Wednesday, May 29, 2013

Take a Load Off, Barry (or: That Time Diller Played Everyone on Newsweek, Including Himself)

Bet "on the eve of Newsweek's sale" are six words you didn't see coming for at least another decade, if that, the more likely possibility being that the entire thing would just shut down at the hands of a benevolent mercy-killer named Diller. And yet, here we stand, on the eve of Newsweek's sale, eagerly awaiting the identity of Barry Diller's latest long con sucker buyer, if we aren't counting Barry Diller himself.

As we wait to find out who the mark is, we're digging into the old mailbox to tell a story of a tip that's never been followed up on. It's a tip that's been shopped around to other media reporters in town, who haven't been able to follow up on it either, for any number of reasons:

(A) It's a loony conspiracy theory about a media company, and thus, the stakes are too low for anyone to actually give a shit and blow whistles.
It's a great tip that's virtually impossible to confirm, and not worth the trouble.
It's a great tip that's actually impossible to confirm, and not worth the trouble.
When fit together, the entire thing makes so much sense and is such a "Duh" moment it's almost not newsworthy, except for the part that involves whether or not IAC shareholders were deceived, and most of the principles of this story have the vested interest of IAC shareholders, and thus, aren't going to say shit (see options B and C for further elaboration).

But it's Wednesday, and after tomorrow, the number of people who will care about this* is likely to drop into the negative digits. Let's run the beat.

Remember, this is just a tip we once received, and nothing we heard was confirmed. That said, for narrative purposes, you can just assume this is all true.

1. Sidney Harman was a proxy for Barry Diller to buy Newsweek.
Barry Diller had to buy Newsweek through a proxy because his seat on The Washington Post Company board put him at odds with a conflict of interest: Either he had to step away from the sale, or resign his seat on the board. Diller could not help sell Newsweek to IAC/himself and objectively claim to have both parties' best interests at hand. Diller could've stepped down—he sits on plenty of boards, and The Washington Post Company isn't exactly the prom queen of corporate vanity projects—but he would have lost his seat at the table for nothing if the sale fell through.
3. Among all the members of The Washington Post Company board, Barry Diller was most in favor of the sale of Newsweek, and most in favor of the sale to Sidney Harman. Lally Weymouth—daughter of Katharine Graham, former Special Diplomatic Correspondent for Newsweek, current Senior Associate Editor of the Washington Post—on the other hand, was vehemently opposed to the sale.** As someone who had both professional and emotional ties to the magazine, she did not want to see it go to someone who had plans to lobotomize it with the fuckery of New York City media value set that Tina Brown would later instill in it. Finally, Don Graham—"the nicest pushover who ever ran a business," we're told—thought Diller was a great businessman, and trusted him.
4. Diller was a great salesman, and not a great businessman. Because Diller sold Harman on Newsweek, and sold The Washington Post Company board on the sale to Harman, in order to get his hands on it. Being a great businessman would've involved leaving Harman with his red-and-white-ink stained dick in his hand, and Diller is a fucker, but he's not a motherfucker. Lally Weymouth, who hasn't spoken to Diller since the sale, might argue otherwise.
5. As part of the contract to purchase Newsweek from The Washington Post Company, Sidney could not sell the brand for two years.
4. That agreement was reached on July 15, 2010. Sidney Harman was announced as the new owner of Newsweek on August 1, 2010. The sale was made official on October 1, 2010.
5. Why Sidney Harman? Why not? Harman was the perfect proxy buyer for Diller in that he was an old man who wanted to make a grand gesture in the twilight of his life, and regain some cultural significance in his dying years. He would front Diller the purchase, and eventually unload it on Diller when the time came. Barry Diller, a man of his word, would not disappoint.
6. Diller was always set to inherit the brand from Sidney Harman after two years. But Harman's health deteriorated sooner than anyone expected.
7. We now arrive at the question of Diller's motivations. A shrewd businessman, why would he buy something as debt-saddled and seemingly hamstrung by the direction of its industry for its remaining days? And why would he do it in such a secretive manner?
8A. Barry Diller would move in secret because Barry Diller answers to shareholders, who would see an out-and-out purchase of Newsweek as batshit insane, and would be none too happy with it. A merger presented a less volitale way to acquire the property. 8B. Barry Diller didn't want Newsweek as a property. He wanted it as a brand. The Daily Beast—his most serious original content operation right now hold (the patently unserious) College Humor—was flailing. And the dentist-office brand cachet that Newsweek held is exactly the kind of thing that could help The Daily Beast. From the tipster: "At one point, Diller's goal was to rename IAC to Newsweek and Co."
9. When Harman found out he was dying—and, oh yes, he was secretly on dialysis for five months—the two parties announced the merger of The Daily Beast and Newsweek so his family could easily pass off the brand without disrupting either party. After Sidney Harman died in April 2011, his family told reporters that "The Harman family is totally committed to Newsweek and its future." Two years and nine days after the initial agreement was reached, Barry Diller indeed took full ownership of Newsweek simply by way of the Harmans "ending" their investment in the property. So, yes, they were committed in the sense that they were committed to Barry Diller honoring his side of this deal.
10. Everyone knows Tina always wanted to get her hands on a print magazine again. Diller, however, had to fight her on this. Diller sought out a number of people before her to edit Newsweek, including Peter Kaplan. But anyone with a working brain knew Tina would present problems, as would running two categorically different publications (as, technically, a singular entity) in the same office. After not finding anyone for the job after a not-great-search, it was generally agreed that one person needed to run both shows. Tina's reluctance was simple: She fancied herself a digital maven, and didn't need this oldfangled print publication getting in the way....unless she had final cut on everything but shutting it down. What Diller didn't plan on was Tina spending the brand equity of Newsweek on The Daily Beast, and ruining it, thus rendering his purchase null and void.
11. "As someone who worked for her, I can assure you, Tina is bat shit [sic] crazy." That was just a line from my correspondence about this. I enjoyed it.

So, if this is true, you can probably grasp the takeaways pretty quickly: First, that Diller fucked both The Washington Post Board and fucked with IAC shareholders. Next, that Diller always ended to put Newsweek down by way of The Daily Beast. And finally, that Diller's confidence in Tina Brown is probably waning after all of this, and it's best he just rid himself of the stupid ass mess he got himself into to begin with.

What's funny is that Diller's plans weren't even so terrible! This is a man who wanted to save a publication, make a less-regal publication regal, give an old man some thrills in his dying days, help The Washington Post Board unload debt, and make everyone a winner in the process. The problem is that attempting to do this in public would've been problematic, because, for one thing, the hubris it'd take to think you can make everyone in this situation happy and come away the big hero and winner is effectively the kind of banging one's dick on the table so hard as to break the boardroom in half. For another, people would've seen it as patently ridiculous, and gotten in the way. Rather than deal with those small minds, Diller—who knows how to run a good play and a long con—went around everyone to execute his machinations. And this is the hilariously sad result.***

[*Who aren't the kind of IAC shareholder that trusts Barry Diller about as far as they can throw him, after brunch, no less. In which case, those people might want to care about this a great deal.
**Media reporters, this is the part where you start to email Lally Weymouth.
***Assuming all of this is true, of course. In the situation where this isn't assumed to be true, it's simply sad.]