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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

TheDeal: Newsweek Fire Sale Hindered by Liabilities

NEW YORK (TheDeal) -- IAC/InterActiveCorp (IACI)'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

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,098.45 +18.88 0.11%
S&P 500 2,003.37 +6.63 0.33%
NASDAQ 4,580.2710 +22.5760 0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs