Posted by: Jon Fine on September 15, 2009
As the midnight deadline for final bids for BusinessWeek neared on Tuesday, Sept 15, the question looming over the process was whether or not late entrant Bloomberg LP would bid.
Given Bloomberg’s late entry into the fray—-its interest kindled quickly last week, and a coterie of its company executives just met with BusinessWeek management on Monday—it’s expected that the company will get an extra couple of days to perform due diligence and decide upon its bid. (Slightly extended deadlines are not wholly unusual in sales of media properties.) A spokeswoman for Bloomberg declined to comment, and a McGraw-Hill spokesman did not respond to multiple messages on Tuesday evening.
A bid is expected from private equity player OpenGate Capital, the recent buyer of TV Guide, though a spokeswoman for the company declined to comment. Executives for ZelnickMedia declined to comment, though I see that private-equity player as a likely bidder as well. The ultimate intentions of Platinum Equity and Fast Company owner Joe Mansueto, both of whom have participated in the process thus far, were opaque, at least to me, as of 10 PM Tuesday evening. (Platinum is chasing a possible deal for the Boston Globe, according to the Globe itself; a Platinum spokesman said the company does not comment on potential acquisitions.)
Bloomberg is acting much like a company intending to place a bid, but then the same was true about Bruce Wasserstein a few days ago. As (horn toot alert) first reported here earlier today, New York magazine owner and Lazard Chairman Wasserstein decided not to bid for BusinessWeek after what multiple executives described as weeks of intensive study of the magazine's operations--which continued into early this week. He and his representatives arrived at the decision to forego a bid late last night. Warburg Pincus also elected not to bid, say executives familiar with the situation.
Wasserstein was described as being personally very interested in a deal for BusinessWeek, although, executives say, this ardor was not unanimously shared among his top management. He finally soured on a deal after concluding that the business challenges of turning around BusinessWeek would be too arduous. An executive familiar with the more detailed data available to those seriously considering final bids said that updated data regarding the magazine performance indicated it could lose upwards of $60 million in 2009.
Meanwhile, McGraw Hill Chairman-CEO Harold “Terry” McGraw III made some interesting remarks on the BusinessWeek situation to an investor conference today. According to an account published in the Wall Street Journal, he said “all options were open” regarding the fate of the magazine his family’s company has published for 80 years. He said the company “wanted to explore everything” with the magazine, including the possibility of a digital-only BusinessWeek.
(Such talk, of course, makes for a good negotiating stance with potential buyers unclear on how aggressively they should bid, as a few observers of the process pointed out.)
There remains, obviously, the possibility that another serious bidder not yet known to outsiders is lurking with an offer impossible to refuse. The identities of a few companies that expressed enough interest in a deal for BusinessWeek to have met with senior management and have access to detailed financial data remain unknown.