ZelnickMedia Enters Chase For BusinessWeek

Posted by: Jon Fine on August 20, 2009

Final bids are due for The McGraw-Hill’s Cos. BusinessWeek during the week of Sept 15, persons familiar with the process say, and another potential bidder for the 80-year old magazine has surfaced.

ZelnickMedia, a private equity firm that’s long sought out distressed media assets for turnaround, was one of nine companies that have attended the management presentations offered to interested parties, say executives familiar with the matter. (Those interested parties can now perform deeper-dive due diligence on BusinessWeek’s detailed financial and operating information that McGraw-Hill is providing.) In a brief email exchange, Jim Friedlich, a partner at ZelnickMedia, declined to comment.

ZelnickMedia, founded and run by former President-CEO of the Bertelsmann-owned record label BMG Entertainment Strauss Zelnick, owns stakes in video game company Take Two software, infomercial company Cannella Response Television, and the Tokyo-based music company Columbia Music Entertainment, among others.

A McGraw-Hill spokesman would not make any comment beyond the two-sentence statement the company issued on July 13 confirming it was “exploring strategic options” for BusinessWeek.

In showing interest in BusinessWeek and taking part in management presentations, ZelnickMedia joins five other entities known to be involved in the process: private equity players Platinum Equity, OpenGate Capital, and Warburg Pincus, and businessmen-turned-moguls Bruce Wasserstein, owner of New York magazine and The Deal, and Joe Mansueto, the Morningstar founder who in 2005 bought Inc. and Fast Company for around $35 million.

It’s unclear as of yet who among the preceding (and those who have been involved but whose identities remain unknown) will play this out to the bitter end and make final bids—-especially in this moment in late August, when many in the media and finance worlds are sunning themselves in some beachy locale.

On a purely predictive and hypothetical level, though, Wasserstein appears to be the candidate likeliest and most able to bid aggressively—should he want to, and insiders report seeing signs of sustained interest in BusinessWeek among his executives--as well as play the deal game wiser than the rest. After doing decades worth of deals for several major Wall Street firms, Wasserstein famously outfoxed a complex consortium of moguls and would-be moguls to buy New York magazine in 2003, even as members of said consortium were taking victory laps around Manhattan celebrating their expected (but nonexistent) purchase.

Wasserstein is also the candidate among the known potential bidders most favored by the rank-and-file at BusinessWeek, of which I am one, so, you know, grain-of-salt/full-disclosure time. (Wasserstein's spokesman declined to comment on the situation.)

As for how much it will take for a buyer to bag BusinessWeek, that, too, remains unknown. But this, however, is: The way the process worked required a company had to offer a nonbinding preliminary bid in order to attend a management presentation and view more detailed financial data. Two persons familiar with the situation say that the cash portion of OpenGate Capital’s initial nonbinding bid—-which would not include the liabilities of funding future losses, or for magazine subscriptions already sold to readers but not yet delivered--was in the ballpark of the company's cash payment for TV Guide magazine, which it bought last year.

That is, around $1.

An OpenGate spokeswoman declined to comment.

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Reader Comments

Mr Merger

September 5, 2009 10:59 PM

Opengate would n doubt bleed the compant of any free cash, much like their role in TV Guide. See this law-suit from ex TV Guide CEO: http://www.courthousenews.com/2009/07/09/TVGuideDude.pdf

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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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