Magazine — once valued at $1 billion — to sell for less than $5 million.
The sale of BusinessWeek is done.
Bloomberg LP won the bid to buy the magazine from McGraw-Hill, the companies announced Tuesday.
Terms of the deal were not disclosed, but a source with knowledge of the deal puts the sale price in the $2 million to $5 million range plus the assumption of debt.
The deal is expected to close Dec. 1.
Norm Pearlstine, Bloomberg chief content officer, will become chairman of BusinessWeek, the companies said. Pearlstine served as Time Inc.’s editor-in-chief, overseeing the company during the Valerie Plame scandal involving Time reporter Matt Cooper.
It remains to be seen if there will be any layoffs associated with the merger. BusinessWeek employs more than 400 staffers.
“We are not buying BusinessWeek to gut it,” Bloomberg LP president Daniel Doctoroff assured BusinessWeek.com. “We are buying it to build it.”
The 80-year-old magazine will continue to publish weekly and online.
"While the ink is barely dry and the long-term plans are being worked out," BusinessWeek publisher Keith Fox wrote in a memo to his staff, "we do know that Bloomberg is committed to and values our brand, our editorial integrity, and our ability to drive advertising, circulation, and new digital revenue."
Through September, ad pages for BusinessWeek were down a staggering 34.7 percent, according to the Publishers Information Bureau.
At a meeting late Monday, Fox told employees that there will be no layoffs between now and the end of the year. (According to BusinessWeek.com editor-in-chief John Byrne, Fox said the Bloomberg agreement "guarantees McGraw-Hill benefits to all BusinessWeek employees for a full year after the deal closes.")
BusinessWeek – once valued at more than $1 billion — is expected to lose roughly $40 million this year. Revenues are expected to be about $130 million, the company said.
That a magazine once viewed that valuable could sell for that little is astonishing, though not surprising to the M&A community.
“A few years ago, BusinessWeek was worth a billion dollars,” Reed Phillips, managing director of DeSilva + Phillips, said in an interview with TheWrap in July. “Today, it has no value. That kind of rapid decline in value is giving buyers of media businesses a real scare.”
McGraw-Hill CEO Terry McGraw and Bloomberg executives are scheduled to address BusinessWeek’s staff on Tuesday morning.