IAC gave away sold Newsweek last week, ending the magazine's merger with Tina Brown's website, The Daily Beast.
The story is full of great anecdotes.
The best is one about how Brown spent big on risky story ideas that didn't pay off:
"The magazine sent Mr. Boyer to Japan hoping he would get an interview with Vice President Joseph R. Biden Jr., even though he had been warned in advance that it was very unlikely (and indeed it never happened). With several days’ notice, the Pulitzer Prize-winning fashion writer Robin Givhan was sent to Paris to track down the Vogue editor Anna Wintour, even though Ms. Wintour had declined to speak."
But the truth is reason why the merger failed isn't complicated.
The merger, formed in 2010, was always a bad idea, given that weekly news magazines are expensive to publish and not as popular they used to be.
It only lasted as long as it did because it had a backer, investor Sidney Harmon, who was willing to pay the bills and not worry about profiting. But then, in the words of Newsweek writer Peter Boyer, "the wrong billionaire died."
Harmon died and the company's costs fell to IAC. Diller couldn't stomach them and there went everything.
A better question is, why would smart people like IAC chairman Barry Diller and Brown allow themselves to get into such a silly deal in the first place?
The answers are from a greek tragedy.
It turns out the disaster was fueled by flattery, nostalgia and poor information.
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Flattery: Before merging the Daily Beast into Newsweek, Brown said she was done with magazines, which she believed were a dying business. Kaufman and Hughney say Brown was "pulled" back in by the owner of Newsweek, Sidney Harmon. Harmon, a billionaire investor, courted Brown hard. Brown says Harmon was "deliciously gallant" and that he called her "princess."
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Nostalgia: Tina Brown is famous for taking Vanity Fair and The New Yorker to great heights. She is infamous for her failure with another magazine, called Talk. Kaufman and Hughney say she missed producing long-form journalism the way magazines used to do it.
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Poor information: Diller says the Daily Beast people were overly optimistic about how many Newseek ads they coudl sell. “Our chief salesman said, you know, ‘Newsweek last year sold 950 pages of ads, you know there’s been no energy there, we’ll at least sell 1,150 ads.’ And, I said, ‘Well, you do that math, we kind of break even.’ Well we didn’t sell 11, 10 or 950, we sold 600 ads.”
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