April 30 (Bloomberg) -- Barry Diller, the billionaire chairman of IAC/InterActiveCorp, said he regrets buying Newsweek magazine, which he merged with the Daily Beast website in 2010.
“I wish I hadn’t bought Newsweek,” Diller, 71, said yesterday in a Bloomberg Television interview. “It was a mistake.”
Diller combined his news website, the Daily Beast, with the 80-year-old newsweekly after an agreement with the late Sidney Harman in November 2010. It’s difficult to publish a weekly magazine when news has become instantaneous, he said.
“It’s a fool’s errand,” Diller said.
Newsweek published its final print issue in December and became a digital-only publication. Diller in recent months has been promoting Aereo Inc., the Internet TV startup he backs that has been battling television networks in court. Aereo can attract 10 million to 20 million subscribers once it is widely marketed, he said separately on a panel yesterday at the Milken Institute Global Conference. The service will upend the cable-television business model, he said.
“I really believe that we’re just starting with video on the Internet, and it is going to absolutely change most things,” Diller said at the conference in Beverly Hills, California. “It will break up the bundled system of television.”
Aereo picks up over-the-air broadcast signals and transmits them via the Internet to subscribers paying $8 a month. So far the company has defeated court efforts to halt the service, has expanded from New York to Boston and will be in 22 cities by the end of the year, Diller said. Reaching 10 million to 20 million customers would let Aereo offer programs and services in competition with cable systems, he said.
Diller, co-creater of the Fox Broadcast Network, said incumbent media companies are “suing us relentlessly.” He dismissed a threat by News Corp. that it would take its Fox network off the air if necessary to stop Aereo, as “silly,” saying such a move would hurt their local stations.
“Do not put your hand in front of a train,” Diller said, “and that’s what the Internet is.”
Buying Newsweek may have reinforced the lesson. Tina Brown, editor-in-chief and founder of Newsweek/Daily Beast Co., said at the time the “incredibly archaic” costs of a print operation and the opportunity to expand through digital distribution motivated the change.
IAC doesn’t officially disclose financial figures for the Newsweek/Daily Beast unit. A person with direct knowledge of the matter told Bloomberg News in July the business would probably lose as much as $22 million in 2012. The publisher cut editorial jobs in December in an effort to hold down expenses.
“We have a very solid newsroom,” Diller told Bloomberg TV. Even so, he said, “I don’t have great expectations.”
IAC, based in New York, fell 0.9 percent to $45.71 yesterday in New York. The shares have slid 3.2 percent this year.