NEW YORK (

TheStreet

) --

Newsweek

magazine and

The Daily Beast

, have merged to become the

Newsweek Daily Beast

company.

The joint venture will be equally owned by

Newsweek

owner Sidney Harman and Barry Diller, CEO of

The Daily Beast's

parent company

IAC/InterActive

(IAC) - Get Report

.

"In an admittedly challenging time, this merger provides the ideal combination of established journalism authority and bright, bristling Web site savvy," Harman said

Newsweek

magazine was founded in 1933, and was purchased by the

Washington Post

(WPO)

in 1961.

In its 2009 annual report, the Washington Post reported the struggling financial state of the magazine. Advertising revenue was down 37%, which followed a 14% decline in 2008.

In efforts to reduce costs, the company reduced the magazine's domestic circulation rate base from 3.1 million to 2.6 million in 2008. Then in January 2010, it lowered domestic circulation to 1.5 million.

In August, the Washington Post

sold the magazine for $1

to Harman, the founder of audio and video equipment company

Harman International

(HAR)

.

The

Beast's

president Stephen Colvin will become CEO of the new company and Harman will be an executive chairman. Tina Brown, co-founder and editor in chief of

The Daily Beast

will also become editor in chief at

Newsweek

magazine.

"I see

Newsweek

and the

Beast

as a marriage between

Newsweek's

journalistic depth and the vibrant versatility

The Daily Beast

has realized on the web," Brown said. "The metabolism of

The Daily Beast

will help power the resurgence of

Newsweek

and

Newsweek

amplifies the range of talent and audience

The Daily Beast

can reach. The two entities together offer writers, photographers and marketers a powerful dual platform."

The Daily Beast

, a news and commentary Web site, launched in 2008 and has an audience of nearly 5 million monthly unique visitors.

"In

The Daily Beast

, Tina and her truly great team have in Internet-time created an hourly, daily news magazine and now will have the ability to revive the weekly venerable Newsweek with all the tools and sensibility they've perfected in the

Beast

," Diller said.

Newsweek

magazine has a global circulation of more than 2.4 million, appears in more than 190 countries and has over 19 million total readers.

-- Written by Theresa McCabe in Boston.

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