New York Observer owner Jared Kushner, the scion of a wealthy and politically entangled New Jersey real estate family, is having a bumpy ride in the media world.
His one-year excursion into building a national network of local political Web sites with Politicker Network came to a crashing halt late last week when he was forced to shut down three more state sites – in New Hampshire, Pennsylvania and Massachusetts.
Only a month earlier, with politics one of the hottest sectors in pop culture, he had shut down 12 state sites and insisted the plan was to continue with a “regional” approach to coverage.
“We’re going to drive for profitability in 2009,” Kushner said to Politico.com at the time.
That was then. Now, the network is dead.
Its national managing editor, James Pindell, recruited from the Boston Globe a year ago, has been laid off. All that remains is a New York site and the New Jersey site which started it all when the Observer Media Group purchased what was then known as PoliticsNJ.com. “I just thought it made more sense to concentrate on the two profitable sites,” Kushner told The Post in a telephone last night..
And then there’s the distinctive salmon-colored weekly – the Observer – which continues to lose money.
“I’m taking a long-term perspective to the Observer,” Kushner said. “We’ve seen revenues grow dramatically since I bought it 2- 1/2 years ago.”
But Doug McIntyre, editor of the financial Web site 24/7 Wall Street, doesn’t see much upside. “They lose money in the newspaper business and there is no prospect they will ever make money.”
Kushner fired back at McIntyre, saying he has never met the Web editor “but I do know he doesn’t know anything about my business.”
Yet the media roller coaster appears to be heading downward for young Kushner, who celebrated his 28th birthday yesterday.
Only a year ago, he was toying with the idea of starting a free daily newspaper in New Jersey and of teaming up with Cablevision to buy Newsday. Cablevision eventually spent $650 million to buy the embattled paper on its own.
Kushner took over the Observer in 2007, reportedly for $10 million, from founder Arthur Carter and spent millions on a redesign. The weekly was losing about $2 million a year at the time of the takeover and indications are that the losses have gone up since.
Despite its rocky road, the weekly propelled Kushner, then still finishing NYU Law School, into the media spotlight. He was seen hosting events at the Four Seasons, renting out hot bars for parties and now dates Ivanka Trump.
But as the media world plunges into its worst recession in decades, he’s learning there is a downside.
Ken Swill, president of Westminster Capital, described as the financing arm of the Kushner real estate companies, claimed in a lawsuit that a $5 million payment by the Kushner company to the Observer represented a “wrongful diversion” of funds.
He also claimed Charles Kushner and son Jared “exerted undue influence and breached their duties” to the real estate company.
A Kushner spokesman denied the claims and said Swill is a disgruntled former employee.
Some have called into question how willing the family will be to use its real estate fortune, which is topped by the trophy building 666 Fifth Avenue, to prop up a media empire in a flagging economy.
“The financial shape of 666 Fifth is strong,” spokesman Steve Solomon told The Post.
He said Kushner stabilized the property last year when a 49 percent stake in the tower’s retail portion was sold to Carlyle Group and Crown Acquisitions for $525 million. He also said the property now has a long-term, fixed-rate debt (with 8 years remaining) which is interest-only and has no short-term liabilities.
“There is a limit to how much they will want to lose in media,” McIntyre said. “In an emergency they could try to sell it, but I don’t think anyone will buy it.”