The good news is that Jon Fine is doing a smashing job covering the pending sale of BusinessWeek, unlike a lot of news organizations that are reluctant to cover themselves. The bad news is that his latest news, out yesterday, is pretty discouraging.
The good news is that two new would-be buyers looked over BW's books. The bad news is that they are both private equity firms, Platinum Equity and Warburg Pincus. The other two that seem interested are Bruce Wasserstein and OpenGate Capital, also a private equity firm.
The last thing BW needs to be taken over by one of those slash-and-burn types, who would be
almost entirely focused on the bottom line and would be likely to make BW even more unrecognizable than it is today, if they don't simply strip it like a 1997 Saturn and sell it for spare parts.
If you want to find out what private equity firms can do to a company, you can read about it in...... BusinessWeek (right). There's also a book out soon called The Buyout of America: How Private Equity Will Cause the Next Great Credit Crisis by Josh Kosman, which I've read in galleys and is terrific.
The even worse news is that BW's books apparently read like they were written by Dickens. Read it and cringe:
The financial data provided to potential buyers or partners are not for the faint of heart. While certain performance metrics detailed in the initial information provided by the company offer some positive signs—the average revenue figure BusinessWeek netted per print-ad page increased slightly from 2006 thru 2007 and 2008, and is forecast to grow again in 2009—the ad revenue decline is severe. Print-ad revenue exceeded $109 million in 2006 but is projected to fall to $59.7 million in 2009, which represents a decline of more than 45% for BusinessWeek's largest revenue stream. Total revenues, including those from BusinessWeek's Web site and offshoot products such as its six-times-a-year magazine SmallBiz, will decline from $181.5 million in 2006 to a projected $135.6 million in 2009, according to the data.
Aw, man. That, if you'll pardon the expression, really blows. I wonder if maybe McGraw-Hill (MHP) somehow accidentally switched its financials with those of the most recent repository for my scribblings, Portfolio. May it rest in peace.
I don't know what I would do if I were Terry McGraw. Guess I'd hold my nose and sell BW to a private equity house, 80 year history be damned. I wouldn't be able to sleep at night, but at least I could hum something like "protecting shareholder value" as I wept bitter tears and, maybe, deep down, expressed regret that I hadn't hired different people to run the magazine during the last four years. Might not have worked, but I guess we'll never know.