Monday, September 14, 2009

Understanding BusinessWeek

BusinessWeek, which seems to be overpaying on the rent it pays to parent McGraw-Hill (to the tune of $26 million in charges like overhead and rent, according to the Times), is facing significant challenges. As the deadline for a possible bid approaches, I thought it worthwhile to provide some context to BusinessWeek, some of it gleaned from a New York Times article, "BusinessWeek, on the Block and Ailing."
  • BusinessWeek founding missions was to summarize the week’s business news. It soon became a handbook for managers, covering strategy, marketing and the big issues affecting business, like policy, energy and debt.
  • In Feb. 2009, BusinessWeek updated its mission: to focus on what executives needed to know for their jobs -- business leaders, and not consumers. In so doing, the magazine droped "sports, lifestyle and politics articles." According to a mission statement unveiled then, “Our mission is to move business forward....(and to help readers) make smarter decisions in their businesses, careers and investments.”
  • However, to succeed,“They have to be unique, must-read,” Stephen B. Shepard, who had served as editor of BusinessWeek for 20 years and is now dean of the Graduate School of Journalism at the City University of New York.
That's just from a journalism perspective.

From a business perspective, BusinessWeek is losing money, even without the overpayment to McGraw-Hill.

According to the Times, ad revenue for BusinessWeek dropped to "an estimated $60 million this year, from almost $110 million in 2006." Meanwhile, its website has been doing very well in generating traffic, yet web-based ad revenue increased by less than a million to an estimated $20.5 million this year.

To understand the gap between web traffic and web revenues, it's important to understand this:
45 percent of pages views of are from slide shows. Apparently, slide shows are considered to be gimmicky. (That may be, but as I wrote earlier today, Using The Power of Multimedia to Make a Point -- Will this be the new journalism?, such gimmicks actually take advantage of the Internet so perhaps that mindset will change.)

In fact, only 16 percent of page views came from original articles, and pulls in just $19.28 per thousand ad views, almost a quarter lower than what it was earning three years ago. And it sells only about 38 percent of the available ads, down from 79 percent in 2006, according to a document cited by the Times.

What this means is that, despite six companies interested in bidding on BusinessWeek, its long-term prospects are not great. BusinessWeek seems to have fixed its journalism model, but it still needs to solve its business model.

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