I grew up on Newsweek and its jealous sister Time magazine (yes, my family got both, plus U.S. News & World Report). I remember Newsweek’s coverage of Princess Diana’s death in 1997, and comparing O.J. Simpson’s mugshots on Newsweek (normal) and Time (darker) And O.J. Simpson’s famous 1994 mugshot on Newsweek that appeared darker on Time? Priceless. And then there was Sarah Palin in her running gear… Memories…
But the magazine, which seems to lose heft with each passing issue, has suffered. Advertising revenue plunged 38% in first quarter. When the Washington Post announced in early May that they would be exploring a sale of Newsweek, no one was shocked.
This week, the Newsweek auction hit the second round and is currently in management presentations, one banker said. Wealthy investors comprise most of the bidders. Our Thomson Reuters colleagues recently reported that at least four interested parties have submitted bids, including Newsmax Media and Ritchie Capital CEO Thane Ritchie.
Bloomberg has reported that OpenGate Capital was interested in bidding but whether they actually did is unclear. OpenGate bought TV Guide in 2008 for $1. Sidney Harman, who founded Harman International Industries Inc., was reportedly also vying but has been discounted as a serious bidder.
One thing is obvious: Private equity isn’t interested, because Newsweek doesn’t have any EBITDA to grow.
One private equity executive said that the Internet has made magazines like Time and Newsweek virtually obsolete. “You can get news real time and cheaper on the Internet,” the executive said. “What is the use of these magazines? Unless you have really good analysis like the Economist, these magazines are all ‘he said/she said. ‘”
Washington Post officials declined comment. OpenGate, Ritchie and Newsmax could not be reached for comment.