Newsweek, brought to you by...China? by Mary Jo A. Pham, contributor

FORTUNE -- China is no longer content to merely be covered by American media. It now wants to own it.

China-based Southern Media Group confirmed last week that it partnered with Chengdu B-Ray Media for a bid to buy Newsweek magazine from its owner, the Washington Post Co. Perhaps not surprisingly, the offer was roundly rejected.

After losing nearly $30 million in print advertising revenues during the past two years and experiencing a 31% plummet in its first quarter revenue this year, the 77-year-old magazine was put on the auction block in early May. Washington Post CEO Donald Graham said Newsweek had no clear path to profitability.

Washington Post Co.'s (WPO, Fortune 500) reason for rejecting the Chinese media group's bid remains undisclosed. Since the deadline for Newsweek bids on June 2, no other serious suitors have announced they've been rejected. A Washington Post spokeswoman declined to comment.

In an interview with The Hefei Evening News newspaper in Anhui province, China, Xiang Xi, the executive editor of Southern Weekly, a popular Southern Media Group publication, said there was no clear-cut reason for the rejection.

"Personally, I feel the reason is quite complex, but there is one point that can be made: The seller genuinely does not comprehend the desires of idealistic Chinese media workers and institutions," he told the paper.

Southern Media Group is a state-owned media conglomerate that oversees a number of newspapers, magazines, and websites, including Southern Daily and Southern Weekly, two popular publications based in Guangzhou, China. It stands out from most Chinese news organizations in that it's widely known for its liberal editorials and investigative journalism.

Following the recent string of suicides at a Foxconn manufacturing plant in Shenzhen, Southern Weekly published an expose written by an intern who lived and worked undercover in the plant for 28 days, giving both Chinese and international readers some insight into a Foxconn factory worker's daily life.

But just because Southern Media Group is known to aggravate the political establishment won't be enough for a U.S. media company like the Washington Post to consider brokering a deal. According to Reporters without Borders' 2010 worldwide index of press freedom, China ranks 168th out of 175, coming in just before Burma, Iran, North Korea and other countries choked with free press limitations.

Unwelcome investment

And while there is no precedent for China taking stakes in American media outlets, its investments into other U.S. industries have been met with great skepticism. When Chinese-owned affiliates took significant stakes in Bear Stearns, Blackrock (BLK, Fortune 500) and Morgan Stanley (MS, Fortune 500) at the cusp of the credit crisis, investors and lawmakers questioned their intentions and some pushed to prohibit more investments.

If owning stakes in our banks created such backlash, the idea that the Chinese government could buy up Constitutionally-protected news organizations sounds downright preposterous.

But that's not stopping Southern Media Group, at least not yet. "Even though the purchase of Newsweek failed, the search for investments will continue," Xiang said. "Any media of global influence, regardless of medium, who has an interest to attract mainland Chinese shareholders, can get in touch with us."

He even gave out his personal e-mail address to the interviewer, suggesting that interested parties should contact him. Xiang declined to comment for this story.

The news of the rejected bid leaves many questions unanswered. Not the least of which is why Newsweek? With its staggering losses and shrinking circulation, the magazine is not an opportunity for a quick turnaround on profit. Then again, neither was Bear Stearns.

Xiang says that Southern Media Group and B-Ray Media's motivation to make a bid was "a spontaneous move" to seek a "global communications platform that everyone has always been striving for."

It appears that China's first-ever media bid for a U.S. household title was little more than a knee-jerk reaction to an open opportunity. It may come as a shock to some, but it shouldn't. In 2009, Beijing announced that it set aside $5.6 billion for worldwide Chinese media expansion, although much of that is expected to fund the expansion of CCTV, a global multilingual news service similar to Al Jazeera from the Middle East.

As David Shambaugh, Senior Fulbright Research Scholar at the China Academy of Social Sciences Institute of World Economics and Politics in Beijing, notes in his June 7, 2010 International Herald Tribune editorial, the Chinese government is encouraging all state media organizations to zou chuqu -- to go out and "establish a foothold in the international media environment and think-tank world."

The American media industry may well be struggling, but even in these brutal times it's hard to imagine a big publisher agreeing to Chinese control in exchange for a Chinese infusion. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.07%4.28%
15 yr fixed3.18%3.26%
5/1 ARM3.36%3.43%
30 yr refi4.05%4.21%
15 yr refi3.17%3.18%
Rate data provided
View rates in your area
Find personalized rates:
Company Price Change % Change
Bank of America Corp... 16.09 0.08 0.50%
Apple Inc 102.50 0.25 0.24%
Intel Corp 34.92 0.27 0.78%
Facebook Inc 74.82 0.96 1.31%
General Electric Co 25.98 -0.03 -0.12%
Data as of Aug 29
Index Last Change % Change
Dow 17,098.45 18.88 0.11%
Nasdaq 4,580.27 22.58 0.50%
S&P 500 2,003.37 6.63 0.33%
Treasuries 2.34 0.01 0.39%
Data as of 7:22am ET


The deal would value Vice at $2.5 billion. The online media company would also create content for the cable network, delivering a wider audience. More

Gas prices are falling to nearly $3 a gallon in some parts of South Carolina, and that will soon be common in much of the country. More

Netflix told the FCC that its speed on the Comcast network became so slow that customers began dropping their service. More

The Coolest Cooler is the most successful Kickstarter campaign in the site's history, raising $13.3 million from over 62,000 backers. More

Five CNNMoney readers share stories about saving that you can learn from: What they would do differently if they had another chance. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.