Newsweek executives speak out amid legal drama

Newsweek, the decades-old magazine company, is looking to build a digital subscription business that focuses on lifestyle and hard news content, executives told Axios.

Why is this important: The hope is that the subscriptions will not only be lucrative, but will also help to steer the publication’s reputation towards that of quality independent journalism in the midst of a messy legal battle with its former parent company.

Driving the news: Newsweek earlier this month deposit a lawsuit against IBT Media, religious leader David Jang, his church group the World Assembly of Olives, and a beleaguered Christian university, among others, to recover more than $35 million in damages.

  • Newsweek claims to have suffered as a result of a criminal money laundering scheme, which IBT Media plead guilty towhich took place while he still owned the publication.
  • The lawsuit includes damages related to IBT Media’s mismanagement of Newsweek before their split in 2018.

Catch up fast: Newsweek spun off from IBT Media in 2018 and is currently co-owned by former IBT executive Dev Pragad, Newsweek’s CEO, and Johnathan Davis, who is still CEO of IBT Media.

  • The magazine was founded in 1933. It was acquired by The Washington Post in 1961 and sold in 2010 to businessman Sidney Harman, who combined publication with The Daily Beast, but was unsuccessful. IBT RELAUNCH the company in 2014, after years of commercial turbulence.
  • Earlier in July, IBT for follow-up Pragad and Newsweek’s holding group NW Media Holdings Corp., seeking to kill the 2018 deal to transfer ownership to Pragad.
  • Pragad belonged to the Christian sect currently being prosecuted by Newsweek, but said he severed ties with the group.

Details: Newsweek staff covered the trial drama gradually for years, but Pragad’s old ties to IBT and the church complicate the story.

  • Global editor Nancy Cooper, who has worked for Newsweek for years, told Axios: “The lawsuit has nothing to do with me. It’s the technical truth and the emotional truth too… What the guys are fight on Mount Olympus – not my problem.”
  • Cooper said covering the suits is “less of a distraction” than you might think, “because we’ve decided what to do and what we’re doing is covering it up.”

Yes, but: The lawsuit is the latest in a cascade of ethics issues that have plagued the company for years.

  • The journalists were fired for their attempt to cover up investigations into the company in 2018, prompting a series of public resignations.
  • Newsweek’s parent company has been arrested buy fraudulent traffic to increase ad sales that same year.
  • It was reported in 2019, the outlet enticed journalists to write clickbait stories for traffic gains.

By the numbers: Pragad said the business was profitable and generated $60 million in revenue in 2021.

  • This would represent a dramatic turnaround from just four years ago, when the company was losing money and get into legal skirmishes on backdated rent.
  • Newsweek was also for follow-up by a technology vendor for the third time in 2021 for allegedly failing to pay hundreds of thousands of dollars in backdated fees. A spokesperson said those lawsuits were settled and the company was debt free.
  • The company has approximately 250 employees located mainly in the United States and the United Kingdom. About 80% of the staff are journalists, said chief strategy officer Dayan Candappa, who was reinstated in 2018 after being furloughed following an internal investigation into allegations of sexual harassment in a previous job.

Between the lines: Most of the company’s revenue comes from advertisements, in addition to content syndication and plate sales for its editorial rankings.

  • Subscriptions, which cost $49 a year, are only a small part of revenue, but the hope is that they will soon become a much larger part of Newsweek’s revenue stream.
  • The company still publishes a weekly print magazine, although Cooper acknowledges “in general, the newsstand is no longer the business it used to be”.

The big picture: Newsweek has struggled to maintain the same level of editorial authority in digital as it did in print years ago – a struggle shared by other print magazines as they transition to digital. But his cascade of polemics amplified the stress.

  • “In the past, our goal was to grow, to get scale, to get enough pageviews,” Candappa said. “We have now moved from simply increasing scale to building an engaged audience. It’s not enough to get pageviews. We need quality pageviews” which will ultimately drive subscribers .
  • “The vast majority of our subscribers are in print and digital,” he said. “The goal we have set ourselves is 100,000 subscribers.”

And after: The company’s foray into digital subscriptions will be two-fold, Cooper and Candappa explain, although pricing is still being evaluated.

  • Quality content: The company will sell subscriptions for “high impact” investigative journalism. China is one of the areas Cooper said the company will continue to focus on.
  • Soft verticals: Newsweek will also create a series of verticals under the “Newsweek Life” brand to engage audiences on topics including pets, health and families.

The bottom line: “The 21st century hasn’t been kind to Newsweek at all in terms of ownership,” Candappa said.

  • “Imagine what we could accomplish when all of this is gone, when the noise isn’t there, when the shareholder battles aren’t there, when the background noise and issues aren’t there, imagine what Newsweek would be like. . That’s our ambition.”