The Newsweek Media Group is reeling.
Senior journalists are leaving the company and advertisers are cutting ties after allegations of fraud, a raid by the Manhattan district attorney’s office and the firing of top editors at the publication who had been investigating the company.
On Wednesday, Newsweek’s head of sales, Ed Hannigan, resigned.
The company, which owns Newsweek as well as the International Business Times, has lost hundreds of thousands of dollars in ad commitments since reports emerged that it bought traffic in order to hit business goals, a senior advertising executive who has worked with the magazine told NBC News. The Manhattan district attorney is reportedly investigating the finances of the Newsweek Media Group, which is privately held.
The ad executive, who lacked authorization to speak publicly on the matter and spoke on the condition of anonymity, said news of the inflated traffic claims was “shattering to us” and had reverberated with clients.
“Newsweek is in disarray,” the executive said. “We have pulled back on some buys. There is no one to speak to there anymore.”
Nativo, an online advertising company, is also suspending part of its business with Newsweek.
“We have been monitoring the situation,” John Haake, senior vice president of marketing at Nativo, wrote in an email. “Newsweek continues to utilize our tech to power their direct ad sales.”
Other ad networks are sticking with Newsweek, including AppNexus.
News of the advertiser pullback comes two days after the company fired two of its top editors and a reporter, all of whom had been involved in articles about their own employer. They had worked with colleagues to report on the magazine’s finances and figure out why the Manhattan DA had raided their offices and taken away servers.
The district attorney’s office declined to comment.
On Tuesday, David Sirota and Kurt Eichenwald, two of Newsweek Media Group’s best-known journalists, parted ways with the company.
Newsweek, once a venerated weekly newsmagazine, has endured a turbulent decade. IBT Media bought it in 2013, later hiring Peter Goodman, an award-winning journalist with The New York Times and the Huffington Post. Since then, the company has gone through several rounds of layoffs, and Goodman was let go in 2016.
In recent months, Newsweek employees have been under pressure to increase traffic to its website at a phenomenal rate, according to current and former staffers who spoke on the condition of anonymity. One former staff member referred to the operation as “a click-bait farm.”
Newsweek’s problems were compounded when a BuzzFeed report alleged that the company had purchased traffic and committed ad fraud. Newsweek admitted to buying traffic but denied the fraud.
Mark Lappin, director of communications for Newsweek Media Group, said in a statement, “Newsweek does not comment on its advertisers.”
But the damage of the BuzzFeed report is only starting to become apparent.
“We were not happy with the things we were hearing,” the ad executive said, adding that allegations of fake news and fake traffic were sensitive topics with clients and undermined the entire digital content business.
“It calls into question our entire industry. We don’t need this.”