Man, Jon Meacham really was great at hemorrhaging cash. The money-draining, reader-losing Newsweek is nearing the end of its auction period, and the most interesting bidder in the mix remains Chris Ruddy of Newsmax (I still can’t believe Sid Harman wants it), whose conservative views have raised the hackles of people like Michael Isikoff, who recently announced he’s planning to bolt to MSNBC — from one failing entity to another.
Ruddy maintains he has a plan for making the publication profitable in 18 months — if he can do that, more power to him. Oddly, he also claims he wants to “retain the brand” and have both Newsmax and Newsweek going at the same time. That just seems ludicrous to me — why sell to a crowded market when you could sell to an underserved one? Ad pages for Newsweek fell 26% in 2009, circulation fell +30%, and their web presence is a joke for a brand that large.
That said, I could certainly see a way forward for Newsweek. It still has over a million subscribers, and if the deal includes a shedding of the majority of the debt obligations, you’re essentially buying a brand and a list. Newsweek has to remain as a print + digital publication for at least the next two years thanks to roughly $40M in subscription obligations, so you can’t turn it into a pure digital publication overnight (as tempting as that might be). What’s more, you’re competing against Time in the middle (which has dominant market share), The Economist on the high end (a dramatically overrated pub), and The Week on the low end (yes, the UK pub from the makers of Maxim). But even with all of that, there’s a crapton of cutting you could do on day one.
Like, the entire staff. That’s a bit of an exaggeration. Not all the sales people need to go. There are several key writers who fled in the past year to other places that you’d want back. Samuelson does good work as a columnist. But in all, the rule should be: keep the photographers, bring in a crack crew of free agents, steal one or two key people from Wired, and start over from scratch.
Looking back over Meacham’s failure, it’s jarringly clear that he should’ve gone the route of one The Week — a handful of original content, but mostly aggregation. It has a great model: 15 people produce most of the original content and editorial, and about 35 people just handle the nuts and bolts. It’s got a full time staff of FIFTY people creating a publication with nearly 600,000 subscribers (~160k in America), with roughly $50M in revenue in 08-09. They had double-digit percentage gain in ad pages last year — it’s actually PROFITABLE in this marketplace as a non-niche publication. Imagine that.
For comparison’s sake, TV Guide, American Spectator, The Weekly Standard and other publications have all sold for $1 (Henry Blodget’s occupying that position already for this auction, so you’ll have to beat that). The once-vaunted BusinessWeek was sold for $5 Million to Bloomberg, and it’s probably worth more than Newsweek (even though Sorkin calls it a “hood ornament”). Yet it’s hard to miss the advantages of retaining that grocery store placement across the country for a national glossy weekly which still has a significant subscriber base.
Frankly, what might make the most sense is an organization like the Examiner buying it. They already have production facilities, they could reuse at least half their material from their local papers at no additional cost, and they could run feature pieces constructed by a smaller, elite staff — Phil Anschutz could easily cross-pollinate reporters from the Weekly Standard to write for the remade Newsweek. But all signs point to “not interested” on that one. A shame, because much of their content would work in that form, and reach a broader audience.
P.S. I’d suggest Breitbart, but he’s saving up to buy the New York Times and burn it to the ground.