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Newsweek plans eventual transition to digital-only format Newsweek plans eventual transition to digital-only format
(40 minutes later)
The owners of Newsweek have said they are considering whether to make the weekly news magazine available only in a digital format.The owners of Newsweek have said they are considering whether to make the weekly news magazine available only in a digital format.
Barry Diller, chairman of IAC/InteractiveCorp, told analysts on a conference call that a major problem with Newsweek is with the cost of "manufacturing" a weekly. He then strongly hinted at taking the Newsweek brand to a digital-only format similar to its sister title the Daily Beast.Barry Diller, chairman of IAC/InteractiveCorp, told analysts on a conference call that a major problem with Newsweek is with the cost of "manufacturing" a weekly. He then strongly hinted at taking the Newsweek brand to a digital-only format similar to its sister title the Daily Beast.
"I'm not saying it will happen totally, but the transition to online from hard print will take place," Diller said on a call with analysts after the company's quarterly earnings were released. "We're examining all of our options.""I'm not saying it will happen totally, but the transition to online from hard print will take place," Diller said on a call with analysts after the company's quarterly earnings were released. "We're examining all of our options."
Diller said his team would have a new plan for the future of Newsweek in place by October or early next year.Diller said his team would have a new plan for the future of Newsweek in place by October or early next year.
Tina Brown, the editor-in-chief of Newsweek and the Daily Beast, moved to reassure staff in the wake of Diller's comments. She said described reports that Newsweek would go digital-only this year as "scaremongering".
"Barry Diller would like to make it clear that he did not say on the earnings call as reported that Newsweek is going digital in September. He made the uncontroversial, industry-wide observation that print is moving in the direction of digital," she said in a memo to staff obtained by Politico.
The 79-year-old Newsweek, which has won many awards and accolades, was seen as a trophy asset for late billionaire stereo magnate Sidney Harman when he bought it for $1 in 2010, plus the magazine's liabilities. Investors usually worry that such vanity projects could derail management's strategy particularly with a loss-making asset.The 79-year-old Newsweek, which has won many awards and accolades, was seen as a trophy asset for late billionaire stereo magnate Sidney Harman when he bought it for $1 in 2010, plus the magazine's liabilities. Investors usually worry that such vanity projects could derail management's strategy particularly with a loss-making asset.
Diller took control of the magazine after Harman's stopped investing in their joint venture.Diller took control of the magazine after Harman's stopped investing in their joint venture.
"Newsweek is not necessarily a distraction for IAC management, though investors may get perturbed about it not being profitable and weighing on the company's bottom line," said Kerry Rice, an analyst with Needham & Co."Newsweek is not necessarily a distraction for IAC management, though investors may get perturbed about it not being profitable and weighing on the company's bottom line," said Kerry Rice, an analyst with Needham & Co.
In the meantime, IAC has had to reassess its original valuation of Newsweek when it formed a joint venture with Harman in November 2010.In the meantime, IAC has had to reassess its original valuation of Newsweek when it formed a joint venture with Harman in November 2010.
IAC's quarterly profit was hurt by an after-tax, non-cash charge of $16.2m or 18 cents a share, from a write down in the value of its stake in Newsweek Daily Beast after it bought a controlling interest in the business.IAC's quarterly profit was hurt by an after-tax, non-cash charge of $16.2m or 18 cents a share, from a write down in the value of its stake in Newsweek Daily Beast after it bought a controlling interest in the business.
Adjusted net income rose 37% to 86 cents a share, far exceeding analysts' average of 72 cents a share, according to a poll by Thomson Reuters I/B/E/S.Adjusted net income rose 37% to 86 cents a share, far exceeding analysts' average of 72 cents a share, according to a poll by Thomson Reuters I/B/E/S.
"These were very solid results, they were able to boost margins at the dating sites and search continues to perform very strongly," said Rice."These were very solid results, they were able to boost margins at the dating sites and search continues to perform very strongly," said Rice.
The company said it will double the quarterly dividend to 24 cents a share to be paid on 1 September. It is also continuing with an ongoing share buyback scheme.The company said it will double the quarterly dividend to 24 cents a share to be paid on 1 September. It is also continuing with an ongoing share buyback scheme.
Revenue jumped by 40% to $680.6m, helped by its search and dating business, which includes brands like Ask.com, Dictionary.com and Match.com.Revenue jumped by 40% to $680.6m, helped by its search and dating business, which includes brands like Ask.com, Dictionary.com and Match.com.
Shares rose more than 7%, breaking the $50 mark on Nasdaq driven by a jump in sales at its Web search and online dating businesses.Shares rose more than 7%, breaking the $50 mark on Nasdaq driven by a jump in sales at its Web search and online dating businesses.
Diller founded IAC as an Internet holding company, which includes a range of brands, including Citysearch, ServiceMagic, Vimeo and CollegeHumor.Diller founded IAC as an Internet holding company, which includes a range of brands, including Citysearch, ServiceMagic, Vimeo and CollegeHumor.