BusinessWeek: The venerable BusinessWeek could be up for sale. But it’s unlikely to bring in much cash. The US magazine is in decline on multiple fronts, and even giving it away more or less intact would be a decent result.
McGraw-Hill, the financial information group whose assets include the Standard & Poor’s credit rating, research and index business and a big education and textbook operation as well as BusinessWeek, has been under pressure from investors to address its underperforming assets.
While properties like Platts, the energy sector information service, have been propping up McGraw-Hill’s information and media division, BusinessWeek has been dragging it down. Advertising pages were down 40 per cent in the first quarter despite its worthy franchise – not out of whack with rivals like Fortune and Forbes, but punishing nonetheless. News magazines are all struggling to work out how their print and online offerings can be reworked to make money.
The magazine weighed on the division’s performance in previous years as well. JPMorgan reckons BusinessWeek could be losing $20 million a year on $100-150 million of revenue, and some loss estimates are multiples of that. That’s a real headwind for a division that made just $92 million in operating profit last year.
McGraw-Hill won’t be losing much in the way of economies of scale, either. Platts, Aviation Week and the well-known consumer survey outfit, JD Power, probably don’t overlap enough with BusinessWeek to offer much synergy.
So offloading the BusinessWeek millstone makes financial sense for McGraw-Hill. That’s a good thing, because a sale may not bring in much cash. It’s hard to see any other owner subsidising it to the same extent. The magazine’s staff has already been slashed. Perhaps the best hope is that a new owner, perhaps with a stable of related magazines, will take it on and squeeze out enough synergies to cancel out its losses.
In fact, McGraw-Hill’s only mild regret might be losing BusinessWeek’s cheerleading for S&P. It’s fair enough that it might sometimes quote its sister company’s credit and equity research. But this year, it did so twice as often as it mentioned rating rival Moody’s and three well-known independent equity research firms combined. If the magazine ends up under new ownership, that’s one small thing - among many bigger ones - that might change.
