The Washington Post Co will sell Newsweek to 91-year-old audio equipment magnate Sidney Harman, who promised to retain most of the US weekly's 350 employees and give it a couple of years to reverse losses.
The founder of Harman International Industries Inc won the well-known news magazine after an auction that had drawn bidders including Fred Drasner, the former publisher of the New York Daily News and U.S. News & World Report, and OpenGate Capital, owner of TV Guide.
Terms of the deal were not disclosed, though the Washington Post Co said it will retain Newsweek's pension assets, liabilities and certain employee obligations. The newspaper publisher bought Newsweek nearly 50 years ago, but decided to shed the venerable but unprofitable magazine this year.
Newsweek's circulation had dropped to 1.9 million last year, from over 3 million two decades ago, as the weekly magazine struggled to keep pace with a ruthless news cycle and competition from television, blogs and social media.
"I think it is conceit for me to offer you or anybody including my comrades at Newsweek a fully articulated vision," Harman said in a phone interview with Reuters. "The role of 'Newsweek' ought to be to look at this complicated world and make sense of it every week."
Harman, who is married to Democratic Congressional Representative Jane Harman, said he is currently thinking about how to reshape the newsweekly, including investing in investigative and enterprise journalism.
Harman has pledged to keep most of Newsweek staff -- though Editor Jon Meacham is leaving the publication.
Harman is taking on Newsweek after the publication has sustained several years of losses. The magazine, which was founded in 1933, lost close to $ 11 million during the first quarter of this year.
Newsweek's main competitor, Time magazine, has also seen its circulation drop to 3.3 million from 4.2 million two decades ago. Time Warner Inc has been fielding questions from investors and analysts about the likelihood of a possible sale not just of Time but the whole Time Inc. unit.
Harman said he is willing to give Newsweek a couple of years to reverse the red ink.
"I am here among other reasons to get that ship traveling on its own fuel. I would be perfectly happy if we get it to break even in a reasonable period of time and keep it there," Harman said.
Brad Adgate, senior vice president of research at Horizon Media, thinks Harman's strategy is "worth a shot."
"The future of news magazines harkens back to another era," Adgate said. "The industry has changed so drastically. Newsweeklies are very nostalgic."
As for the Washington Post Co, selling Newsweek is part of a course that Chairman and Chief Executive Donald Graham has pursued for several years. Best known for its namesake newspaper, the publisher has been redefining itself as a media and education company, reflecting the contribution of its Kaplan educational test preparation services unit.
Kaplan provides about 60 percent of the Post's revenue.
"In seeking a buyer for 'Newsweek', we wanted someone who feels as strongly as we do about the importance of quality journalism," Graham said in a statement on Monday.
When the Washington Post put Newsweek up for auction in May, it said that any employee in good standing dismissed by the new owner would receive four months of severance pay. Newsweek spent $ 29 million in editorial expenses last year.
Harman holds a presidential chair at the University of Southern California and helped establish a new educational program of Polymathy for doctoral students. Harman's colleague Warren Bennis, a distinguished professor of business at USC, described the mission of the program as helping to create "deep generalists."
"I think he has been eager to have a more public voice," Bennis said about Harman's bid for Newsweek.
Shares of Washington Post, which are down 21 percent from a year-high in April, closed up 3.2 percent at $ 433.89 on the New York Stock Exchange on Monday. The company is reporting quarterly results on Friday.