Moisés Naím, editor-in-chief of the bimonthly magazine Foreign Policy, is a sought-after speaker. He speaks at conferences, seminars, world forums, and on TV. All the speaking has endowed Naím with a precious skill. No matter what the situation, he knows exactly what to say.

In spring 2008, for instance, one of his staffers at Foreign Policy was being wooed for a position at the Washington Post. After considering the prospect, the staffer withdrew from consideration, preferring to stay at Foreign Policy. The move pleased Naím. “You have no idea how good a choice you just made,” said Naím, in the source’s recollection. Naím homed in on the Post’s finances, noting that the company wasn’t on a stable footing. “That was the reason I’d dodged the bullet,” says the source.

Months later, Naím issued a different assessment of the Washington Post Co., one that, again, struck all the right chords. A different occasion was at hand: The Post Co. was buying Foreign Policy from the Carnegie Endowment for International Peace. In a Sept. 29, 2008, press release, Naím is quoted as follows:

“Foreign Policy is thrilled to join The Post Company. In an era in which too many newspapers and magazines are retreating from international news, The Washington Post Company is smartly bucking the trend. Serving the expanding market of readers eager to understand how events in other countries affect them is what FP is all about, and that is why we are so excited to have The Washington Post Company as our new home.”

In an interview with Washington City Paper, Naím called his new owner “one of the top media companies in the country.”

Did Naím contradict himself? Actually, no. The Post Co. is among the country’s elite media companies and also a financial wreck. The two go hand-in-hand these days. Last year, the company’s stock lost more than 50 percent of its value.

What keeps the Washington Post from the fate of many other dailies—bankruptcy, oblivion—are the company’s acquisitions. In 1984, it bought Stanley H. Kaplan Educational Centers Limited; two years later, it gobbled up a bunch of cable systems. Together, Kaplan and Cable ONE supplied nearly 70 percent of the company’s 2008 revenues.

Now comes Foreign Policy,a purchase that, of course, will never get mentioned alongside Kaplan and Cable ONE. But what the transaction lacks in financial upside it more than compensates for in chutzpah. Why would a company in the midst of a tanking media economy snap up a property that has run year-after-year losses in the millions of dollars? And why would it sink more resources into international news and opinion, a segment of the industry known for its resistance to profit-making?

Let Washington Post Co. Chairman and CEO Donald Graham explain: Foreign Policy, he says, has “attracted a very, very remarkable audience—a tremendous number of policy makers and foreign ministers that advertisers want to reach. We know a little bit about selling to such an audience.”

Call it a bellwether. If the Post Co. manages to coax good money out of Foreign Policy, the news business has nothing to worry about.

The Post Co. has a complex set of criteria for deciding which publications to purchase. If they love the stuff, they dive in.

In March 2005, Graham threw a bash celebrating the company’s purchase of Slate. In his remarks, he shed some light on the process. After receiving notice that Microsoft’s online magazine might be on the block, Graham walked into the office of a colleague, who reported, “I love Slate.” Then he checked with another colleague, who reported, “I really love Slate.”

“That’s a good example of deft acquisition work, in case any of you are interested in buying stock,” joked Graham.

Tongue-in-cheek remarks notwithstanding, Slate actually was a deft acquisition. The Post Co. smartly kept the digital magazine’s staff intact, invested in the content, hooked it up with its massive sales infrastructure, and eventually made it the namesake of a corporate cohort: The “Slate Group” of publications includes TheRoot.com, The Big Money, and, now, Foreign Policy.

In many respects, the Post Co. followed the Slate template in approaching Foreign Policy. “It’s a terrific magazine,” responds Graham when asked what motivated the purchase. In an e-mail to Naím last August, Graham wrote, “[W]e are only interested in acquiring publications we think are distinguished and publications on which we can go forward with an unusual degree of long-term committment. This long-term focus is made possible in part by the Post’s unusual stance for a public company: that we are completely uninterested in quarterly earnings results and pay no attention to analysts’ forecasts.”

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Foreign Policy won the general excellence contest in the National Magazine Awards twice this decade, so it had no problem meeting Graham’s standards. The recipe for such distinction calls for brain-bending features and reported long-form pieces, all of which is fronted by a section of short-attention-span capsules edited and presented as smartly as any Entertainment Weekly spread. Even on stories that don’t make a splash, the execution is routinely perfect, with easy-to-follow narratives and utter copy integrity. (I spent weeks trying to find a typo and failed.)

The intellectual design for all this belongs to Naím, who took over as top editor in 1997. Naím inherited a journal known best for its ripped physique—a hard-bound, rail-thin publication that took pliers to crack. Founded in 1970, it was written by top scholars for an audience of other top scholars. In 2000, Naím ditched the Slimfast format for a magazine design and a greater variety of editorial and visual offerings. The move symbolized a shunning of the intelligentsia, of the great thinkers on foreign relations. Jessica Mathews, Carnegie’s president, credits Naím with having “an incredibly creative ability to see around corners.”

Superhuman qualities don’t come cheap on the labor market: In 2007, Carnegie paid Naím upward of $400,000 for his services. (Naím says his compensation included a commission on sales and that he has taken a pay cut under Post Co. ownership.)

Absent Naím’s overhaul of Foreign Policy, the Post Co. would never have expressed interest in purchasing it. That’s because Naím’s move to a mainstream presentation aimed to capture a new “globalization” demographic. “There is a whole category of professionals that would never call themselves foreign policy specialists that are discovering that what happens [elsewhere] matters here,” he says.

Another thing about this category of professionals is that they’ve historically anchored a lousy business model. If journalistic excellence has been a constant at Foreign Policy, so have steady losses. Ring up an old Carnegie hand, ask how much the magazine typically lost each year, and get prepared for a different story. One says losses range between $400,000 and $600,000 per year. Another, who claims to have sat in on budget sessions, places the number at $1.3 million a year. That’s the same figure cited in a story by the Washington Post, sourced to an anonymous Carnegie official.

Greater authority on this topic comes from the Carnegie Endowment’s nonprofit tax forms. According to the latest documents on file, Foreign Policy in 2007 siphoned nearly $4.5 million in expenses. The same forms report that income from Carnegie’s publications totaled slightly more than $2.6 million for the year. However, that amount represents receipts from “a variety of books and magazines,” meaning that Foreign Policy alone produced revenue below that figure. Translation: Foreign Policy’s operating loss appears to fall somewhere in the neighborhood of $2 million, at least for 2007.

The Foreign Policy establishment won’t discuss the magazine’s financials. When asked about the topic, Carnegie president Mathews deferred to Naím, who, on the same topic, responded, “Let me pass on that.”

Just before press time, a Foreign Policy spokesperson indicated that Washington City Paper’s numbers were “dramatically wrong” but did not elaborate.

As one of the country’s top media outfits, the Post Co. likely didn’t fuss too much about whether the magazine lost a million a year or some other amount in that neighborhood. It probably paid a small price for a very recognizable brand.

Nor is there any shame in the subsidy. Over its nearly 30-year stewardship of Foreign Policy, Carnegie sold subscriptions, advertising, and conferences to support the magazine. To cover the gap between that income and the budget required to publish a quality product, it called on philanthropic funds.

Sound familiar? Yes, that “hybrid” approach to funding journalism is now the hottest idea in an industry whose business model went on vacation in the mid-’00s. Perhaps the Carnegie people didn’t realize what pioneers they were.

Turning Foreign Policy from a money-losing think-tank appendage into a profit-making machine apparently required an assertive leader, someone ready to question the assumptions and MOs fixed in the conference-room ether.

The Post Co. settled on Susan Glasser. Among the more compelling figures in journalism, Glasser has a résumé covering top managerial stints at the Harvard Crimson, Roll Call, and the Washington Post, where she also corresponded from Iraq, Afghanistan, and Russia.

Impressive work as head of the Post’s Outlook section vaulted Glasser to the top job on the national desk in late 2006. She got ambitious fast, ordering up various enterprise projects and launching a Web “journal” called the Trail, a campaign-coverage platform that wrung greater productivity out of the Post’s staff writers. Upon President Obama’s inauguration, the journal morphed into 44 and to this day serves as a go-to spot for Washington Post political coverage.

With industry came staff alienation, as Glasser pissed off underling after underling with a gruff management style that turned her national pod into a hive of whining and whispering. Morale dropped low enough to prompt something of an internal affairs investigation into her reign, a process that ended in her April 2008 firing. It was one of the nastiest episodes ever at the Post.

Glasser immediately found work in the Post Co.’s executive suite, carrying out unnamed projects for Graham on the future of journalism. She worked with Naím to lay the groundwork for the purchase. At one point, Graham told Naím that he’d like to put Glasser to work on the new Foreign Policy. “A great idea,” Naím responded.

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Landing Glasser at Foreign Policy required a silent coup, the sort of operation that, had it occurred on an international stage, would have made great copy for the magazine. Just before the transition to new ownership, staffers discovered that Managing Editor William Dobson would no longer be running the day-to-day operations of the magazine, as he had been for four years. Dobson was the central player in the magazine’s ascent to national renown, an ideas guy with a relish for all the minutiae of putting out a publication. Now he was gone.

Then, silence. No staff meeting, no official word from Naím or Glasser about what had happened to Dobson. Nor from Dobson, who has maintained the disciplined silence of someone who signed a whole bunch of legal documents. (He failed to respond to repeated requests for comment.) He remains at Carnegie as a visiting scholar.

Once inside, Glasser did what she does best: She got to work, riding herd on a redo of Foreignpolicy.com that had been in the works. Whereas she had difficulty pushing her Web plans through the two-headed print–Web bureaucracy at the Post, she faced no such resistance at Foreign Policy.

The new site hit screens just after New Year’s, complete with a platoon of new writers and bloggers, including celebrated military correspondent Tom Ricks and former Mother Jones reporter Laura Rozen. The press release announcing the makeover spanned more than a dozen paragraphs and promised an online product that “takes readers inside the running of the world.” A couple of months later, management hired the magazine’s first Web-development director.

Rozen, who writes a blog titled the Cable, on the Obama administration’s foreign policy, writes via e-mail, “It’s clear Foreign Policy.com is answering a previously unmet hunger in the Washington foreign policy community for reported daily information about their world….And we’ve had tremendous response to what we’re doing.”

No question there. Ricks says he gets up to 100 e-mails a day off his blog, The Best Defense. Monthly unique visitors to Foreignpolicy.com hovered around 100,000 in the months leading up to the purchase. Since the relaunch, they’re squarely above 200,000, according to compete.com. Naím says that the Web expansion came off without “a massive expenditure.” Ricks offers corroboration: “How much are they paying me? Peanuts.”

So at a time when news organizations are sucking wind to maintain their 2008 traffic levels, Foreignpolicy.com is making its chart look like a technical climb—a phenomenal feat. The traffic doesn’t surprise Charles Sennott, executive editor and founder of GlobalPost, an international news site. “The world is interested in watching what happens with an American news organization speaking to Americans about the issues of the world.”

At the Post Co., officials are thrilled with the spike—and with Glasser. “The Web site tells you a lot about Susan’s capabilities as an editor,” says Graham.

Her capabilities as a manager apparently need some more work. One staffer, 10-year Foreign Policy employee Travis Daub, clashed frequently with Glasser, and not only on journalistic questions. Daub, the magazine’s art director, says that the staff was promised a meeting with higher-ups from the Slate Group. When he asked that the meeting be set up, he says, Glasser lashed out at him.

Glasser, recalls Daub, said that “we were damaging our careers and damaging the careers of our colleagues by scheduling the meeting. It was huge—extremely upsetting to her.” Daub reports that Glasser “often spoke of conspiracies to undermine her.”

In late 2008, Daub resigned despite not having another job lined up in the worst media-hiring market in ages. Two of his colleagues, editors Kate Palmer and Carolyn O’Hara, followed him out the door.

Naím calls Palmer and O’Hara “wonderful editors” and Daub “one of the most talented, intelligent, and passionate art directors.”

It’s tempting to view the departures as casualties common to an ownership transition. Someone in a position of power at the Post Co., though, apparently thought otherwise. Earlier this year, a management consultant conducted interviews with Foreign Policy staffers to discuss their concerns with Glasser’s ways.

Faith Mauro-Huse, of Columbia, Md.–based Leadership Enhancement Associates, asked interviewees questions such as: What is Susan doing wrong? What is Susan doing right? Are there any recommendations you could make to improve Susan’s management style? Who do you think are the people on staff that she needs to cultivate?

Mauro-Huse didn’t respond to requests for comment on her inquiries, but her project marks the second time in less than a year that someone has investigated Glasser’s office manners.

Perhaps Mauro-Huse has worked some magic. Christina Larson, a recently hired editor at the magazine, had this to say when asked about Glasser: “She has a real knack for inspiring the staff. Editors work hard in part because they’re jazzed about the material and in part, I believe, because there’s a lot of affection for Susan and the staff overall.”

Interview requests to more than 10 other full-timers under Glasser went unreturned. Glasser, too, denied an interview request, instead asking for questions via e-mail, which she didn’t answer.

The most compelling story line on the magazine’s factory floor may not be how well Glasser is getting along with her people but who runs the place. The announcement of the purchase read like a hierarchical farce. In the space of a few lines, it said that Naím would be staying on as editor-in-chief and that Glasser would be acceding to the magazine as executive editor. Is this like president vs. prime minister?

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Naím says, “She reports to me.” The Foreign Policy masthead concurs, listing Naím above the take-charge Glasser.

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