After more than a month of speculation and on again off again talks Newsweek and The Daily Beast have agreed to merge.

From the New York Times

Tina Brown is back in the world of print.

After a brief and interrupted dalliance, Newsweek, the 77-year-old magazine, and The Daily Beast, Ms. Brown’s two-year-old Web site, have decided to put their cultural differences aside and will join forces.

Ms. Brown confirmed the deal in a column posted Thursday night in which she said the agreement was finalized with a coffee mug toast Tuesday evening. “As for me, I shall now be in the editor-in-chief’s chair at both The Daily Beast and Newsweek,” she wrote.

A Newsweek-Daily Beast partnership joins three outsize personalities: Sidney Harman, the 92-year-old stereo mogul who recently bought Newsweek for $1; Barry Diller, the media magnate who finances The Daily Beast and a host of other Web properties; and Ms. Brown, whose various stints as a high-flying — and high-spending — editor over three decades have always drawn intense curiosity from the media business.

One person who was involved in the deal said both publications would retain their separate identities.

The arrangement is in many ways a win-win for both sides, with Mr. Harman getting a respected editor who will generate buzz around a magazine that many in the publishing world had left for dead, and Ms. Brown gaining an editing job back in a well-known publication.

It also gives Mr. Diller, a member of the board of The Washington Post Company, the longtime former owner of Newsweek, a print magazine. That has the potential for far more revenue than The Daily Beast, a digital news and aggregation enterprise that has been neither fish nor fowl.

Mr. Harman and Mr. Diller have met in recent days to discuss the terms of a partnership, as Ms. Brown negotiated the financial terms of her contract.

Newsweek, bled by an exodus of staff members, a rapidly declining readership and a flight of advertisers, is a shell of what it used to be: a member of the small prestigious club of weekly magazines that helped set the tone for news coverage.

Mr. Harman was seen as a savior for the magazine when he bought it and someone to help it rebuild its reputation. But he has struggled to find an editor for three months, leaving the magazine effectively rudderless.

It became difficult for him to recruit an editor after the first discussions between him and The Daily Beast fell apart, partly because candidates did not want to be seen as groveling for a job that Ms. Brown had walked away from, people close to the deal said.

But according to one of these people, Mr. Diller and Mr. Harman continued to talk and grew to admire each other. For Mr. Diller, the idea of owning a print product was appealing.

“Both could understand the industrial logic of this deal,” this person said.

The deal to bring Ms. Brown on board will probably be seen as a test of whether both Newsweek and Ms. Brown can reclaim their former glory in the print galaxy.

Ms. Brown appears to believe at least part of that is true. She said early Friday morning she hoped The Daliy Beast would help “power the resurgence of Newsweek.”

Mr. Harman initially pursued Ms. Brown and Mr. Diller, chairman of IAC/InterActive Corp, to join forces.

The terms of the deal call for 50-50 control. The new company will be named the Newsweek Daily Beast Company. The deal was first reported by The New York Observer.

In a joint statement posted on The Daily Beast early Friday morning, the companies said the venture would be owned equally by Mr. Harman and IAC.

“In an admittedly challenging time, this merger provides the ideal combination of established journalism authority and bright, bristling website savvy,” Mr. Harman said.

Mr. Diller called Mr. Harman “a compelling force and I’m sure he will stimulate this undertaking every day.”

Besides the long somewhat awkward name the new company will be merging two money losing operations.  According to press reports Newsweek was expected to lose $20 million this year while the Daily Beast would be in the red to the tune of $10 million.

So on the surface this doesn’t look like much of a deal for Diller as he partnered with an operation that is losing twice as much money as his own company so I would assume that he has received some sort of guarantee from Harman that limits his losses in the new venture just in case things don’t go as planned.

But Diller is a pretty shrewd dealmaker and he may be looking at the fact that Sid Harman is 92-years old and the possibility that should this venture work that he could take over the entire company when Harman dies.

Despite the fact that Newsweek has suffered large losses it still has some brand recognition and attracts an audience of 7.3 million per month compared to the Daily Beast’s 4.6 million so depending on  how things go Diller could emerge in the future with a much more robust audience and and a more valuable company.

For Harman the merger brings him a well known editor at a time when Newsweek is badly in need of leadership. In essence he couldn’t find a top-flight editor so he had to go out and buy one.

Mergers of equals are not easy to pull off and Harman, Diller and Brown have some pretty large egos that will have to be tamed in order for the new company to succeed and there is no guarantee that can be done especially with these three.

We will have to wait and see how the melding of all of these personalities and the competitive challenges the new company will face plays out but I still like the name NewsBeast better.

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