Following speculation that it was seeking a buyer for BusinessWeek, The McGraw-Hill Cos. announced it was “exploring strategic options” for the struggling magazine.
Industry chatter about a possible sale of the mainstay title has been percolating for months. Given BusinessWeek is McGraw-Hill’s lone major consumer magazine and has sustained heavy losses, news of a possible sale isn’t surprising. But it’s unclear who would buy the 935,820-circulation BusinessWeek, which has been challenged as its core categories of financial and technology advertising have dried up.
Under top editor Stephen Adler, BusinessWeek has retooled its look and content in print to focus on business news and less on lifestyle content, while using its Web site to focus on breaking news and social networking. Despite those efforts, BusinessWeek’s ad pages fell 37 percent to 604 this year through its July 6 issue, per the Mediaweek Monitor. (The business/personal finance category has fared almost as bad, with ad pages declining 32 percent.)
To reduce costs, McGraw-Hill has whittled staff at BusinessWeek and companywide over the years; in 2008, it eliminated about 1,045 positions out of about 21,000 across its businesses, which include Standard & Poor’s and J.D. Power and Associates. An undetermined number of the cuts came from BusinessWeek.
Publishers of business titles, such as Forbes, Time Inc. and Mansueto Ventures, have their own challenges with their existing titles, making them unlikely buyers for BusinessWeek, said media investment banker Reed Phillips of DeSilva & Phillips.
“It is going to be a difficult property to sell and difficult to sell to any of the obvious players, because the market for business magazines is really soft,” Phillips said. “I think a lot of potential buyers are going to be intimidated by the losses. It’s not an easy fix.”
Under one scenario, he said, investment bank Evercore Partners, which reportedly was hired to explore options for BusinessWeek, could look for an acquirer that would buy the magazine for a token amount in exchange for assuming its subscription liability and the burden of turning around the business.
That’s essentially what happened to TV Guide, for which private equity firm OpenGate Capital paid Macrovision Corp. $1 plus $9 million in debt in December. Since then, OpenGate has been dramatically cutting costs to get it to profitability.