Mansueto Enters The Picture As Wasserstein's Reps Meet With BusinessWeek

Posted by: Jon Fine on August 04, 2009

Morningstar founder Joe Mansueto has expressed interest in pursuing a deal for BusinessWeek, individuals familiar with the situation say, and representatives from his Mansueto Ventures are expected to meet with BusinessWeek management at some point in the next several days for a detailed presentation of the magazine and its finances.

In a brief email exchange, Mansueto said he had “no comment regarding the potential BusinessWeek sale.” In 2005 Mansueto bought Inc. and Fast Company from Gruner & Jahr for around $35 million in cash plus the assumption of certain liabilities.

After two years in which his magazines posted some positive indicators—especially Fast Company, which netted 20%-plus ad page gains in 2007 and 2008—both of Mansueto’s business titles backslid considerably in 2009. For the first six months of this year, Fast Company’s ad pages dropped 33.6% to 171.3, and Inc’s fell 29.0%, to 262.4.

Yesterday, representatives of Bruce Wasserstein met with BusinessWeek management to view more detailed data regarding the magazine’s finances.

A spokesman for Wasserstein, who through various companies owns New York Magazine, The Deal, and a large stake in business publisher Penton Media, declined to comment. A spokesman for the McGraw-Hill Companies, the owner of BusinessWeek, also declined to comment.

As previously reported, Mansueto would join Wasserstein and three private equity players—Platinum Equity, Warburg Pincus, and OpenGate Capital—in taking in such a presentation concerning the magazine, but attending these sessions does not guarantee a company will place a final bid. Two executives familiar with the buy-side of the process said that no firm deadline for final bids has yet been set.

Meanwhile, financial data regarding BusinessWeek’s stressed financial state continues to surface. In the first quarter of 2009— roughly the nadir of the ad downturn for magazines—total revenues for BusinessWeek and its ancillary products came to $27.8 million, down from $36.9 million in the first quarter of 2008, says the financial data initially provided to potential buyers.

If you include corporate overhead charges like rent, according to that data, BusinessWeek lost $16.6 million in the first quarter of 2009.

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Reader Comments

Don

August 4, 2009 02:42 PM

Could you foresee a merger of titles under Mansueto or are ad packages across titles more likely?

Jon Fine

August 4, 2009 03:46 PM

Don:
Obviously any response builds on hypotheticals atop of hypotheticals, the most relevant of them being that Mansueto hasn't even bid yet, much less bought BW, and it won't be up to me to decide what will happen in any event.

That said, I don't think outright merging/combining the actual product of a weekly magazine like BW with the actual product of a monthly like Inc or Fast Co makes sense. They're just completely different beasts. But you could do stuff with cross-selling print and Web ads, and save costs by combining certain functions and office space etc.
Jon

arthur

August 4, 2009 04:32 PM

BW could fare well under Mansueto. The magazine is much less relevant to the larger market than it was ten years ago and it probably would fare better as a smaller book aimed at middle management executives who are looking for guidance/gospel about how the corporate world works. That certainly seems to be the way BW has moved inthe last 18 months....Smart people don't need to read Maria Bartiromo's canned Q&As or Jack Welch's ghostwritten bragging, but less savvy - read less intelligent - aficionados will likely lap up BW's vanilla articles on how to think green or what to do with fuel alternatives i 2015. Best of luck!

Frank

August 5, 2009 06:02 AM

Is this another case of John Byrne's svengali like wooing of Mansueto? The sad fact is that BW should die. It is dull and uninteresting. Subscribers are unwilling to pay more than $20 for it, which doesn't even cover the cost of printing, paper and distribution. The weekly news format is no longer viable.

Frank

August 5, 2009 06:02 AM

Is this another case of John Byrne's svengali like wooing of Mansueto? The sad fact is that BW should die. It is dull and uninteresting. Subscribers are unwilling to pay more than $20 for it, which doesn't even cover the cost of printing, paper and distribution. The weekly news format is no longer viable.

Theo

August 5, 2009 10:56 AM

So, does this mean that Mansueto will also continue to poor money into Time Out Chicago? I have noticed that recent issues - when you can find them - are very thin. It appears the weekly has been hit hard by the recession and the ongoing changes in how the public interacts with print media. I seriously doubt that Time Out Chicago has ever made a profit nor will it in the immediate future. Will Mansueto continue to pump money into it?

Sam Whitmore

August 5, 2009 11:49 AM

It might be better for BW to be bought by someone whom it could learning something from. Mansueto is all too familiar to McGraw-Hill, especially to John Byrne, who long worked there. Might be better to be bought by someone with deep knowledge of overseas markets, where the growth is.

Rafael

August 5, 2009 03:36 PM

Frank - If BusinessWeek is so dull and uninteresting, why are you here again?

Sam - it seems like it would be useful to have a person who knows both companies/cultures and can help form a new one. They can always recruit someone with overseas experience if that's their new direction.

Why all this targeting of John Byrne? Why do all the commenters here seem to have personal agendas against BusinessWeek? I am more interested in hearing solutions for transforming old media than all this gravedancing.

Carla

August 6, 2009 09:47 AM

Mansueto knows so little about his own publications,(or publishing in general)-- witness the hemoragging of Inc. and Fast Company, and his absentee landlordship when it came to handling the CEO Koten situation. He has developed Mort's ego, but with half of his smarts.

Theo

August 6, 2009 03:47 PM

Mansueto is a successful businessman with a proven track record. The pitfall of getting involved with publishing these days is that it doesn't follow a fruitful business model and those holding positions that can cause positive change are few and far between. Some are even dinosaurs who cannot grasp the way readers digest information in the modern age. Case in point: Tony Elliott of Time Out. Listening to him in interviews and reading about him makes me cringe. The man still believes in sticking to the same practices he applied in the 70s and 80s. Mansueto has a hard road ahead if Elliot and President Alison Tocci continue to steer the Time Out Chicago ship (which they do, despite telling Chicagoans otherwise). As for INC and Fast Company, when Mansueto took those over, the titles couldn't sink any lower and therefore reaped increases shortly after the purchase. But these topsy-turvy times catch up with everyone. It's a good thing Mansueto has money to prop up these publications (for now). Bottom line: There are way too many magazine titles overall anyway. Maybe -- and in some cases, sadly -- it's time the market weeded out some of them.

Phil

August 11, 2009 02:01 PM

Personally, I wouldn't sell the magazine but figure out how to incorporate into the Web presentation of material closer and reduce costs to achieve profitability. It seems a strategic fit with S&P and can reduce print costs for the rest of the MHP empire. Currently there is a significant lack of reliance on S&P material that could make the print magazine a reference source to Investors(such as a Value Line) and that should add value to advertising by giving it more eyeball time to readers. And that material is available at essentially no cost. Bi-weekly printing or bi-monthly would also appear sufficient for print as most of its competitors are doing and frankly it is tough to keep up with weekly and I read fast and often. No magazine that I have seen combines their web material tightly, it is closer to parallel universes. When I mean tight I mean you have print and then more extensive detail on a given article available on the web, not the same article re-printed, summarized or re-hashed. Make the reader want to go to both places out of interest and necessity, web and print co-existing and co-mingling. It can be made to work and like health care, I don't think the answer is blow it up and start from scratch. Evolve and survive.

DigitalDon

August 11, 2009 06:16 PM

First question would be, if we are building hypotheticals upon hypotheticals, isn't the idea that BW would remain a Weekly publication a hypothetical?

For Rafael, everyone always talks about "overseas growth" but a magazine like BW faces multiple hurdles:
1. Is it going to be English or local language?

2. Is it going to be locally oriented content or repackaged U.S. content?

3. If English and/or U.S. content, is there a need/market overseas for a "U.S." business publication?

4. If it is local language/local content, is it competing with local entrenched competitors in the 'big business' markets and is there really a need for another business publication?

Marty

August 22, 2009 05:04 PM

I think we'll find out that Mansueto is involved just so he can get a look at the books of Business Week and enjoy the benefit of competitive information. In the unlikely event he's actually serious -- well, there's really no other explanation other than the tax write off. He has massive amounts of income from his mandatory annual sale of Morningstar stock -- he owned about 75% of the company when it went public and pledged to sell about 2% a year. He can pay the government taxes or take the write offs from money-losing business. If the business' gain in value by some stroke of luck, he can sell them and pocket the profits. If they just lose money, he's no worse off because of the government hand-out in tax breaks. Thus the only explanation his continued support for Fast Company magazine, which loses millions annually and the rest of the industry has long written off as hopeless.


I don't know enough about tax policy to suggest how this loophole be closed. But I know the outcome to the economy is perverse when a money-losing asset ends up in the hands of someone without strong incentive to turn it around as quickly as possible.

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The media, entertainment and marketing worlds continue to shapeshift on a near-daily basis, as new forms arise and old assumptions erode. Where is it all going? No one really knows. But on this blog BusinessWeek’s media writers Tom Lowry and Ron Grover promise to provide ample helpings of scoop, provocation, and sharp analysis as they track and annotate this constantly changing terrain.

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