Financial troubles brought on by declining advertising revenue forced the Washington Post Co. to move forward Wednesday with the possible sale of Newsweek magazine.
The company’s magazine division lost more than $29 million in 2009, compounding about $16 million in losses the year before, according to financial statements.
“Despite heroic efforts on the part of Newsweek’s management and staff, we expect it to still lose money in 2010,” said Post Co. Chairman Donald Graham.
On the digital side, Graham told the Washington Post that the magazine made only $8 million last year, calling the multiple losses a “continuing frustration.” Magazine staffers reacted to the news, delivered via a morning conference call, with “stunned silence,” wrote Post media writer Howard Kurtz. A Newsweek redesign in early 2009, focused on providing more analytical content, met with mixed reviews from critics and subscribers. The magazine went through a round of layoffs in November of the same year. Along with the redesign, the magazine increased its price in a conscious effort to pare back circulation. It sold about 26 percent fewer advertisement pages in 2009 than in 2008 — consistent with the industry average, according to the Publishers Information Bureau. “Basically, magazines are a very down business right now,” said John Morton, a Silver Spring-based media analyst. “In light of the Post Company’s emphasis on Kaplan — which is now the tail that wags the dog — the possible sale is not surprising.” Kaplan, a for-profit education company, made about $195 million in operating income in 2009. Newspapers, including the Washington Post, had an operating loss of almost $164 million in 2009, after posting losses of $193 million in 2008. Roberta Garfinkle, director for print strategy at media strategy firm TargetCast TCM, said that it’s too early to tell what a sale would mean for readers. “This was a business decision of the Washington Post Company to say, ‘This is a viable product that we may not have the resources to put behind, so it makes sense to find someone who can,’ ” she said.
