The New York Times today has a sobering article that remedies a deficiency in coverage of BusinessWeek's recent troubles and pending sale. Rather than focusing on "suitors" and the broad numbers, Stephanie Clifford describes exactly how BW got in this mess. There's some disturbing stuff in this article.
I've long been impatient with the tendency to exonerate top management from responsibility for my alma mater's troubles, and to blame the whole thing on the economy. As the Times points out. BW's "share of the ad pages among competitors — Fortune, Forbes, Inc. and Fast Company — has fallen in the last six years."
The current management has systematically laid off the most experienced people at the magazine--
one-quarter of the staff was let go in the latest layoff, according to the Times (see update about error in Times story)--while redeploying the savings into online features that have been a disaster:
Hoping to find new revenue, BusinessWeek started a social-networking site, Business Exchange, and sank $16 million into it in 2007 and 2008. Almost two years after its introduction, the site drew just 1.5 million page views in the United States in July, according to the measurement firm comScore. That is about the same as Wikinvest.com, a start-up offering investment tips.
Last year, Business Exchange had expenses of $7.6 million, and brought in only about $600,000 in revenue. The company expects that gap to narrow significantly. Still, the project is expected to cost $4.7 million this year, excluding interest and taxes.
I think one can assume that if this strategy has succeeded, there would have been no effort to shirk responsibility for its success. What's that old saying about failure being an orphan?
At the same time the magazine decided to trade good editors and writers for columnists and online fluff, advertisers were unpersuaded. A BW editor laid out the underlying editorial thinking here a few weeks ago, and the Times has the bottom line::
Though BusinessWeek.com attracts a lot of page views, 45 percent of those are from slide shows, which Web publishers consider a gimmicky way to increase hits. Only 16 percent of page views came from original articles for the six months ended in April. BusinessWeek.com also 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 the document.
Overall, the Times reports, the magazine has adopted a kind of modified B2B strategy.
“Our mission is to move business forward,” read the mission statement, handed out at the meeting, and to help readers “make smarter decisions in their businesses, careers and investments.”
Some editorial employees liked the change. “We’re trying to serve business readers at a time when business is in disarray,” said one employee, who spoke on the condition of anonymity because employees are not authorized to speak publicly about the sale. “I think we’ve done remarkably well doing that.”
But other employees saw a different subtext: their role now was to help business leaders make more money. Though the investigative unit has continued its work, other staff members say their harder-hitting stories have been killed, held or edited into submission.
I heard an inkling of the latter some years ago, immediately after the change in management. It definitely is a change from the past. BW was never Mother Jones by any means (a story on Enron was spiked, for instanced, as I described in Wall Street Versus America). Some editors positively hated investigative reporting, while others treated it as a necessary evil. Very few, fortunately including my immediate bosses in the 1990s, actively encouraged it. But one never could have made such a sweeping "killed, held or edited into submission" statement in the past.
CJR says, "That's what we call burning the village to save it."
Clearly a new owner, if there is one, has his work cut out for him.
BW's Jon Fine points out an error in the Times account about the timing of the last layoff. He has no comment on the rest of the article.
The last big layoff--the one where all the experienced people were canned--was in December '07, not in January '09 as Clifford seemed to imply. Fine is correct that "there was no layoff of this size in 2008 or 2009," but I think that the December '07 layoff was close enough to that time frame, and certainly traumatic enough, to have been mentioned.
Meanwhile, take a look at this angry but on-target comment in the Talking Biz News blog. The blog notes another error in the Times account: BW was born in 1929, not 1926.
UPDATE: Clifford says on Twitter that the layoff is planned, but may not go into effect if a buyer doesn't want it to. I hope she uses something more than Twitter to fix this rather serious error. Such as a correction, online for starters.
More errors and inconsistencies were pointed out in the CJR Audit blog item. I'd say Clifford has a passel of correctin' to do.
At 24/7 Wall Street, Doug McIntyre weighs in on the spinelessness of McGraw-Hill and makes some important points:
No matter how the auction for BusinessWeek turns out, the question will always linger about why McGraw-Hill did not have the guts to take the chance that a buyer was willing to take. A lot of smart money still believes that Business Week is viable.
Finally, there is one more reason for keeping BusinessWeek and it may be the most compelling one. McGraw-Hill has faced charges about whether its financial ratings arm, S&P, played a role in the mortgage meltdown. The market has questioned S&P’s independence. BusinessWeek may be only 2% of McGraw-Hill’s revenue, but it is critical to the company’s reputation as an ethical distributor of business information. That has to be worth a great deal.
It's an obvious point, but I haven't seen it raised anywhere.
Michael Moore says that newspapers have "slit their own throats" by pursuing profits at the expense of newsgathering. That's true. But imagine pursuing profits at the expense of newsgathering and going out feet-first anyway? That appears to be BW's fate, unless Bloomberg or some other buyer materializes.