NEW YORK (AdAge.com) -- It's official: Sidney Harman, the businessman who made his fortune selling stereo equipment, has secured a deal to buy Newsweek from the Washington Post Co. and will announce the deal later Monday afternoon.
The New York Times and others have previously reported that Mr. Harman was the front-runner to come away with the news weekly, but have cautioned that no deal was certain. Politico's Playbook e-mail newsletter this morning said a deal with Mr. Harman was imminent, but also cautioned that "no deal like this is done until it's done." The deal is now done, according to people familiar with the process.
Mr. Harman and the Washington Post Co. declined to comment.
The Times quoted one person briefed on Mr. Harman's bid who said his plan would retain 250 of Newsweek's employees. Newsweek counted 379 full-time staffers at the end of March, according to the sale book posted by PaidContent, but a significant number have left in the time since. Losses at the magazine could approach $70 million this year, this person told the Times. Mr. Harman reportedly bid $1 for the magazine but agreed to assume the magazine's liabilities; those details could not be confirmed on Monday.
Post Co. Chairman Donald E. Graham put the long-running and iconic newsweekly on the block in May, saying it would lose money again this year and "might be a better fit elsewhere." The Post Co. sold its other magazine, Arthur Frommer's Budget Travel, last December. Despite the legacy of the flagship Washington Post newspaper, the Post Co. now finds the majority of its revenue in educational test-prep services, prompting Mr. Graham to reposition the Post Co. as an "education and media company" in 2007. The company decided to sell Newsweek one year after the title introduced a major redesign to its print edition's look, editorial mission and business model.
Newsweek has been cutting spending, but revenue has been falling as well. Newsweek's ad pages fell 9.6% in the first half, compared with a narrow 0.4% gain at Time, according to the Publishers Information Bureau.
Other once-mighty magazines have sold for astonishingly low prices, such as the $1 deal for TV Guide, but those prices don't look quite so minimal once you factor in the losses and liabilities -- such as the obligation to keep serving millions of subscriptions that may or may not be profitable -- attached to such acquisitions.
Bidders that were rejected or dropped out include Fred Drasner, Avenue Capital, OpenGate Capital, Newsmax and the hedge fund manager Thane Ritchie.
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