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together a financial news service specialising in rapid-fire updates
with a print publication struggling to adapt to the Internet's
information whirlwind. Terms of the sale announced Tuesday were not
disclosed. Citing unnamed people privy to the negotiations,
BusinessWeek pegged the acquisition price at $2 million to $5
million in cash. Bloomberg also would be responsible for paying
other costs, such as severance pay to any of the roughly 400
BusinessWeek employees who might be laid off, the magazine's Web site
reported. Bloomberg LP, a privately held company started by New York
Mayor Michael Bloomberg, expects to take control of BusinessWeek by
the end of the year. That ends BusinessWeek's 80- year run as part
of McGraw-Hill Cos., which also owns the Standard & Poor's credit
rating agency. New York-based McGraw-Hill put BusinessWeek on the
auction block in July, apparently fed up with the losses that have
been mounting at the magazine as its advertising revenue plunged. The
acquisition represents one of Bloomberg's boldest and riskiest
attempts to extend its audience beyond its main mode of
communication the roughly 300 ,000 electronic terminals that it has
set up in the offices of money managers, traders, bankers and other
financial services professionals around the world. "BusinessWeek helps
better serve our customers by reaching into the corporate suite and
corridors of power in government, where news that affects markets and
business is made by CEOs, CFOs, deal lawyers, bankers and government
officials who typically are not terminal customers," said Daniel L.
Doctoroff, Bloomberg's president. Like many print publications,
BusinessWeek has been reeling from a one-two punch: the longest U.S.
recession since World War II and a massive shift in media consumption
that has driven more advertising online, where prices are generally
much lower than in print. BusinessWeek also has been trying to figure
out how a weekly magazine can remain relevant at a time when
financial and corporate news is plastered all over the Web around the
clock. As part of its coping mechanism, BusinessWeek has sharpened
its focus on its corporate audience and trimmed its coverage of
general-interest topics, such as sports and culture. Bloomberg didn't
immediately discuss how it might reshape the magazine's coverage or
how its takeover will affect the publication's staff. It appears
those decisions will left to Norman Pearlstine, a former managing
editor for The Wall Street Journal and Time Inc.'s former editor-
in-chief. Currently Bloomberg's chief content officer, Pearlstine
will become BusinessWeek's chairman. "It's kind of an old fashioned
idea but I still very much believe that a rich and smart weekly can
find an audience in this space," Pearlstine said in an interview.
Although Bloomberg spent weeks poring over BusinessWeek's books and
operations, Pearlstine said he still hasn't had time to talk to the
magazine's editors to get a better idea on what to do next. "The
first thing I want to do is sit down with them and try to learn from
them," he said. Pearlstine described BusinessWeek's current top
editor, Stephen Adler, as an old friend. The two men worked together
for several years while they were both still at The Wall Street
Journal. With a circulation of about 921 ,000 , BusinessWeek has been
doing a better job retaining subscribers than advertisers. The total
number of advertising pages sold by the magazine has plummeted from a
peak of 6 ,000 in 2000 to fewer than 1 ,900 last year, according to
the Publishers Information Bureau. The ad decline has deepened this
year with the volume falling another 37 percent through June. The
deterioration is expected to saddle the magazine with about $40
million in losses for the second consecutive year, including office
rent and other overhead, according to internal figures cited by
BusinessWeek. Despite BusinessWeek's woes, the magazine attracted
interest from several private equity firms and other media investors,
including Bruce Wasserstein, the owner of New York magazine, and Joe
Mansueto, the owner of two business publications, Fast Company and
Inc. The other bidders were reported by BusinessWeek. Other
struggling magazines haven't even had a chance to turn around under
new owners. Just last week, Conde Nast Publications decided to close
Gourmet magazine, ending a 68- year run to the dismay of food
connoisseurs. Earlier in the year, Conde Nast pulled the plug on a
BusinessWeek rival, Portfolio magazine. Besides distributing stories
generated from Bloomberg's staff of 2 ,200 reporters, editors and
photographers, Bloomberg terminals also display a wide range of
market and economic data that help shape investment decisions. The
service is the main reason Michael Bloomberg ranks among America's
richest people, with a fortune of $17.5 billion, according to Forbes
magazine estimates. This is the second deal announced this month that
gives Bloomberg a new springboard to reach a wider audience. It is
also joining forces with The Washington Post in a partnership that
will put Bloomberg stories in the Post's print edition and Web site
and include a jointly operated news service targeting other
newspapers.
