Business

Observer editor out

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The New York Observer jolted its staff yesterday with the news that Elizabeth Spiers was exiting as editor-in-chief — only 18 months after she was handed the job by Jared Kushner, the real-estate scion who has owned the money-losing paper for the past six years.

Spiers will be succeeded by executive editor Aaron Gell, who becomes the fourth person to hold the job since longtime editor Peter Kaplan quit in 2009.

A year ago, Kushner — who bought the struggling weekly from founder Arthur Carter in 2006 when it was losing about $3 million a year — was insisting that the salmon-colored weekly and related websites had finally made their first-ever profit.

Plans were being made to develop and roll out a national website, with the possibility of launching digital versions in other cities around the country. The 21-person editorial staff was expected to expand to more than 30.

Now, insiders say that after that first brush with profitability, the paper is back in “investment” stage — that is, bleeding red ink once again.

While there are more editorial people on board, its national plans seem to have stalled, creating a source of friction between Kushner and Spiers, who was said to have been very disappointed.

The sudden news of her leave-taking — announced the same day as the departure of President Christopher Barnes — had all the earmarks of a major housecleaning by Kushner.

Spiers dismissed outright the speculation that she had been fired, labeling it “false and ridiculous.”

Barnes also insisted that nothing of the sort had taken place.

Said Kushner, “I have a lot of appreciation for what they’ve both done. It’s part of the growth of the company. Every time I’ve made a change so far, our business has only done better.”

More than half of the 27-person editorial staff had been brought on board by Spiers.

Several acknowledged that the news that she was going was a “total surprise,” but few could think of any trigger event.

Kushner, who had been famously meddlesome when he first took over the paper, seemed to be a non-presence around the office for most of Spiers’s tenure. Any meetings that took place were usually at his real-estate headquarters.

And Spiers brought the paper, which had shrunk to a tabloid size shortly after the Kushner takeover, back to its original broadsheet size, while starting websites such as PolitickerNY and GalleristNY, as well as Scene, a glossy.

The Observer also had developed a real estate spinoff called Commercia l Observer.

Spiers will stay on board day to day through the end of the month and will continue as a part-time “business consultant” until Nov. 30.

Gecko gone

The remark by Barry Diller, chairman of IAC/InterActiveCorp, that Newsweek would go digital at some point down the road is having a chilling effect on advertisements.

GEICO, the ad-savvy insurance giant with the talking gecko as its spokesman, this week told Newsweek Daily Beast President Rob Gregory that it was pulling its third-quarter schedule from the Tina Brown-edited weekly.

Brown has been running provocative covers that have gotten media attention, but have had a questionable effect on advertising.

One of her more controversial covers last summer was “Princess Diana at 50,” a rendering of how the Dutchess of Wales would have looked had she not died in a Paris car crash in 1997. She was holding an iPhone — a move not greeted very favorably by Apple, which had run some ads in the magazine in early 2011 but has not since.

One ad agency head said Diller’s recent remarks would certainly give advertisers pause. “It would put up yellow flashing lights to a lot of people,” said Bill Koenigsberg, CEO of Horizon Media, an ad buying agency.

Diller said he’d have a plan in place for Newsweek by September and told investors that he had no intention of continuing the support he gave it this year into next.

The title was said to be losing an estimated $30 million a year, although Newsweek Daily Beast had insisted the losses were lower. Prior to the Diller remarks, ad pages through the July 16 issue were up 4.6 percent to 371.

Said Stephen Colvin, CEO of Newsweek Daily Beast, “July was a record month for the Daily Beast of 14 million unique visitors and iPad subscriptions are up 233 percent since January. Our advertisers remain committed and engaged with Newsweek and Daily Beast across all platforms.”

Free after all

Once again media concerns have learned that it is very tough to charge money for something that readers expect to get for free.

Arianna Huffington, the boss of AOL’s Huffington Post subsidiary, launched a weekly iPad magazine called Huffington only five weeks ago with the idea that it would be a premium product that readers would pay for.

Now, in the blink of an eye, that idea has been scrapped, and AOL is going to try to make a go of Huffington as an advertiser-supported free tablet publication.

The original prices were 99 cents for a single copy, $4.99 per month or $19.99 per annual subscription.

There were 115,000 downloads of the app, but it is hard to tell how many were actually paid for since one month was free for annual subscriptions.

Tim O’Brien, executive editor of Huffington Post, concedes that readers hated the idea of paying for the tablet magazine. Now, anyone who was willing to pay will be getting a refund.

“I still think it’s a premium product, and I was optimistic that we could take it to market and get readers to pay for it,” said O’Brien, “but I didn’t anticipate how much readers would hate the idea.”

But finding ad support may not be an easy sell either. Huffington launched with a single advertiser, Toyota.