Diller mulls making money-loser Newsweek online only
(Reuters) - Media veteran Barry Diller's IAC/InteractiveCorp is contemplating the end of an era for a U.S. publishing icon - making the weekly newsmagazine Newsweek available only online.
Diller 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 '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."
Diller said his team would have a new plan for the future of Newsweek in place by October or early next year.
It is not yet clear that traditional magazine formats will work successfully in the digital-only format.
In February 2011 News Corp chief and fellow media mogul Rupert Murdoch launched 'The Daily' for the iPad and other tablet devices. But reports have said the title continues to lose money and is unlikely to be profitable anytime soon.
Diller took control after the family of late billionaire stereo magnate Harman stopped investing in their joint venture.
The 79-year old Newsweek, which has won many awards and accolades, was seen as a trophy asset for Harman when he bought it for $1 in 2010. Investors usually worry that such vanity projects could derail management's strategy particularly with a loss-making asset.
Diller took control after the family of late stereo magnate 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.
In the meantime, IAC has had to reassess its original valuation of Newsweek when it formed a joint venture with the late billionaire Sidney Harman in November 2010.
IAC's quarterly profit was hurt by an after-tax, non-cash charge of $16.2 million, 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 percent 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.
The company said it will double the quarterly dividend to 24 cents a share to be paid on September 1. It is also continuing with an ongoing share buyback program.
Revenue jumped by 40 percent to $680.6 million, helped by its search and dating business, which includes brands like Ask.com, Dictionary.com and Match.com.
Shares rose more than 7 percent, 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.
(Reporting by Yinka Adegoke; Editing by Gerald E. McCormick, Bernadette Baum, Jeffrey Benkoe and Leslie Gevirtz)