Ritchie Capital Management LLC Chief Executive Officer Thane Ritchie and private-equity firm OpenGate Capital LLC both said yesterday they are considering offers for Newsweek magazine as the first deadline for bidders approaches.
Ritchie, who sought to buy Sun-Times Media Group Inc. last year, said in an interview he would make any offer for the Washington Post Co.-owned magazine personally, not on his firm’s behalf. OpenGate managing partner Andrew Nikou said in an interview his firm is interested in Newsweek, though he declined to discuss details of a possible bid. OpenGate, with offices in Los Angeles and Paris, bought TV Guide in 2008 for $1.
The expressions of interest come even after Newsweek lost $44 million on an operating basis since 2007 while reducing costs, according to financial documents distributed to prospective buyers. Circulation for general interest newsmagazines, such as Newsweek and Time Warner Inc.’s Time, has plummeted as readers seek more news from the Web.
“Management believes that Newsweek can regain profitability through additional cost savings,” Washington Post wrote in the documents. Rima Calderon, a Post Co. spokeswoman, declined to comment.
Newsweek lost $2.3 million in the first quarter as revenue slid 31 percent to $29.4 million, according to the documents. Newsweek trimmed expenses by 38 percent in the period to $30.8 million, in part by reducing its guaranteed circulation for advertisers to 1.5 million from 2.6 million.
Print advertising revenue plunged 39 percent to $70.3 million last year from $115.5 million in 2008, the documents show. The magazine took in more revenue from circulation sales last year -- $79.7 million -- than from print ads.
Newsweek lowered its manufacturing and distribution expenses by 42 percent last quarter, following the guaranteed circulation cut.
Post Co. fell $4.27 to $465.73 yesterday in New York Stock Exchange composite trading. The stock has risen 5.9 percent this year.
The Washington-based publisher said in the documents, prepared with the help of investment banking firm Allen & Co., that it is accepting expressions of interest from prospective buyers until no later than June 2 at 5 p.m. New York time. Newsweek editor Jon Meacham has said he is seeking backers for a possible bid.
Washington Post plans to retain all long-term workforce expenses, such as pension and retirement costs, according to the documents.