Will Newsweek be savaged or salvaged by the Daily Beast?

Rumors are swirling that online HuffPo-esque publication  Daily Beast may merge with old-school and debt-ridden Newsweek magazine.

Tina Brown runs the edit at Daily Beast, and has confirmed the rumors of discussions between IAC CEO Barry Diller (and financial backer of Daily Beast), and Newsweek's new owner, Sidney Harman.

Harman bought Newsweek for $1 and has taken on its debt. Since he arrived, there has been an exodus of editors and reporters.

The Daily Beast on the otherhand, reportedly has severe Huffington Post envy, and has been funded through a $20 million infusion of IAC money. Brown has serious credentials in the print magazine world--including powerful stints at Tatler, Vanity Fair, The New Yorker and Talk.

The UK Guardian suggests that a merger for Diller would get the Beast off his books and, in a stock deal, give him a significant stake in Newsweek to add to his disparate media holdings.

"It could end up being a smart deal for Barry and Tina," said media commentator Michael Wolff. "It allows Barry to monetise the Daily Beast and gives Tina a vastly expanded platform."

Stay tuned.

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