Sidney Harman, the founder of Harman International Industries Inc., agreed to buy Newsweek magazine from Washington Post Co., ending a three-month bidding process for the money-losing publication.
The terms of the deal weren’t disclosed and the sale won’t have a material effect on Post Co., the company said in a statement today. Post Co. will retain pension assets and liabilities and certain employee obligations.
“In seeking a buyer for Newsweek, we wanted someone who feels as strongly as we do about the importance of quality journalism,” Donald E. Graham, chairman and chief executive officer at Post Co., said in a statement. “We found that person in Sidney Harman.”
Harman, 91, agreed to keep most of the magazine’s more than 300 employees after the sale. Post Co. agreed to assume severance costs for Newsweek employees that any buyer didn’t keep, making Harman’s bid more attractive than offers from other suitors who would have cut more, people with knowledge of the situation said.
“I am very pleased with the top management of this place,” Harman said in an interview, adding Newsweek’s performance may improve once the magazine is no longer part of a larger corporation.
Newsweek’s editor, Jon Meacham, issued a statement to the magazine’s staff announcing he would leave once the ownership transition is complete. Harman said he is searching for a replacement.
Post Co. said in May it was considering selling the weekly publication it has owned since 1961. The circulation of general interest newsmagazines, including Newsweek and Time Warner Inc.’s Time, has plunged as more readers seek their news from the Web, where stories are updated more frequently.
Other bidders included Fred Drasner, a former executive at U.S. News & World Report and the New York Daily News, and investment firm Avenue Capital Group, the people said. Andrew Nikou, chief executive of private-equity firm OpenGate Capital LLC, issued a statement confirming that OpenGate “made a significant bid” for Newsweek. Publisher Newsmax Media Inc. also considered buying the magazine.
“I wish him the best of luck,” Drasner said in an interview today. “I’m pleased somebody is going to devote this amount of resources to preserve serious journalism.”
Newsweek, which was founded in 1933, posted losses from 2007 to 2009 and its owner in May predicted this year will be unprofitable too. Newsweek redesigned the magazine last year and cut its guaranteed circulation for advertisers to 1.5 million from 2.6 million.
Post Co. rose $13.40, or 3.2 percent, to $433.89 at 4:04 p.m. in New York Stock Exchange composite trading. The stock has lost 1.3 percent this year.
Harman, who resides in California, is chairman emeritus of Harman International, the Stamford, Connecticut-based maker of audio equipment including the Harman Kardon, Infinity and JBL brands. He is married to U.S. Representative Jane Harman, who represents a Southern California district that includes the cities of Redondo Beach and Torrance.
Since 2007, Newsweek has lost $44 million on an operating basis, according to documents sent to prospective buyers. Print advertising revenue plunged 39 percent to $70.3 million last year from $115.5 million in 2008, the documents show.
Post Co. was advised by Allen & Co.