Tiny digital publisher to put Newsweek back in print

The Graham family, longtime newspaper publishers, gave up and sold it for a dollar. Media mogul Barry Diller spent tens of millions trying to revive it, only to throw in the towel. Even Diller's star editor, Tina Brown, could not stop it from going out of print.

But where giants failed, IBT Media, a small digital publishing company, sees a growth path for Newsweek, the struggling newsweekly magazine it bought for a pittance last summer.

Etienne Uzac, 30, and Johnathan Davis, 31, founders of IBT Media, believed they could recreate Newsweek as a vibrant and profitable web-only magazine. But now, having tripled Newsweek's online traffic, they plan to punctuate the magazine's comeback by turning on the printing presses again. Hard copies are expected to hit newsstands Friday.

Break out the banner headline: Newsweek Is Back From the Dead!

"We had no real plans to bring it back into print," Jim Impoco, Newsweek's editor in chief, said during a recent interview at the company's headquarters in Lower Manhattan. "We called it the p-word."

But Uzac said readers urged them to return to print. "I had heard it would not be viable, but then I looked into it and decided we could sell some copies for significantly more than it cost to make," he said.

Newsweek's print ambitions are modest. It plans to print 70,000 copies - at its peak two decades ago, circulation was 3.3 million - and sell them for $7.99 each, with the magazine's content also available online for a more affordable price.

"You would pay only if you don't want to read anything on a backlit screen," Uzac said. "It is a luxury product."

Steven Cohn, editor in chief of Media Industry Newsletter, said Newsweek's decision to print the magazine made good business sense.

"The print magazine is kind of a prop to give the Web better exposure," Cohn said. "For Newsweek, having a cover can have its advantages. You can appear on 'Meet the Press.' Celebrities and politicians like being on actual covers on the newsstand. They have stripped the costs way down. So really, what do they have to lose?"

Yet Newsweek's reappearance in print comes at a fraught moment for the industry. Time Inc. - the parent of Newsweek's longtime archrival, Time magazine, as well as Sports Illustrated and Fortune - recently fired roughly 500 people to cut costs.

Across the industry, newsstand sales of consumer magazines fell 11 percent in the second half of 2013 from the period a year earlier. Paid subscriptions dropped 1.2 percent, according to the Alliance for Audited Media's most recent data.

"They have got a really tough road to revive a ghost brand," said Ken Doctor, a media analyst with Newsonomics. "They are looking for really high prices and in a market where they have a lot of general competitors."

Today's Newsweek bears little resemblance to the magazine in its heyday. It was founded in 1933 and backed by members of the Astor and Mellon families. The Washington Post Co., controlled by the Graham family, acquired Newsweek in 1961 It thrived for decades under The Post's ownership, but during the Internet era it began to struggle with shrinking readership and advertising sales.

In 2010, businessman Sidney Harman bought Newsweek for $1 and the assumption of $40 million in liabilities. He teamed with Diller and invested heavily in the magazine in a failed attempt to revitalize the brand, putting Brown in charge. She spent freely, hiring well-known writers and sending them around the globe.

Newsweek's current owners are the youthful Uzac and Davis, who met after college through campus Christian fellowships. They started the website International Business Times in 2006, scraping together money from family and friends. Uzac sold ads; Davis was the programmer and wrote the articles. They eschewed outside investors, ran a lean ship and expanded the company slowly. By 2010, IBT had 10 employees and revenue of roughly $2 million, they said.

It was then that IBT began using metrics to help tailor coverage to what readers wanted.

"We began to shift the culture to serve a different type of demand, so we were getting cues back from our audience," Davis said.

Dry corporate-earnings articles larded with financial data, for example, were poorly read. But Davis discovered that readers landed on earnings pieces by searching for a company's products. So IBT began to de-emphasize numbers in earnings stories while highlighting a company's product pipeline.

That sort of analysis helped traffic increase 1,200 percent in 2010, Davis said. Today, IBT has 240 employees and 40 million unique monthly visitors across 10 brands, with titles like Latin Times and Medical Daily. Davis said the privately held company posted revenue of about $21 million last year, largely from digital banner ads, and generated a profit of about $500,000.

Newsweek's current editor in chief, Impoco, has held senior editing positions at The New York Times, Portfolio and Reuters. The magazine also has a few prominent writers, including Kurt Eichenwald, a former Times business reporter, and contributors like Matthew Cooper, a former reporter at Time. But only five staff members from Brown's Newsweek were offered jobs by IBT, and most of the current staff members are relatively young and not yet established.

When IBT bought Newsweek, Davis and Uzac came under scrutiny for their religious ties. An article published on Christianity Today's website tied the two to a Korean pastor, David Jang, whom it described as a controversial, messianic figure.

Davis and Uzac say they are dismayed that their religion has become an issue. They admire Jang, they said, and acknowledge that Davis' wife works at a university Jang started. They said Jang had no financial stake in IBT or influence on the business, and the idea that they considered him the messiah was preposterous.

"My faith is my faith, the work is the work," Uzac said. "The editorial is 100 percent independent."

Impoco, the magazine's editor, said he had not seen any religious or conservative agenda.

"Since I've been here I've had less interference than any other place I've worked," he said. "We've written more stories on atheism than anything religious."