A big publishing story of 2010 was when stereo equipment magnate Sidney Harman bought financially troubled Newsweek Magazine for $1 in the hopes of revitalizing the venerable old publication into the "thought leader" it once was. Now, since Mr. Harman's death, his family seems poised to bail on the old man's publishing charity case along with the left-leaning Daily Beast website.
Since Sydney Harman bought Newsweek and took controlling interests in the Daily Beast, neither has become a profitable venture. This has caused the Harman family to re-think their position.
Now, the Harman family has announced that it is pulling back and has stopped investing in the Newsweek Daily Beast joint venture with Barry Diller's InterActiveCorp (IAC).
On July 23, a Harman family spokesman told Reuters news service, "The Harman family remains supportive partners in the business of Newsweek Daily Beast, including service on the Board by Jane Harman and family participation in various informal roles."
Things are changing, says the Harmans.
However, given the death of Sidney Harman, who was actively involved in the Newsweek Daily Beast business, the Harman trust has indicated that it does not intend to make further capital contributions to the venture.
The Daily Beast, launched to great fanfare in 2008 by Barry Diller and Tina Brown, quickly built a readership on the Internet. But, as Reuters notes, "advertising sales never caught up with the buzz, and media reports have estimated losses at The Daily Beast at around $10 million annually."
Diller's IAC went in partnership with Harman in November of 2010 thinking that Daily Beast and Newsweek could share readership and advertisers, but this never helped Daily Beast to make a profit.
Insiders claim that the Harman family is also unhappy that Newsweek has not developed into a intellectual publication but has instead driven for sensationalism. The magazine has fallen from its one-time height of 4 million readers to somewhere around 1.5 million today.
The Daily Beast website's June stats show 11.4 million visitors, up 73 percent from one year ago and the Newsweek Daily Beast digital app has 34,265 subscribers, up from 10,299 in June.
Still, despite the website’s seemingly good web stats, it is still not profitable. It also suffers some other problems, as Reuters reports.
In addition to being unprofitable, Newsweek Daily Beast has suffered from high staff turnover on both the business and editorial side.
For its part, IAC shows enough assets and cash on hand to continue floating the unprofitable enterprises and will continue to invest in Newsweek Daily Beast for now.