Posted by: Tom Lowry on September 23, 2009
ZelnickMedia LLC, a New York-based investment firm, is teaming with the former publisher of The Wall Street Journal, L. Gordon Crovitz, to make a possible run for BusinessWeek, yet it appears no formal bid has been made, according to executives familiar with the situation.
Interest by the Zelnick-Crovitz team offers an intriguing twist to the months-long sale of the 80-year-old magazine, especially on the heels of Bloomberg LP submitting a bid for BusinessWeek less than a week ago. The financial data and media empire founded by New York City Mayor Michael Bloomberg was largely seen as the front runner for BusinessWeek.
Those in deal circles familiar with the modus operandi of Strauss Zelnick, a former music and movie executive and founder of ZelnickMedia, say it is not unusual for him to wait until the absolute last minute to submit a bid. “He likes to hang around the hoop for a long time,” says one investment banker. ZelnickMedia’s diverse investments have included a Japanese music company, Time Life, retailer Lillian Vernon and Take-Two Interactive Software, the publisher of the hit video game Grand Theft Auto. Zelnick, who co-founded the firm in 2001, declined to comment.
That Zelnick would reach out to Crovitz makes sense since it is known that the well-regarded news executive has been looking for a second act following his departure from Dow Jones & Co. (The Wall Street Journal’s parent) after its sale to News Corp. in 2007. Crovitz knows ZelnickMedia partner Jim Friedlich, a senior executive at Dow Jones for nearly a decade. And Crovitz is known to have a good relationship with investment banker Jonathan Knee of Evercore Partners, which BusinessWeek’s parent McGraw-Hill companies has hired to sell the magazine. Knee did not return calls seeking comment.
In addition to Bloomberg, private equity firm Open Gate, which owns TV Guide magazine, has submitted a bid, as previously reported by BusinessWeek’s Jon Fine.
More recently, Crovitz has been partnered with entrepreneur Steven Brill and former cable executive Leo Hindery Jr. in a firm called Journalism Online, LLC, which seeks to help news organizations generate revenues online. Crovitz also writes the “Information Age” column for The Wall Street Journal. He did not respond to phone calls seeking comment about his interest in BusinessWeek.
A BusinessWeek spokesman declined to comment about interest from ZelnickMedia and Crovitz. A McGraw-Hill spokesman declined comment as well, other than to repeat the statement the company had previously released stating that “BusinessWeek has generated a meaningful level of interest, which reflects its strong position and reputation among the business community, and we are pleased that the process, which will take some time to complete, continues to go well.”
It is still not clear when McGraw-Hill hopes to wrap up the sale of BusinessWeek. Complicating matters are negotiations over whether McGraw-Hill or a buyer would be responsible for a myriad of issues, including possible severance liabilities and ending or renewing existing leases and contracts with vendors, says an executive familiar with those negotiations.