Newsweek draws several nonbinding bids despite continuing losses

Newsweek draws bids despite continuing losses

NEW YORK — At least three groups of investors have made bids for Newsweek despite expectations of continued losses at the magazine.

Initial, nonbinding bids were due Wednesday. Those submitting bids include Newsmax Media, the publisher of the conservative monthly Newsmax; Open Gate Capital, the private equity firm that owns TV Guide magazine; and Thane Ritchie, a hedge fund manager who made an unsuccessful bid last year for the company that publishes the Chicago Sun-Times.

The bidders declined to say how much they are willing to pay.

Rima Calderon, a spokeswoman for Newsweek owner Washington Post Co., said the company is not commenting on how many bids came in or how attractive they were.

The Post announced last month it wanted to sell the 77-year-old newsweekly. The collapse of the advertising market during the recession put severe pressure on Newsweek. Its print ad revenue has dropped by more than half since 2007 to $70 million, according to a summary of the magazine’s finances reviewed by The Associated Press. It had an operating loss of more than $28 million last year.

Through staff reductions and other cost cutting, the magazine reduced its losses to $2.3 million in the first quarter of this year, compared with $17.4 million a year earlier.

Under editor Jon Meacham, the magazine underwent an ambitious redesign last year and cut the circulation it guarantees for advertisers to 1.5 million from 2.3 million, an effort to focus on a smaller and more loyal audience. Circulation for the magazine’s domestic edition had exceeded 3 million through the 1990s.

But Newsweek still faces long-term challenges. More and more, readers are heading to the Web for news and opinion that’s updated constantly, raising questions about the viability of a news provider that publishes only once a week. U.S. News and World Report has already shifted from weekly to monthly format. Although Newsweek runs a website, news publishers haven’t been able to charge as much money for online ads as they have for print.

The Post Co., which has owned Newsweek since 1961, has said it doesn’t see a way to make the magazine profitable on its own.

For their part, the bidders say they are up for turning the magazine around.

“Given our most recent successful turnaround with TV Guide, given our skill set and know-how in the industry, we’re confident that we can demonstrate the same results with Newsweek,” said Open Gate Managing Partner Andrew Nikou.

Newsmax founder Christopher Ruddy said he believes he can get Newsweek at a break-even level in about 18 months, “and then the future is wide open after that.”