Barry Diller: 'Newsweek' cuts to be as 'spare' as possible
On this morning's IAC third-quarter earnings call, company chairman Barry Diller addressed last week's bombshell news that Newsweek will eliminate its print edition starting in 2013.
"We have made the tough and right decision to cease printing," he said. "We know that the results of that are going to dramatically decrease losses in the future."
He then expressed some enthusiasm about Newsweek's companion publication, The Daily Beast, which IAC launched in 2008, as well as some cautious optimism about Newsweek Global, the digital-only title that will replace the print edition.
"We have a very, very solidly growing Daily Beast, and there's some prospect, who knows, but there's real enthusiasm for Newsweek Global. But we have no stars in any of our eyes, and our plans for next year, or for any year for that matter, are not going to relate in any way to the results from Newsweek. So it's not like we're projecting that this digital product is going to have X or Y subscriptions or whatever."
Diller also spoke briefly about the layoffs that are expected to result from the transition, which will come with $5-$10 million in restructuring charges, an IAC executive said on the call.
"It's a painful process, as you can imagine," he said. "We are having to downsize considerably, and that's difficult. We're doing it as spare and as positively as we can. But the prospects for the enterprise are much improved by this difficult but necessary action."
Newsweek, which merged with The Daily Beast in 2010 following its sale from The Washington Post Co. to Sidney Harman, who died last year, was said to have lost as much as $40 million a year. And despite having star editor Tina Brown at the wheel, it was unable to stem losses quickly enough to make its print edition sustainable for IAC without the full support of the Harman family, which announced over the summer that it would be ending its investment in the magazine.
In the third quarter of 2012, IAC's media segment, which also includes Vimeo, College Humor and Electus, saw 182 percent revenue growth. But operating losses grew year-over-year from $2.8 million to $13.2 million.
"Revenue increased due to the contribution of Newsweek Daily Beast, which has been consolidated following our acquisition of a controlling interest in late May 2012, and strong growth from Electus and Vimeo," the company said in statement. "Higher losses primarily reflect the inclusion of Newsweek Daily Beast in our consolidated results."