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Newsweek deal may bring Chinese investors prestige, not profit

05-18-2010 14:06 BJT

By Bi Yantao

The famous US news magazine Newsweek is up for sale, as it has been bleeding money for years. Losses last year alone were $29 million.

The public in China has been urging Chinese investors to seize this chance to buy an American institution.

True, Chinese investors have plenty of money, but are they capable of buying Newsweek? It's a question of whether it would be a sustainable operation, not raw economic strength.

Newsweek is affiliated with the Washington Post Company. The main cause of the sale is supposedly the poor chances of Newsweek's recovery, but some analysts believe that it's because the company wants to shrug off the burden of the magazine and concentrate instead on securing the future of the Washington Post itself.

On May 7, Newsweek's editor-in-chief Jon Meacham wrote in his magazine that a lot of institutions like Newsweek are facing the same formidable forces, "a difficult business climate, especially in advertising, and changing reading habits." However, many argued that Newsweek's doom was caused by its top management team's poor decisions.

Are Chinese investors capable of buying Newsweek successfully? Could Newsweek come back into profit under a Chinese team? In fact, both questions are two sides of the same coin.

Without a mature theory of journalism and a practical business model, the Chinese will never get Newsweek. Under such circumstances, even if Chinese investors are lucky enough to get it, they won't make it profitable.

Some scholars have even joked that running Newsweek in the Chinese way would only lead to failure and make China a laughing stock.


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