BusinessWeek is on the block as McGraw-Hill trims the fat. Buyers could include private equity firms or Mansueto Ventures, which publishes Inc. and Fast Company. But one stat has gotten a lot of attention: The FT‘s assertion yesterday that like TV Guide, BusinessWeek might only sell for $1.
Why so little? How is that possible?
Because BusinessWeek is shrinking and losing money, and a new owner is going to have to do a lot more with it than just let the machines keep running.
A buyer is going to have to figure out how to scale back BusinessWeek‘s print operations, build out its Web operations, and likely deal with printing and union contracts, severance fees, and other wind-down expenses.
These expenses could add up to tens of millions of dollars over several years. So while the cash paid in the transaction — $1 — might seem small, the real cost of owning BusinessWeek would be much more. And that’s money that McGraw-Hill won’t have to spend anymore, which is why it won’t care about getting much cash from the deal.
Via the FT: Piper Jaffray analyst Peter Appert estimates that McGraw-Hill “would receive minimal proceeds from the sale, but would cut annualised losses of ‘at least $10m-$20m’ this year and remove ‘a continuing distraction’.”
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