Barry Diller (EPA)
Newsweek’s days as a print publication are numbered.
Barry Diller, chairman of the 79-year-old title’s parent company, dropped the bombshell yesterday, saying an online-only version of the money-losing title is inevitable.
“The transition to online from hard print will take place,” Diller, chairman of IAC/InteractiveCorp, said during a conference call. “We’re examining all of our options.”
Diller’s comments came just days after it was revealed that IAC will have to shoulder all future investments in Newsweek DailyBeast (NDB).
The family of the late Sidney Harman, which is in the joint venture with IAC, has stopped funding the unit.
Diller’s “online” comments were accompanied by an announcement that IAC is aiming to curb investments in NDB — which is said to be losing about $30 million a year — and that a plan for NDB’s future would be announced in September.
The words from Diller sparked a firestorm of speculation, with observers saying it could mean anything from a sale of Newsweek to a transition to a digital-only brand at some point in the near future.
“The brand is good,” said Diller, who insisted it is stronger today then when he formed the joint venture with Harman in January 2011.
The joint venture united the weekly mag, which Harman bought for $1 from the Washington Post Co., with the then 30-month-old Daily Beast website run by former Vanity Fair editor Tina Brown.
“Tina Brown and her staff have done a superb job,” insisted Diller.
In fact, sources said that Brown was “gobsmacked” by Diller’s comments.
Hours after the Diller conference call, Brown tried to calm a jittery staff by penning a memo saying Newsweek was not going digital by September.
“[Barry] made the uncontroversial, industry-wide observation that print is moving in the direction of digital,” Brown wrote.
Ad pages at Newsweek were up only 4.07 percent through July 23, after falling double digits last year.
An NDB spokesman insisted that unique visitors to the website will reach a record 13 million in July.
Still, IAC initially predicted the venture would be coming close to profitability around about now, so the continued stream of red ink could not be greeted with any happiness by the IAC board.
“What is the problem?” Diller asked rhetorically on the call. “The problem is in manufacturing, producing a weekly news magazine. And that has to be solved.”
“Everyone is going to face the same problem, other than I think luxury brands over a period of time, because advertising in the category is entirely elective,” he said.
“The transition will happen,” said Diller. “I’m not saying it will happen totally, but the transition to online from hard print will take place.”
One scenario might be for a potential new suitor to step forward. Thomson Reuters was rumored to be a potential buyer, possibly to use Newsweek as a consumer-facing brand the way rival Bloomberg LP has used Businessweek since taking it over from McGraw-Hill in December 2010. Thomson Reuters did not comment by presstime.
Regardless, it promises to be a bumpy autumn for Brown. She has already experienced a fairly high degree of management turnover.
Among those who have left are Executive Editor Ed Felsenthal, Managing Editor Tom Weber, Web Editor Jane Spencer and Chief Digital Officer Daniel Blackman.
Said Blackman, who left in June, “Every smart news organization has to be thinking aggressively about how to digitally innovate.”