operating loss is still forecast at $20 million.
In fairness to Harman, many moguls, from Si Newhouse (The New Yorker) to David Bradley (The Atlantic) have had the patience to see their money-losing gems all the way into the black. But the print media outlook has never been worse—and even billionaires tire of losing money. For every Newhouse and Bradley, there are currently two Sam Zells, who had employees of the Tribune Company rejoicing about their good fortune in finding a benefactor willing to sustain millions of dollars in losses to protect journalism’s standing as a public trust.
Not unlike Harman, Zell, too, promised minimal layoffs and a commitment to finding a business model that worked, Zell’s tune quickly changed after realizing the realities of today’s printed media world, however, and multiple rounds of layoffs and an eventual bankruptcy proceeding are the legacy his Tribune purchase left behind.
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.”
Sidney Harman buys Newsweek – POLITICO.com, 2 Aug 2010:
Graham personally chose Harman from among several well-heeled bidders, in part because he would provide the most continuity for the magazine, according to the sources.
The other two finalists were New Yorkers: Marc Lasry, an influential Democratic donor who heads Avenue Capital Group, a hedge fund where Chelsea Clinton worked; and Fred Drasner, former part owner of the Washington Redskins and former co-publisher of the New York Daily News.
Graham felt comfortable with Harman’s centrist politics, and was comforted by the idea of selling to a stalwart of the Washington establishment. Harman is expected to preserve the serious-minded, essentially New-Democratic tone Meacham set for the magazine.
From this friendly spin you’d think all these cold calculators want to own businesses that lose tens of millions annually because they’re soft-headed “philanthropists” who just love “journalism”, not because they’ve coldly calculated that media outlets provide them a political megaphone with which to tell the masses how and what to think.
Democracy is the theory that you have as much power and influence as plutocratic moguls like Harman, Newhouse, Bradley, Zell, Drasner, Lasry, …
Asked why he wanted to purchase NEWSWEEK, Harman, in a brief interview, said he saw it as an “opportunity to synthesize all of that experience [in industry, education, and government]. I couldn’t pass it up.”
He added, “I did not and do not think of this in traditional business terms. The purpose of the investment is to provide fuel for the transition of the magazine in its current position into a thriving operation in the print, mobile, and digital worlds … I’ll consider it a victory when it breaks even. Breaking even is a big deal.”
Harman’s wife, Jane Harman, is a member of Congress representing California’s 36th Congressional district in Los Angeles’s South Bay area, since 1993. She is chair of the Homeland Security Subcommittee on Intelligence & Terrorism Risk Assessment, and is a member of the Energy and Commerce Committee, where she sits on the Health and Energy & Environment Subcommittees.
Rep. Jane Harman , a California Democrat long involved in intelligence issues, was overheard on a 2005 National Security Agency wiretap telling a suspected Israeli agent that she would lobby the Justice Department to reduce espionage-related charges against two former officials of the American Israel Public Affairs Committee (AIPAC).
“It’s the deepest kind of corruption,” said one of the sources, a recently retired law enforcement official who was involved in the AIPAC investigation. “It’s a story about the corruption of government — not legal corruption necessarily, but ethical corruption.”
Spy Story: Harman, Saban, and AIPAC | The Nation, 20 April 2009:
Who was Harman talking to when she was caught on tape by the NSA? Stein says she was speaking to a suspected “Israeli agent.” The Jewish Telegraph Agency suggests — as did earlier reports, in 2006, when the story first broke — that the person lobbying Harman to intervene in the AIPAC case was Haim Saban, a top Democratic fundraiser:
Similar reports surfaced in October 2006, just prior to the midterm elections. Those reports named the Israeli “agent” as Haim Saban, the Israeli-American entertainment magnate who is a major donor to the Democratic Party and to AIPAC.
Federal prosecutors eventually abandoned the espionage-law case against AIPACers Steven J. Rosen and Keith Weissman. The non-jew involved, Lawrence Franklin, got 12 years.