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).

"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.

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