This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

TheDeal: Newsweek Fire Sale Hindered by Liabilities

NEW YORK ( TheDeal) -- IAC/InterActiveCorp (IACI - Get Report)'s News_Beast unit confirmed this week that it's already entertaining takeover bids for Newsweek within the first half year of its becoming a digital-only publication.

Tina Brown, Daily Beast's founder and Editor-in-Chief, and Baba Shetty, CEO of News_Beast (formerly The Newsweek/DailyBeast Co.), tried positioning the exploration of strategic alternatives for the 80-year-old newsweekly as more a look-see opportunity than the fire sale it's almost certain to be.

"[IAC chairman Barry Diller] has made the point that this process is about exploring options," the leadership duo wrote in a memo to News_Beast staff, responding to sale reports that first appeared in Variety. "We will only do this sale if it reflects the value we've created."

Few magazine insiders saw it that way, however, especially in light of Newsweek's $30 million or so in deferred subscription liabilities. This is what News_Beast must legally deliver to existing Newsweek subscribers in future issues or in a reasonable make-good publication or in cash.

An alternative would be bankruptcy, which would reduce these subscribers to unsecured creditors without much recourse. But as long as IAC seeks a sale of Newsweek, the liabilities will stand and the issue will most likely be how many millions Diller must pay for someone to take Newsweek and its attendant liabilities off his hands.

That there will be a someone isn't in serious doubt. At a small Newsweek reunion last week, some former staffers talked about trying to buy the newsweekly themselves, before even knowing it would soon be for sale. "Maybe Barry was having a drink in the back," one of them joked Wednesday, "and overheard."

A more likely scenario, according to Martin Walker of the magazine consultancy Walker Communications, would feature new money from new media. The precedent here is The New Republic when, a little over a year ago, Facebook Inc. co-founder Chris Hughes became the majority owner of the political journal in a quest, he told The New York Times, to protect "high-quality long-form journalism."

Newsweek wouldn't have to limit its journalism to long-form or, for that matter, to politics. As another magazine veteran put it, what's critical is the new owner "gets out from under Tina's editorial budget, puts together some very smart young journalists and creates something closer to The Week than any previous version of Newsweek."
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
IACI $71.44 0.00%
AAPL $113.29 0.00%
FB $91.01 0.00%
GOOG $630.38 0.00%
TSLA $248.48 0.00%

Markets

Chart of I:DJI
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 +1.21 0.06%
NASDAQ 4,828.3250 +15.6170 0.32%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs