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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