and The Daily Beast will merge, and each company will own 50% of the new entity. Tina Brown, a longtime magazine editor and Daily Beast co-founder, will be editor-in-chief of the new entity. Sydney Harman, who recently bought Newsweek from The Washington Post (WPO), will be executive chairman. The agreement was first reported in The New York Observer.
Brown will report to a board of directors that will include Harman and IAC/InterActive (IACI) CEO Barry Diller, who financed the launch of The Daily Beast.
Some early media reports say that each outlet will keep its own identity; others that the new firm will be called Newsweek Daily Beast Co.
The Daily Beast operates only online but has said it will start a print edition. Newsweek has a print circulation of 1.6 million, but its paid readership has dropped sharply in recent years. Industry estimates are that the publication will lose as much as $40 million this year. The Daily Beast is also thought to operate in the red.
The merger may be a marriage of two wounded media operations. Newsweek has lost scads of staff since it was sold by The Post, and it currently has no editor. The Daily Beast has been losing readership. Research firm Compete says the number of unique visitors to the site has dropped from 2.18 million in June to 1.55 million in September -- a fall of nearly 30%. Rival Huffington Post has 12.2 million monthly unique visitors. Newsweek relies heavily on MSNBC.com for online traffic, but it's not certain whether that will continue after the merger.
In short, the two businesses are so troubled that the merger may be a case of 1+1=0.