Newsweek is unable to pay its bills, faces eviction

When we checked in with Newsweek last week, the magazine had just published a news article critical of the magazine’s owners. That article only saw the light of day after a number of reporters and editors threatened to quit if it were spiked. It came after two top editors were fired and a raid based on an investigation by the Manhattan District Attorney. Today, the Daily Beast reports the struggling magazine is unable to pay its rent and may face eviction.

Guardian Life Insurance, the sub-landlord for the company’s downtown Manhattan office, informed International Business Times Inc. in late November that it owed several hundred thousand dollars representing “unpaid, delinquent rent and additional rent.”

According an affidavit filed in New York County court in mid February, Guardian claims IBT currently owes the landlord $303,466 in rent…

The company had stopped paying other bills months ago, racking up what Guardian claimed in early December as an additional $309,229 invoice for various utilities and fees.

IBT stopped paying its electric bill in July 2016, stopped paying for condensed water in September 2016, and lagged in paying rent on-time every month since July 2016—resulting in thousands of dollars worth of late fees.

As you might imagine, this dispute ended up in court. The landlord is demanding the company pay all back rent, fearful that it is about to go out of business. Newsweek is claiming it tried to settle that debt and its payment was rejected by Guardian (the landlord). Guardian admits Newsweek paid a portion of the money it owed but says it never paid the rest, an amount over $100,000. Meanwhile, Newsweek sought a temporary order to protect the company from being evicted:

Newsweek (which used to be owned by IAC, parent company of The Daily Beast) also got a temporary so-called “Yellowstone” restraining order to keep the company from being evicted…

The temporary restraining order runs out on Wednesday, allowing Guardian to take legal action against IBT that could result in potential eviction.

A real estate law expert who looked at the various filings told the Daily Beast, “From all that appears, the subtenant [Newsweek] doesn’t have the money to pay and is trying to conjure up ways to delay eviction.”

The company has been laying off staff last week and this week and, according to sources who spoke to the Beast, editors were told more layoffs were imminent. The NY Post has a story about the high-profile firings which took place over the past few days:

Gersh Kuntzman — a veteran editor who had grilled the magazine’s owners at a town hall meeting about the Manhattan district attorney’s raid of Newsweek’s offices last month, reportedly over alleged ad fraud, IRS tax liens and ties to a California-based church — was fired Friday.

On Tuesday, national editor John Seeley was also let go, sources said. One insider said the bloodbath is not over in the wake of a stunning expose by Newsweek reporters and editors last week that detailed how Olivet University, a Bible college affiliated with Newsweek’s corporate parent, offered free ads to Dutchess County officials as it sought tax breaks and permits for a new university there.

“They’re thinning the herd,” said a source.

Given all of this, it certainly doesn’t sound as if this is a company likely to survive. But never underestimate the market for garbage hot takes that tell a segment of readers exactly what they want to hear.