<i>Newsweek</i> By The Numbers

A look at the 66-page memorandum The Washington Post Co. provided prospective Newsweek bidders shows exactly how much the weekly news magazine has been struggling financially -- and just how much work its new owner, audio mogul Sidney Harman, has cut out for him. The sales memo was leaked to The Daily Beast, who breaks the mag's losses down, number by number: 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. Newsweek was sinking, and fast, losing money across U.S. publishing, foreign publishing and digital in 2008 and 2009 -- a reality not helped by the fact that, like many in New York, the magazine paid a lot of rent for not a whole lot of space. In addition to $13 million in rent, Newsweek managed to spend $55 million in general and administrative costs in 2009. At this point, there's a pretty good idea of why Harman won out over other bidders (he's pledged not to leave massive layoffs in his wake and he seems to genuinely enjoy believe in Newsweek as a product and a company), but there are also compelling reasons for why he might not be the best, or at least not the obvious, choice to head the flailing weekly. As OpenGate Capital noted in a statement following the announcement of Newsweek's final sale, it had a plan and, like rival bidder Avenue Capital Group, was a media company with the experience and the means to offer a turnaround. The problem with Avenue Capital, of course, was its ties to National Enquirer parent company American Media Inc, which the Washington Post Co. feared would take over certain aspects of Newsweek production. Nevermind that they may have been exactly what Newsweek needed in a new owner. And it isn't as if the Washington Post Co. wasn't aware of that, either. According to the memo, "The right strategic partner can potentially provide scale and synergies on the digital platform" -- that is, another media company. It'll be interesting to see, then, if and how Harman is able to provide the sort of support and creativity needed to breathe new life and financial stability to Newsweek -- even while he maintains its status as a, in Harman's own words, "national treasure."

Fishbowl

Newsweek By The Numbers

Alex Alvarez

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Alex Alvarez