Reasons to buy Newsweek

By Felix Salmon
May 5, 2010
Ken Layne has by far the funniest and most cutting reaction to the Newsweek news, but it's Jeff Bercovici who nails the conventional wisdom:

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Ken Layne has by far the funniest and most cutting reaction to the Newsweek news, but it’s Jeff Bercovici who nails the conventional wisdom:

If Allen & Co. can succeed in finding a buyer for Newsweek, it will likely be the sort of transaction in which the Post Co. accepts a nominal sum just to rid itself of the expense of publishing a money-hemorrhaging weekly magazine.

I’m a little bit more optimistic, because at heart the circulation numbers at Newsweek are still extremely impressive, even if they’re well down from their highs. The US rate base is 1.5 million, there’s another 460,000 English-language copies sold each week internationally, and 560,000 foreign-language copies as well. Then of course there’s the website on top, which attracts a respectable 5 million uniques.

Those numbers are more than high enough to sustain a seriously profitable business; the problem is that Newsweek had a much larger rate base — of 3.1 million — as recently as 2008, and it has necessarily suffered as its staff and circulation has shrunk.

There are two big problems facing Newsweek, but neither is insurmountable. The first is that it can’t afford to have a huge newsgathering and editorial staff any more. The occasional fabulous feature about Oprah is wonderful to have, but those things can be bought from freelancers: they don’t need to be written by expensive staffers. Newsweek is not going to break much if any news, and it shouldn’t spend a fortune trying: instead it must aggregate, curate, and add value with a range of expert and reliable voices. Think of it as a more honest, less pretentious, and less anonymous version of the Economist.

The flipside of that problem is that Newsweek has to be able to rise above the rest of the bloggy commentariat. Ezra Klein, one of WPNI’s biggest stars, writes today about the plight of the Economist and other highbrow mags:

Those magazines write reported, analytical (and opinionated) articles for a sophisticated audience. But because their publishing cycles are slow, they’ve not traditionally been major players in the day-to-day conversation. But now you’ve got people who trained at those magazines and adopted their sensibilities writing at internet speed, which is to say, faster than the daily cycle. And that’s working, I think. At the very least, it’s working with elite audiences.

Newsweek is actually in a strong competitive position here: elite audiences are more comfortable making their own judgments about what’s worth reading and what isn’t, and coming to the conclusion that they get better analysis from say Rortybomb than they do from any of their print publications. But most of Newsweek’s readers don’t read blogs, or consider it to be in competition with blogs. They’re comfortable getting their news analysis weekly, in a trustworthy format, rather than multiple times per day in a format which requires active, critical reading.

As a long-term investment, the demographics of any print product look bad. Newsweek’s audience is old, it’s getting older, and it’s hard to imagine the social-media generation having so much awe and respect for its authority that they will buy it weekly to find out what’s going on in the world. And the economics of distributing a weekly news magazine are extremely painful: it costs a huge amount of money to print and distribute all that paper every week, when you don’t have the luxury that monthly magazines have of long lead times at the printers.

But printing technology is advancing fast, and it’s easier than ever for magazines to print relatively small runs in dozens if not hundreds of non-union locations around the world. A new and nimble network of local ad-sales teams can fashion custom versions of the product to targeted demographics, with a relatively small central publisher’s office handling the big buys across the global franchise. And the editorial product will be a bit like Google search results: universally authoritative, while still looking significantly different depending on where and who you are.

And internationally, where Newsweek has an enviable and demographically very high-end footprint, there’s more respect and hunger for authoritative news analysis. Besides, for the next couple of decades at least there will still be tens of millions of Americans who don’t like consuming such things by reading screens, and are much happier sitting back in the garden or on the couch with a high-res paper product.

Getting from today’s Newsweek to tomorrow’s will be painful, and will involve lay-offs; the buyer will naturally want WPNI to pay for those. So depending on how the deal is accounted for, Bercovici might be right about the headline price. But Newsweek is one of only a handful of highly-respected global news brands, and in a shrinking world that should be more valuable than ever.

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