After several rounds of bids by various private equity firms and publishers, Bloomberg ultimately emerged as the winner in the race to acquire struggling BusinessWeek magazine.
The terms of the transaction, which is expected to close by the end of this year, were not disclosed. However, according to sources, Bloomberg offered cash in the range of $2 million to $5 million, and agreed to undertake BusinessWeek’s liabilities, including potential severance payments to nearly 400 employees who might be laid off.
The parent group McGraw-Hill Companies (MHP) was seeking strategic options for BusinessWeek ever since July. Like other print publications, the magazine has long been grappling with the slump in advertising demand amid the global meltdown, as advertisers are migrating to the Internet due to increasing online readership and lower ad prices than print. Advertising pages in BusinessWeek’s global edition fell 34.3% in the second quarter.
Other potential bidders for the magazine were Bruce Wasserstein, the Chairman and CEO of investment banking firm Lazard Frères; Mort Zuckerman, the real estate tycoon and the owner of the New York Daily News newspaper; media business manager ZelnickMedia Corp.; and private equity firms OpenGate Capital, Platinum Equity and Warburg Pincus.
Bloomberg’s interest in the struggling magazine is part of its business strategy to sustain expansion beyond its core business. The company has a news service, publishes books and magazines, and circulates business information through TV, radio and the Internet.
Bloomberg also recently struck a deal with Washington Post Co. (WPO) to launch a global news service, “The Washington Post News Service with Bloomberg News”, that will provide selective news elements to newspapers, websites and other subscription based clients. The news service is scheduled to commence on Jan 1, 2010.
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