The 19-year-old newspaper has been up for sale for some time, with several deals to ensure its future coming to nothing until yesterday Jared Kushner, the son of a wealthy New Jersey developer now in prison, snapped up a majority stake for $10m.
The paper is best known outside of New York as the title that was home to Candace Bushnell and her weekly column on the sex lives of Manhattanites, which gave rise to her book and the long-running TV series 'Sex and the City'.
The Observer may only sell 50,000 copies a week, but its relatively small circulation belies its influence among the city's elite, which is what Kushner says attracted him to buy the paper and its brand.
Like any developer, Kushner hopes the paper can one day make a lot of money as well, and plans to invest online and possibly extend coverage in certain areas to pull in more advertising. Currently, it is reported to lose around $2m a year.
In an email to the paper's staff, Kushner said: "We find ourselves at a crossroads in the newspaper business. The balance of printed and online content is undergoing an unprecedented adjustment and the way we deliver our product -- first-rate journalism -- continues to evolve.
"Together, we will navigate this challenge with perseverance and innovation. The only promise I will make on the business front is to keep a completely open mind. At 25 and with only non-publishing related business experience, I am now equipped with two of the finest tools that a publisher could ever have; this fine staff, and the inquisitive energy needed to tackle convention."
The paper was founded in 1987 by former investment banker Arthur Carter, who will retain an interest in the Observer. Carter previously owned stakes in two other titles, the Litchfield County Times and the East Hampton Star, which like the Observer are known for coverage of the lives of the rich and powerful.
Kushner's father Charles was sentenced to two years in prison last year. He pleaded guilty to an array of charge ranging from tax evasion, witness tampering and illegal campaign donations.
In addition, he hired a hooker to seduce his brother-in-law. He then sent a tape of the set-up to his sister.
The paper will continued to be run by editor Peter W Kaplan, who said he had been assured that the new owner would not interfere with its running.
"He told me that he will not interfere with the paper, that editorially, the paper is ours."
The new proprietor was announced by the paper in a posted online, "To the reader, The New York Observer has a new owner, Jared C. Kushner, of New York City."
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