Amid the hubub yesterday over the sale of the Washington Post, a decidedly smaller media business item got lost: the sale of Newsweek magazine to the owners of the International Business Times website.
At the present, no details on the terms of the deal were announced. In 2010, Newsweek was sold by the Washington Post to a left-leaning stereo equipment billionaire named Sidney Harman for $1 plus the assumption of outstanding debts, said at the time to number in the tens of millions of dollars. Harman then proceeded to merge the ailing magazine's operations with the general interest news website, the Daily Beast.
In 2011, Harman died and his heirs effectively ceded control over Newsweek to the Daily Beast's owner, left-wing media tycoon Barry Diller and his company IAC.
Combining up was later acknowledged to have been a “mistake” in the words of Diller as neither Newsweek nor the Daily Beast were profitable when the merger happened in 2010. Since then, neither publication has turned a profit.
The new owners of Newsweek appear to have paid even less than Harman did for the digital-only brand than Harman did judging from a report filed by Forbes.com:
The seven-year-old company has about 200 employees worldwide. By way of comparison, that’s more people than worked for the Huffington Post when AOL bought it in 2011 for $315 million. It occupies expansive old-media-style offices in Manhattan’s Financial District, which I saw last summer when I first met its cofounders, CEO Etienne Uzac and chief content officer Johnathan Davis. Perhaps not quite coincidentally, the space’s previous tenant was Newsweek.
While its monthly audience is small for a publication with global ambitions — 7 million visitors domestically and 13 million worldwide, according to Quantcast — IBT has been profitable since 2010 and was able to make the purchase without taking on outside investors, something Uzac and Davis have assiduously avoided to this point.
“People asking us, ‘How did you fund the acquisition of Newsweek? You must have outside backers, right?’” Uzac told me when we spoke this morning. ”Well, as we told you in the previous interviews, we are indeed a bootstrapped company.”
Doubt that IBT could be paying for all of its hiring and real estate with nothing more than the ads it serves to 13 million readers has been fueled by reports of the founders’ close ties to Korean religious leader David Jang, Olivet University and the World Evangelical Alliance. The fact that neither Uzac nor Etienne had any background in news, media or publishing before starting the site also seemed odd. While they’ve acknowledged some business connections, Uzac and Davis have repeatedly denied, to me and to other reporters, that anyone but them has an ownership stake in IBT Media.
One interesting aspect of the deal that has yet to be determined is the state of Newsweek's archives, an asset which neither of the magazine's previous owners had actually ever bothered to digitize as PJ Media's Ed Driscoll noted.