The Daily Beast
OCTOBER 19, 2010
Website, Newsweek End Talks On Merger
By RUSSELL ADAMS
The Daily Beast news and commentary website and Newsweek magazine have ended talks about a possible merger.
The two parties have been discussing a deal that would make Daily Beast co-founder and co-owner Tina Brown the editor of Newsweek on top of her existing editorial duties at the website. In recent weeks, talks have centered around the specific roles of Ms. Brown, new Newsweek owner Sidney Harman and Barry Diller, chairman and chief executive of Daily Beast owner IAC/InterActive Corp.
Talks were hung up on the issue of how control would be divided among the three people, all of whom are heavily invested financially and emotionally in their respective news operations and not inclined to cede control, according to people familiar with the matter. Mr. Harman, a stereo-equipment magnate, recently acquired Newsweek from Washington Post Co.
“The engagement was fun but the pre-nup got too complex,” Ms. Brown said in a memo to her staff. “We wish Newsweek all the best.”
The people familiar with the matter said talks broke down over the weekend because the two parties couldn’t come to an agreement on governance and editorial control. In a joint statement, Messrs. Harman and Diller said they “mutually decided not to pursue” the talks.
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Daily Beast co-founder and co-owner Tina Brown, seen last year in New York.
“Sidney Harman presented us with an interesting possibility, but we would only consider a partnership on terms that made sense for the thriving Daily Beast,” Ms. Brown said in an email. “We weren’t able to come to terms, but I wish him the best of luck.”
Mr. Harman, who acquired Newsweek this summer for $1 plus liabilities, has said he bought the unprofitable magazine because he was excited about the challenge of reviving it and has strong convictions about how to carry that out. Even as talks about a merger advanced, Mr. Harman had reservations about handing over the reins of his new property to a strong-willed editor who reported to another boss in Mr. Diller, said people familiar with his thinking.
A merger with the Daily Beast was attractive to Newsweek because it offered an immediate injection of editorial talent to Newsweek’s depleted ranks and the potential to pare expenses at a publication on track to lose at least $20 million this year.
The top editorial spot at Newsweek has been vacant since longtime editor Jon Meacham stepped down over the summer. Mr. Harman has interviewed a number of candidates including former New York Observer editor Peter Kaplan , people familiar with the situation said. Mr. Kaplan already indicated to Mr. Harman he is committed to his current post as editorial director of the Fairchild Fashion Group, a person familiar with the matter said. A person familiar with Mr. Harman’s thinking said he is talking to several “excellent candidates.”
For its part, the Daily Beast stood to gain from a global print platform on top of cost-saving opportunities. The two-year-old site is on pace to lose about $10 million this year, according to a person familiar with the matter. However, Daily Beast executives said the site is on track to be profitable within the next two years.
The Daily Beast publishes a mix of news and commentary from its own staff and outside sources. The site averaged 2.9 million unique visitors per month in the 12 months through September, according to comScore.