Layoffs loom as Bloomberg buys BusinessWeek
In announcing the acquisition, Bloomberg president Dan Doctoroff sought to position it as a move that will enrich the value of the company's flagship product, its terminal-based news service, as well as its other digital offerings. "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 in a statement.
BusinessWeek's Tom Lowry reveals many more details, including the sale price, said to be between $2 million and $5 million in cash, plus the assumption of some of the magazine's considerable liabilities. (The title lost more than $40 million last year.) Lowry notes that the acquisition represents a sharp break with tradition for Bloomberg, which has only ever made one other acquisition. It also underscores the considerable clout of chief content officer Norman Pearlstine, who, as chairman of BusinessWeek, will oversee the integration of the two organizations, Lowry says.
To what extent that integration will involve a mass purge of BusinessWeek's existing personnel is a question on the minds of many. It's already known that McGraw-Hill (MHP) suggested to potential buyers that they save money by laying off 20 percent of the magazine's staff. Rumors of dubious provenance have put the expected body count even higher.
But Lowry reports that Bloomberg plans to "substantially boost the magazine's editorial pages," suggesting the plan is to invest in BusinessWeek rather than gut it. Those members of BusinessWeek's 400-person staff who survive the transition will move into Bloomberg's headquarters by next May 1 following the close of the deal, expected to occur by Dec. 1.
Those parties who looked at BusinessWeek but ultimately took a pass included Bruce Wasserstein, OpenGate Capital, Mort Zuckerman and, reportedly, Donald Trump. In the end, the bidding came down to Bloomberg and Zelnick Media. DailyFinance contributor Doug McIntyre looked at Strauss Zelnick's track record here.