Putting together The Daily Beast and Newsweek makes little financial sense, includes not much in the way of editorial synergies — is it The News Beast or The Daily Week? — and marries two properties that have almost nothing in common other than the fact that they both lose lots of money.
Other than that? A great idea. Brilliant, really. And it will be fun to watch.
For starters, it will be nice to see Tina Brown back in print, just two years after starting The Daily Beast for Barry Diller at IAC and making it clear that she was crossing over to digital media and had no intention of coming back.
“I would hate to be in the magazine world. It’s a really tough world to have to compete in,” said Ms. Brown at the EconWomen conference in 2008. But that clear-eyed assessment seemed very far away on Thursday night. Never mind all that black crepe; bring on the Champagne!
“What does this exciting new media marriage mean? It means that The Daily Beast’s animal high spirits will now be teamed with a legendary, weekly print magazine in a joint venture, named The Newsweek Daily Beast Company, owned equally by Barry Diller’s IAC and Sidney Harman, owner (and savior) of Newsweek,” she wrote in an announcement on the site Thursday night. Her note to readers came after The New York Observer broke the news that the wedding, which had been called off just weeks before, was back on.
Nuptials that grow out of broken engagements seem particularly fragile, and there is a kind of shotgun aspect to all of this: The Daily Beast is up against the seemingly impossible economics of producing quality general interest content on the Web, and with its weekly cadence, Newsweek has lost salience in a news environment cluttered with rapid new competitors, like, um, The Daily Beast.
For Mr. Diller, the deal is an opportunity to distribute costs over a larger organization, reach the more reliable advertising platform of print and get his hands on a major media calling card, if one that is tattered almost beyond recognition.
Mr. Harman gets a star editor — albeit one who doesn’t report directly to him — landing a prized Manhattan media collectible after feckless and fruitless months of searching. The list of people who turned down the job of reviving Newsweek reads like the reservation list of Michael’s restaurant in Midtown on a very busy day.
The people who said no before Ms. Brown said yes are said by at least two people involved in the process to include (in no particular order): Peter Kaplan, former editor of The New York Observer and now at Women’s Wear Daily; Josh Tyrangiel, formerly of Time Inc. and now at Bloomberg Businessweek; Kurt Andersen, the founder of Spy and the former editor of New York magazine; Adam Moss, the current editor of New York; Jim Kelly, the former editor of Time magazine; Jacob Weisberg, chairman and editor in chief of the Slate Group; Fareed Zakaria, a former Newsweek luminary now at Time and CNN; and Andrew Sullivan, the blogger and former editor of The New Republic.
Mr. Harman seemed unprepared for the challenges that went with plunking down a dollar for Newsweek and assuming some $40 million in liabilities. After he made the deal in August, weeks and then months went by with the patient still on the table, bleeding cash, talent and advertiser interest. Enter Ms. Brown and her trusty set of paddles. “Clear!” you can almost hear her shouting as she steps toward the task at hand.
(Her first act was a bit of euthanasia: Newsweek.com is being shut down and its traffic is being redirected to its new sibling, even though it has more than twice the traffic of The Daily Beast.)
Can she combine the two patients into one with a good life expectancy? Stephen Colvin is now chief executive of The Daily Beast Newsweek Publishing and had been president of The Daily Beast. He spent 17 years in magazines at Dennis Publishing, which included the then-successful Maxim magazines and where he also started The Week, which turned out to be a pretty good idea, and wouldn’t you know, created turbulence for Newsweek with its formula of aggregating weekly content in print. He is confident that the blend of the operations will be a fruitful one.
“It combines a great, prestigious magazine with a very buzzy, feisty Web site, both targeted at the same audience,” he said. “We have budgets, we have a plan, and if we execute, there is a real opportunity here.”
Mr. Colvin won’t say so, but Newsweek is less prestigious than it used to be. Yes, Ms. Brown’s track record in reinventing magazines is excellent, but in the case of both Vanity Fair and The New Yorker, she had the backing of S. I. Newhouse, whose financial indulgence was eventually rewarded with revitalized franchises that are part of the core assets of Condé Nast.
Mr. Harman and Mr. Diller have deep pockets, too, but they are already dealing with very significant losses — about $500,000 a week at Newsweek, and The Daily Beast, a much smaller enterprise, will lose about $10 million this year.
“When you step back, this is not a marriage made in heaven,” said Mark Edmiston, a former media investment banker who was the president of Newsweek in the 1980s. “You have two very different owners with very different motivations. At Sidney’s age, he is interested in creating a journalistic legacy, while Barry will be looking to monetize his investment in The Daily Beast by doing what Politico does, which is use a print product to subsidize a digital business.”
“And if you leave Tina out of it for a moment, what is the model?” he added. “I don’t see how you can take two money-losing businesses and put them together and come up with a single entity that makes money.”
He’s got a point. Imagine trying to sell packaged advertising: “Not only will you get a great ad position on a fresh, provocative Web site, but we will also sell you a large brand advertisement in a storied weekly that circulates to 1.5 million Americans.” Gee, that sounds like a very unusual animal, one that has the head of a goat and the backside of a cow.
When the merger talks fell apart three weeks ago, staff members at The Daily Beast were relieved and couldn’t help noticing that Ms. Brown seemed “almost giddy that she didn’t end up with this 1,000-pound rock strapped to her back,” according to one staff member who didn’t want to be quoted talking that way about the boss.
Now she has to get the rock off her back and start rolling it up a hill.