What Does Bloomberg Get in Buying BusinessWeek

The news that Bloomberg LLC has bought BusinessWeek provides the magazine with a good home, but raises some interesting points and questions.

• According to the Wall St. Journal, "Bloomberg's staff of more than 2,200 journalists is bigger than the combined newsrooms of The Wall Street Journal and the New York Times."
  
• BusinessWeek lost $43 million, and is expected to lose more than $60 million this year.
  
• Bloomberg will have to cut costs by combining bureaus -- like DC, Chicago, San Francisco. Even its NYC headquarters will have to leave its overpriced McGraw-Hill office building to move several blocks east to Bloomberg's midtown offices. But will Bloomberg also seek to reduce staff levels?
  
• Subscribers of the Bloomberg terminal, typically Wall Streeters, will now have access to BusinessWeek information, according to Daniel L. Doctoroff, president of Bloomberg. That means the traders won't need to subscribe to the magazine -- so a loss of some revenue.
• BusinessWeek has lost more than half its advertising pages since its peak of more than 6,000 pages in 2000, according to BtoBOnline.
• “Although Bloomberg has built one of the world's largest news organizations, with more than 2,200 journalists, our primary audience has been our 300,000 Bloomberg Professional service subscribers. … 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,” Daniel L. Doctoroff, president of Bloomberg, said in a statement.
• Norman Pearlstine, Bloomberg's chief content officer and a former editor in chief at Time where he was responsible for all of Time's publications, will become chairman of BusinessWeek and will oversee the integration of the property into Bloomberg.
• According to MarketWatch, it seems that the "privately owned Bloomberg is doing this deal because of a desire to satisfy an executive's ego. Still, it seems likely that whoever is driving this proposed acquisition will get a great deal of criticism." For one, Bloomberg was not successful with its print personal finance monthly magazine.
• According to MarketWatch, citing "a report on BusinessWeek's Web site, the terms weren't disclosed but Bloomberg's cash offer 'is in the $2-$5 million range and that it has agreed to assume liabilities, including potential severance payments.'"
  
• Jon Friedman at MarketWatch feels the deal doesn't make sense.

I think it provides greater visibility to the Bloomberg name. And I would bet that a lot of BusinessWeek writers would like to believe what Stephen Baker tweeted, "Bloomberg bought us. Seems like good news. They dont want to fire everyone. Others get McGraw Hill severance for next 12 mths. Good combo?"

I also think that the deal gives Bloomberg a well known, popular website that has been developing its own community.

Actually, if the economy is rebounding, it doesn't really make sense for McGraw-Hill to unload BusinessWeek. To me, it seems that Bloomberg is betting that the recovery will start being felt in 2010. Even as the new normal means reduced ad spending, at $2-5 million, plus pension liabilities, Bloomberg is buying a respected brand name and robust website that have a global reach at a significant discount to building one itself. Bloomberg will be able to cut huge costs by combining bureaus, including the overpriced McGraw-Hill offices. I don't think they need to reduce costs by $60 million to make this work. They can leverage BusinessWeek's conferences, too.