Newsweek to merge with the Daily Beast

What do loss-making global media firms, who have seen better days in the past, do when red ink threatens to maroon them? Merge.

Newsweek, which together with Time,was once an icon of American journalism – also described by many as tools of American cultural imperialism – has decided to do just that. After haemorrhaging for years, the news magazine has decided to merge with two-year-old news and commentary web site The Daily Beast.

And heading the new entity will be celebrity editor Tina Brown, a former columnist for the Washington Post's Style section, who had also edited magazines such as Vanity Fair, the New Yorker and the defunct Talk. Newsweek will continue to be a weekly print magazine, while its web operations will be incorporated into the Daily Beast's web site.

The Newsweek Daily Beast Co will be a 50:50 venture between Sidney Harman (who recently bought Newsweek from the Washington Post Co for a dollar, along with its $47-million liabilities), and Barry Diller, who owns dozens of web sites, including the Daily Beast, CollegeHumour.com, Ask.com and dating site Match.com.

Newsweek sustained an operating loss of over $28 million last year, while IAC Corp – which owns Daily Beast and other web sites – is expected to lose about $10 million this year. The US news magazine, like many of its contemporaries in the US, has been steadily losing advertising. Tina Brown's appointment is expected to bring back some advertisers.

''In an admittedly challenging time, this merger provides the ideal combination of established journalism authority and bright, bristling website savvy,'' remarked Harman, announcing the merger today.