George S. May Business Blog

Business Week up for sale. Asking price…$1?

According to people familiar with Business Week’s long history of losses, publisher McGraw-Hill’s effort to sell the publication may bring them in a whopping…$1.

Well, not exactly. Really the $1 estimation is more of a tribute to the difficulty of trying to sell the publication, as well as a reference to OpenGate’s fairly recent acquisition of TV Guide for a buck.

McGraw-Hill, which owns the Standard & Poor’s rating agency and a large educational publisher, would only say it was “exploring strategic options” for Business Week. In exploring those options, McGraw-Hill has appointed Evercore, the boutique investment bank, to sell the business after concluding it was non-core, two people familiar with the decision said. Evercore has not been available for comment.

Selling a predominately print business, for a profit, in this day and age is an incredibly hard task in itself. Selling one for a profit that has had a history of failing, even before the birth of the internet, will be, well, nearly impossible.

From the Financial Times:

“According to the Publishers’ Information Bureau, Business Week’s advertising revenues fell by a third to $77.8m in the first half of 2009. The magazine says its circulation is 936,000.

Bankers said it was unlikely that Time Inc, publisher of Fortune, or Forbes would bid. Condé Nast closed Portfolio, a business glossy, in April.

Reed Phillips, managing partner of DeSilva & Phillips, the media investment bank, said more likely buyers were OpenGate Capital, which bought TV Guide; Platinum Equity, owner of the San Diego Union Tribune; and Mansueto Ventures, a publisher.

Platinum and OpenGate would not comment. Mansueto did not return calls.

The $1 for which OpenGate bought TV Guide “is probably the kind of deal that would be obtainable for Business Week”, Mr Phillips said. Another banker said: “I think they’ll end up giving it away.”

Peter Appert, an analyst with Piper Jaffray, estimated that McGraw-Hill would receive minimal proceeds from the sale, but would cut annualised losses of “at least $10m-$20m” this year and remove “a continuing distraction”.

In April, McGraw-Hill reported a 76.4 per cent drop in first-quarter operating profit from its information and media division – which includes Business Week, JD Power & Associates and Platts – to $2.8m.

Among the few groups investing in print media, Bloomberg would not comment and Bonnier said it had always favoured niche acquisitions. News Corp, owner of the Wall Street Journal and Barron’s, said it was not interested.”

I’ve heard some rumblings that International Data Group (ING GROEP NV PERP (NYSE)) could be a good fit. Here are several reasons as to why:

a) They already have a print business so off the bat, they’d would be able to save in their start-up costs.

b) They are privately held, so should thye feel they need to make changes it would be far easier o fly under the radar.

c) As a large technology publisher, they already have the business contacts.

d) IDG also has a strong online presence, has a very big research division (IDC) and a very strong expo division.

While these are all elements that Business Week could benefit from, it is still unconfirmed that IDG is even considering such an acquisition.

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