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News Flash: Newsweek Publisher Throws In Towel

Posted on Wednesday, May 05, 2010 at 3:30 PM

The Washington Post Company has given up on Newsweek. It put the publication up for sale. Chairman Donald E. Graham, in announcing the move on May 5, admitted, "we do not see a path to continuing profitability under our management."

The Washington Post's failure with Newsweek underlines a point about business strategy. If a publication is operating with flawed business strategies, when the economy hits a downturn, the publication can experience potentially insurmountable problems. Even the mighty Newsweek was not above that basic principle.

Graham said that they are looking for a rapid sale to a qualified buyer. STRAT has learned of interest from a group of Russian investors with experience in publishing. (Newsweek actually has a Russian edition, which is operated by licensee Axel Springer and reportedly in deep financial trouble, as well.)

Graham's statements make no mention of whether an independent valuation of Newsweek has been conducted. The business itself may indeed even have a value of less than zero, given "reported losses in the tens of millions for the last two years." That said, there may be residual value in the Newsweek brand if it can be divorced from association with the Washington Post operation.

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