Wednesday, August 4, 2010

Why Not Sell Newsweek for Scrap?

The Washington Post Company recently sold Newsweek for $1 (source).

The magazine has recently been losing about $30 million a year, so the purchase is analogous to buying a $99 iPhone and paying $2,000 to use it, in the form of AT&T bills.

One has to wonder why the magazine wasn't just shut down outright. Surely it has some assets worth selling--such as real estate, printing presses, and office equipment--that would have netted the Post Company thousands if not millions of dollars.

Perhaps these sales wouldn't cover Newsweek's debt obligations. If that's the case, Sidney Harman did the Post Company a huge favor.

(In fairness, I realize that I argued the opposite point in February when GM shut down its Hummer brand.)