After audio equipment tycoon Sidney Harman died in April 2011, his widow Jane Harman stood at a podium before the Newsweek Daily Beast newsroom to publicly proclaim her family’s commitment to the joint venture that it owned with Barry Diller’s IAC.
A little over a year later, the Harman family has stopped investing in the company, while IAC has stepped up its share to a controlling stake, Reuters has reported. The Harman family will maintain a minimum ownership stake in the company.
"IAC acquired a controlling interest in Newsweek Daily Beast," an IAC rep told Adweek. "This is one of many areas of investment for IAC and is not material to our overall business. The Harmans indicated they're not going to make any more contributions....Given Sidney died a while ago, this is a financial decision to cap their investment."
Rumors of a split have been circulating for some time, given the company's losses, and today's news had people hypothesizing that Harman had been dissatisfied with the magazine's editorial direction as well. "I don't think they liked crazy-eyes Bachmann or Obama as the first gay president," speculated one source with inside knowledge of the situation, referring to two of several sensational covers that Brown published. A week ago, a regularly scheduled board meeting of the Newsweek Daily Beast Co. was canceled.
The company denied that the pullback was rooted in anything but finances, noting that Harman was hosting an event for Brown in Aspen this week and that she would continue to take part in company events like Women in the World and a Heroes Summit that the company plans to launch later this year.
In any case, now that the Harmans' decision to stop subsidizing the magazine is official, it's likely to spur talk that IAC will eventually pull the plug on the magazine, which is still losing money, and focus its resources on the Beast and its growing roster of events.
The union certainly seemed far-fetched from the start. The then-91-year-old Harman had bought the struggling Newsweek from the Washington Post Co. for $1 with the goal of resurrecting a magazine in a now-faded newsweekly category. Harman and IAC’s Tina Brown-edited Daily Beast merged forces in early 2011 with the idea that combining their established newsgathering forces would improve the financial state of two money-losing media outfits, despite their disparate voices.
The results haven’t matched up with the buzz though. The combined properties were estimated to have lost $30 million premerger, and while IAC has said the losses have been significantly reduced, NewsBeast is still expected to lose money this year.
Staff turnover has been heavy, and while the magazine has certainly grabbed attention for some sensational covers, it's also left confusion in the market about what exactly it stands for. Ad pages for Newsweek, which supplies the bulk of the entity’s revenue, rose 8 percent in the first half of the year, to 344. Still, that’s half the ad-page volume Newsweek had in the same period four years ago—suggesting the magazine still has a long way to go to get its footing.
While Sidney Harman called Newsweek a "national treasure" worth preserving and took an active interest in the magazine, going on sales calls with the publisher and even leaving his editorial thumbprint on it, his widow didn't appear to share that passion. One can only wonder how the magazine might have been different if he'd lived longer.