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After months of speculation, Bloomberg LP finally won the bidding for BusinessWeek on Tuesday.
The deal, which comes at a time when some magazine publishers are looking to closures and layoffs, is expected to close in the fourth quarter and, according to sources, the magazine will soon be renamed Bloomberg BusinessWeek.
A statement from McGraw-Hill Cos. did not disclose terms of the deal; however, a report on businessweek.com said a cash offer from Bloomberg is in the $2 million to $5 million range and the financial news group also will assume liabilities and severance, which is likely to push the final price into the tens of millions. Haggling over who would take on the severance costs of BusinessWeek staff — the buyer or the seller — is said to have been one of the final issues between McGraw-Hill and the remaining bidders which, in addition to Bloomberg, included ZelnickMedia.
“We are pleased that we have reached an agreement for BusinessWeek to be acquired by Bloomberg, which shares the same high standards for editorial independence, integrity and excellence that have long defined BusinessWeek,” said Harold McGraw 3rd, president, chief executive and chairman.
Employees at BusinessWeek were said to have heard the news at the same time Bloomberg released it on its terminals. “BusinessWeek will be a powerful addition to our portfolio of leading news and information services,” said Peter T. Grauer, chairman of Bloomberg. “BusinessWeek is one of the business world’s most recognized and trusted sources of news and insight, and we believe that it will be highly valued by our customers worldwide.”
On businessweek.com, Daniel Doctoroff, Bloomberg’s president, said the company isn’t buying the magazine to gut it. “We are buying it to build it,” he said.
Norman Pearlstine, chief content officer at Bloomberg, will become chairman of the magazine. Sources weren’t sure to what extent Mayor Michael Bloomberg was involved in the deal. BusinessWeek staff reportedly will be moved across town and into Bloomberg’s Manhattan headquarters by May 1. Officials from Bloomberg will begin meeting with the BusinessWeek staff in the coming weeks. Bloomberg was advised by The Quadrangle Group. The sale was conducted for McGraw-Hill by Evercore Partners.
McGraw-Hill said in July it was exploring strategic options for BusinessWeek, which lost upwards of $40 million last year. Year-to-date, ad pages in the business title are down 34 percent to 922 pages through Oct. 12, according to Media Industry Newsletter. Several bidders for the title emerged, including OpenGate Capital; Bruce Wasserstein, owner of New York Magazine; Mort Zuckerman, and ZelnickMedia, which was working with L. Gordon Crovitz, formerly the publisher of The Wall Street Journal.
“For McGraw-Hill as a company, this means an end to the substantial losses they were incurring,” said Reed Phillips, managing partner, DeSilva+Phillips. “For Bloomberg, they are getting a very strong brand name in the consumer sector to match where they are in B2B. They probably have a pretty good idea of a business model going forward and are likely to value what BusinessWeek has accomplished editorially — and maintain those standards.”