The McGraw-Hill Companies' ( (MHP)
) exploration of its strategic options for BusinessWeek
has drawn several potential bidders, executives familiar with the matter say. Representatives of these companies will get a look at more detailed financial information during management presentations made by the magazine's senior leadership, which will begin late next week or early August.
One company participating in that process is OpenGate Capital, the Los Angeles private equity firm that in October 2008 purchased TV Guide
magazine (without its Web operations) for $1 plus the assumption of substantial liabilities. Another interested party, though it is not yet fully certain he will place a bid, is the veteran financier Bruce Wasserstein. Wasserstein is the chairman and CEO of Lazard Frères and also chairman of investment firm Wasserstein & Co., which holds a substantial stake in business publisher Penton Media and owns The Deal
magazine. In 2003, Wasserstein bought New York
There are at least a few more companies expected to attend the BusinessWeek
management presentations as well, though their identities could not be immediately determined. A spokeswoman for OpenGate said executives from the company are on vacation and can't be reached, and a spokesman for Wasserstein declined to comment. Attendance at these management presentations does not guarantee that a participating company will make a final bid, but before a company can take part in such meetings it generally must make some kind of preliminary, nonbinding offer for the property being shopped.
Rent and infrastructure costs weigh heavily
Financial data—invariably termed "black books," though they don't always appear in such a form—for BusinessWeek
went out to interested parties around six weeks ago, said executives from outside companies who saw the information. These executives, all of whom insisted on anonymity because they signed confidentiality agreements, say the data state that BusinessWeek
lost around $20 million on revenues of $147 million in 2008, and that slightly smaller losses are projected in 2009 on revenue of around $135 million. These losses do not, however, include key corporate overhead items, such as rent and certain infrastructure-related costs. When all those items are factored in, the total loss figure essentially doubles, said two executives who saw the data. (Costs for rent or other overhead can be taken out of an operation should a buyer or partner have, say, spare office space and a sizable enough infrastructure.)
McGraw-Hill confirmed on July 13 that it is "exploring strategic options" for BusinessWeek
, an admission that came in the wake of a Bloomberg News report from that morning saying BusinessWeek
was for sale. A McGraw-Hill spokesman referred inquiries back to the two-sentence statement the company issued on July 13. Top McGraw-Hill executives were in a quiet period in advance of the company's second-quarter earnings call with investors, which is scheduled for July 28. A BusinessWeek
spokesman directed all questions to the McGraw-Hill spokesman.
One executive with first-hand knowledge of the situation said McGraw-Hill had made quiet moves to find a purchaser or partner for BusinessWeek
as far back as 2008.
Time Inc., a unit of Time Warner ( (TWX)
) that publishes Fortune
and is the largest U.S. magazine publisher, is not pursuing a deal for BusinessWeek
. Among the companies that have passed after some contact (even cursory) with McGraw-Hill or Evercore Partners, the investment bank handling the deal, are: Thomson Reuters ( (TRI)
); Bloomberg; and Investcorp, a London private equity fund that through its Source Media unit owns New York-based trade title American Banker
Spokespersons for all of those companies declined to comment.