The founder of Harman Kardon has decided to move into publishing after stumping up $1 to buy Newsweek the struggling US Magazine that at one stage was bundled with the now defunct Bulletin Magazine.
Currently Newsweek is owned by the Washington Post, who said it will sell the magazine to 91-year-old stereo equipment magnate Sidney Harman for $1. Harman will also take on the company’s considerable debt and 300 plus staff.
Last year the magazine lost nearly $30 million dollars. Insiders are tipping that the print version of the publication will be killed off with the masthead being used for an online portal.
Accounting for the value of the liabilities, Mr. Harman’s offer was about $70 million higher than the next highest offer, according to a person familiar with the matter. But it was Mr. Harman’s commitment to retain more employees than anyone else that ultimately separated him from a small group of bidders still under consideration at the end of the three-month process.
One employee said that Newsweek won’t keep is editor Jon Meacham, who was expected to tell his staff he will resign after the sale to Mr. Harman is complete, according to a person familiar with the matter.
Newsweek is a significant financial gamble. Its current owner saw no path to sustained profitability even after remaking it in sleeker form, and Mr. Harman lacks the magazine assets Post Co. deemed essential to turning Newsweek around.
Mr. Harman, who turns 92 later this week, founded his stereo-equipment business in 1953 and built the US company into a multibillion-dollar international company. He left Harman International Industries in 2007 and has spent the past few years at the University of Southern California where he’s helping launch an institute for graduate students.
Mr. Harman comes with his own political baggage. His wife, Jane Harmon, is a Democratic congresswoman for the 36th district in California. Earlier this month, her Republican opponent for the Southern California seat penned an open letter to Mr. Meacham questioning whether the congresswoman would exert influence over Newsweek to advance her political interests.