Imagine someone came to you with an offer to buy a property with a long and storied history. Owning it will bring you prestige and influence. Because it is yours, people in power will know who you are and you will have influence in Washington. The purchase price is negotiable, but you should know that the investment isn’t going to bring you a profit. In fact, owning this property will probably cost you seven figures a year.
We’re not talking about a foreclosed mansion—the property in question is the New Republic, which remains one of the most important political magazines in America. And because the Canadian company that owns it appears to be sliding toward bankruptcy, it may be about to be sold, for the third time this decade.
One potential buyer whose name has been circulating in publishing circles is Laurence Grafstein, until recently a top executive at Lazard.
There are a couple of political magazines older than the New Republic—The Nation has been published continuously since the Civil War, while The Atlantic began even before, in 1857. But since the New Republic was founded in 1914, edited by Herbert Croly and Walter Lippmann, it has been considered the voice of American liberalism. Along the way, it has courted controversy, particularly on foreign policy, but on domestic politics as well. There’s no easier way to start an argument among journalistic cognoscenti than to ask whether the New Republic is really liberal anymore, or how much influence it retains. Progressive bloggers pillory TNR as “the Joe Lieberman” of magazines, and, indeed, the magazine endorsed Lieberman’s 2004 presidential run. Many love TNR, and many others hate it– while yet others feel both ways about it at the same time.
For the last 35 years, Martin Peretz, who bought the magazine for $380,000 in 1974, has controlled it. A former Harvard lecturer (whose students included Al Gore), married to a Singer Sewing Machine heiress, Peretz’s otherwise liberal politics came to be defined over time by his hawkish positions on foreign policy, particularly relating to Israel.
But the magazine’s hawkishness (including support of Reagan-era foreign policy and the Iraq war), not to mention some anti-liberal cover stories published by then-editor Andrew Sullivan in the 1990s (one on “Race and IQ” suggested the natural intellectual inferiority of blacks), never stopped TNR from being considered a cornerstone institution of the center-left. In 2001, after a quarter-century of sole ownership, Peretz sold a controlling interest in the magazine to Roger Hertog and Michael Steinhardt, two Wall Street figures whose politics were to the right of the magazine’s historic position. (Hertog and Steinhardt also owned an interest in the conservative New York Sun, which went out of business last year). Peretz, though, retained the title editor in chief.
Then, in 2007, Hertog and Steinhardt tired, and the magazine was sold to CanWest Global Communications Corp, which already had a minority stake. CanWest paid $5 million for the 70 percent of the magazine it did not already own; at that rate, the whole value of the magazine would be $7.14 million. While this may be a modest sum for a multinational conglomerate to shell out, it still amounts to paying for the privilege of losing money.
Which is precisely what happens when you own a journal of opinion. Pick up a magazine like Vanity Fair or Sports Illustrated, and you’ll have to wade through pages of ads for cars, watches, and other consumer goods before you get to the content (at least before the current recession). For a magazine like the New Republic, however, advertising doesn’t even come close to covering costs. Subscriptions help, but not nearly enough. And at the New Republic, circulation has fallen from around 100,000 per issue in the early 1990s to around 60,000 or less today.
Nonetheless, when CanWest bought the New Republic in 2007, they claimed it was a sound business investment. Greg MacNeil, the magazine's interim publisher at the time, was quoted in the New York Times saying the magazine's business plan called for profits within three years, a goal that even at the time seemed almost absurd. Although both CanWest and the New Republic refused to answer questions for this story, discussions with industry insiders suggest that the magazine’s losses likely run a minimum of $1 million per year and perhaps two to three times that.
CanWest has been in some ways a close ideological match with TNR—the company’s founder, Israel “Izzy” Asper, was a former Liberal Party official and longtime power player within the party, particularly close to former prime minister Jean Chretien. But what really seemed to motivate him politically was not just the Liberal Party’s centrist politics, but support for Israel. Izzy died in 2003; the current president and CEO is his son, Leonard Asper, and Leonard’s brother David Asper is executive vice president.
Today, CanWest is the largest media company in Canada, owning two broadcast networks, 21 cable-TV channels, magazines, radio stations in Turkey, and an outdoor-advertising company in Australia. CanWest’s extensive Canadian newspaper holdings include the National Post and some of the country’s oldest and most venerable papers, among them the Montreal Gazette, the Ottawa Citizen, and the Vancouver Sun. One might compare the Aspers to Rupert Murdoch—media magnates focused on making money, but with a soft spot for outlets that advance their ideology. In 2001, CanWest ordered its newspapers to run editorials written at corporate headquarters, provoking howls of protest, including a byline strike at the Montreal Gazette. Columnists have sometimes had their columns spiked. News Corp., for its part, owns its own money-losing political magazine, the right-wing Weekly Standard, which Murdoch seems quite willing to hold on to, despite its losses.
But unlike NewsCorp, CanWest is in deep financial trouble and unloading its properties as fast as it can. Buckling under a crushing $3.7 billion debt, CanWest has been in feverish negotiations with its creditors in an attempt to avoid bankruptcy. The company has already put five television stations up for sale and laid off 5 percent of its employees. Canadian banks recently narrowed the company’s access to credit while it attempts to right itself. The company’s market capitalization, which was once over $2 billion, has dropped to around $30 million. Its stock, which traded at over $6 a year ago, now sells for around 30 cents a share.
Will CanWest go bankrupt, and if so, what would happen if the New Republic went on the auction block? At this point it’s impossible to know the answer to the first question, but the answer to the second is: It depends. According to Jacob Ziegel, an emeritus professor of law at the University of Toronto, if CanWest goes bankrupt, the courts would oversee sale of its assets in consultation with the company’s creditors. They wouldn’t be required to sell the magazine. But if they did, and someone came along with a serious bid that was higher than those of other bidders—even if they wanted to take it in an ideological direction that the Aspers or Peretz don’t like—the company would have no choice but to accept.
One potential buyer whose name has been circulating in publishing circles is Laurence Grafstein, until recently a top executive at Lazard, the international asset-management firm. Grafstein may be just what the New Republic is looking for: pockets deep enough to absorb the magazine’s losses and an ironclad commitment to supporting Israel. Grafstein also has a history with the magazine, having written articles. Most importantly, Grafstein served on the magazine’s board, so presumably he has seen the books and would know what he’s getting into. (Grafstein did not return emails asking for comment).
What he, or any other buyer, would be getting in TNR is a history, a voice, and a brand. Eric Alterman, author and professor of English and journalism at City University of New York, says that for all its troubles the magazine’s brand remains strong. “Like any opinion magazine, TNR would be a ‘prestige’ buy,” Alterman told me. “But the question TNR watchers are discussing is whether—as with its last sale—Peretz will be able to retain the control of it that allows him to continue to vent against his enemies, real and imagined.”
Alterman’s view of the problematic Peretz as one who seems to delight in offending and creating enemies is widely shared (his enemies, for example, include the publishers of the Washington Post). But there is no doubt that the New Republic continues to house talented political writers and a back-of-the-book edited brilliantly by longtime literary editor Leon Wieseltier. If it doesn’t have the impact it had during its glory days in the 1980s, when Michael Kinsley and Hendrik Hertzberg traded off editing duties, it still retains the ability to influence debate in the capital. Washington is peppered with prominent journalists who once worked for TNR, which is partly why the magazine’s fate engenders such passionate debate.
In a strict financial sense, the New Republic is a toxic asset—buy it today and you are guaranteed to lose money. If the Aspers are thinking purely in investment terms, they will pay someone to take it off their hands. They could also decide to hold on to it, if they don’t go bankrupt and the courts take over. But if CanWest is restructured or even liquidated, someone else will likely come along, willing to pay for the 95 year-old once-proud flagship of liberalism.
UPDATE: An earlier version of this story indicated Greg MacNeil told the Times that the magazine would be profitable in three years. It has since been updated to reflect that he was referring to the magazine's business plan, which called for profits within three years.
Paul Waldman is a senior correspondent with the American Prospect magazine.