Tina Brown, the famed editor-in-chief of the combined Newsweek/Daily Beast, admitted in an interview with Nightline that the company is losing money and that profitability is a couple of years away.
Brown disputed reports that the company lost $30 million last year, calling them “excessive,” but didn’t offer an official number to Nightline anchor Cynthia McFadden.
“We are certainly not losing that amount, but we aren’t making money yet and we won’t make money for another couple of years, but we will as long as we can build the brand back up again…”
That’s an additional two years on top of Brown’s prediction in 2010 that the combined company would be profitable in — you guessed it, two years.
I guess using two-year chunks of time is more palatable to Brown’s bosses than the reality that it would take nothing short of a miracle to revive the moribund Newsweek.
Brown also admitted that last year was “very difficult” as she was trying to keep Newsweek from completely crashing while redesigning the magazine at the same time.
“Difficult” may be an understatement. While Newsweek managed to increase newsstand sales 15% last year, it was more than offset by the 11.7% ($20 million) drop in ad revenues. And since most ad revenues flow directly to the bottom line, it shows Newsweek took a giant step backward financially last year.
When the late Sid Harman bought Newsweek for $1 plus assumed debt in 2010, it was more about saving a magazine that aligned with his liberal politics than about its future financial viability. When he partnered with IAC/Interactive Chairman Barry Diller to combine Newsweek with The Daily Beast, it was an opportunity to see whether or not the old media magazine could be revived using The Daily Beast’s new media tactics.
That hasn’t happened yet. And with Diller being a bottom-line type of guy, answerable to shareholders, it remains to be seen how much longer he will be willing to put up with Newsweek’s losses which are masking a much stronger Daily Beast operation.
Diller expressed skepticism last March about the potential of combining the two companies, but said he would know more in six to eight months.
Well, a year has passed since he expressed that opinion and it seems clear that Diller was right. The future of Newsweek remains very much in doubt.