Bloomberg LP will buy BusinessWeek magazine from McGraw-Hill Companies as the news and data provider seeks to reach a wider audience than its traditional clients in financial services.
The announcement on Tuesday comes after several rounds of bids by various private equity firms and publishers. Bloomberg was long seen as the most likely winner of the auction.
The company, controlled by New York City Mayor Michael Bloomberg, provided few details on how much it will pay and how many BusinessWeek staff might lose their jobs.
Bloomberg offered $2 million to $5 million, and agreed to assume BusinessWeek's liabilities, including potential severance payments, according to the magazine's website.
The fact is, it has been losing a meaningful amount of money and that is reflected in the purchase price, Bloomberg President Daniel Doctoroff told Reuters in an interview, declining to confirm or deny the price.
Bloomberg Chief Content Officer Norman Pearlstine, who will become BusinessWeek's chairman, added, We're also looking at it as something we're going to be investing in going forward as we build the magazine and get it where it ought to be.
Bloomberg's primary audience is the 300,000 subscribers to its Bloomberg computer terminals. But it also owns a cable television network that competes with CNBC, a New York radio station and the Bloomberg Markets magazine.
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, Doctoroff said.
Bloomberg would keep the magazines separate after the purchase. BusinessWeek journalists also would work as separate groups, but with much cross-pollenization, said Pearlstine, former editor-in-chief of Time Warner's Time Inc and former executive at buyout firm Carlyle Group.
The interaction with Bloomberg News is going to be all pervasive, he said. We will have editors from Bloomberg News and BusinessWeek working together.
Pearlstine declined to say when Bloomberg would want BusinessWeek to turn profitable, but said that the process would be gradual. The magazine could lose as much as $40 million this year, BusinessWeek reported on its website.
We don't believe that it has to happen immediately or even quickly, he said.
The deal is expected to close before the end of the year. The BusinessWeek magazine may be retitled Bloomberg BusinessWeek, Doctoroff said.
Doctoroff declined to comment on job cuts, but said, We bought the magazine to build it, not to gut it .... Our hope is to retain as many of them as it is financially prudent to.
McGraw-Hill put the 80-year-old, money-losing BusinessWeek up for sale in July. The magazine's ad revenue, like that of other publications, has fallen as more people get free news online and competition has grown from companies like Bloomberg and its rival, Thomson Reuters Corp.
The recession has accelerated BusinessWeek's ad declines.
Other bidders included an investment firm run by Strauss Zelnick, chairman of videogame publisher Take Two Interactive Software, private equity firm OpenGate Capital and Boston Properties co-founder and New York Daily News owner Mort Zuckerman.
(Reporting by Robert MacMillan; Additional reporting by Yinka Adegoke; Editing by Phil Berlowitz, Carol Bishopric and Richard Chang)