NEWSWEEK exec We gotta turn this business around or were dead
Two weeks ago, Newsweek Media Group Chief Content Officer Dayan Candappa said the company had just five weeks to turn around its business, or it might have to shutter for good.
“I wish I could varnish this, it would be an easier conversation to have,” Candappa said in audio of the meeting obtained by The Daily Beast. “I think we can pull out of this, but we have to execute with the precision of a brain surgeon. Really, we have to do everything right.”
In the private conversation with top editors on Feb. 21, lasting nearly 90 minutes, the CCO acknowledged a litany of what he described as “significant” financial problems the company faced.
An office raid by the Manhattan district attorney amid an investigation into the company’s finances and ties to mysterious church-affiliated Olivet University have created a number of embarrassing headlines for the company, as had newly surfaced allegations of workplace harassment by Candappa when he was employed by Reuters (an internal probe at Newsweek cleared him).
In the secretly recorded meeting, Candappa claimed that Newsweek’s major financial problems were the result of a February BuzzFeed report showing the media group had committed digital advertising fraud. More immediately troubling, the CCO said the report had spooked advertisers, and that a number of advertising exchanges had subsequently cut off IBT and Newsweek.
“The idea that Newsweek Media Group is legally throwing money to the church is probably a joke,” he said, laughing at the notion that Newsweek had enough money to funnel anything to Olivet University, which is infamous for its bizarre cult-like ties. “There’s no money. I can tell you that. There is no money.”
Candappa conceded that, as a result, the company was operating at “50 percent of the revenue needed to cover the costs,” and that the only thing keeping NMG afloat was a strong revenue haul at the end of last year.
“Those fourth-quarter revenue numbers were frickin’ fantastic,” Candappa beamed. “If we didn’t have that quarter, we’d already be dead by now.”
He then presented an ominous timeline: Cash flow was coming down and would “hit bottom” in April 2018 and, unless the company recouped some of its previous revenue, it would likely not survive much longer.
“If that doesn’t happen in six weeks, now five, in five weeks we need to create ‘V’-shape recovering revenue,” he said. “So when the cash flow runs out, we still have promises that we can make that can keep us going, because if the cash runs out and there’s similar revenue coming in, that’s bad.”
The changes laid out in the meeting were stark, and have already played out in Newsweek’s bureaus in the past several weeks.
He essentially acknowledged that Newsweek’s British outpost was on the chopping block, saying the collapse of the company’s paid traffic and rejection from some advertising exchanges was a “matter of life and death for the U.K. operation.”
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