* Bloomberg to pay $2 mln to $5 mln, BusinessWeek reports
* Norman Pearlstine to become BusinessWeek chairman
* Bloomberg and BusinessWeek magazines to be kept separate
* Journalist interaction to be "all pervasive" -Pearlstine
(Adds comments from interview with Bloomberg executives)
By Robert MacMillan
NEW YORK, Oct 13 Bloomberg LP will buy
BusinessWeek magazine from McGraw-Hill Companies MHP.N as the
news and data provider seeks to reach a wider audience than its
traditional clients in financial services.
The announcement on Tuesday comes after several rounds of
bids by various private equity firms and publishers. Bloomberg
was long seen as the most likely winner of the auction.
The company, controlled by New York City Mayor Michael
Bloomberg, provided few details on how much it will pay and how
many BusinessWeek staff might lose their jobs.
Bloomberg offered $2 million to $5 million, and agreed to
assume BusinessWeek's liabilities, including potential
severance payments, according to the magazine's website.
"The fact is, it has been losing a meaningful amount of
money and that is reflected in the purchase price," Bloomberg
President Daniel Doctoroff told Reuters in an interview,
declining to confirm or deny the price.
Bloomberg Chief Content Officer Norman Pearlstine, who will
become BusinessWeek's chairman, added, "We're also looking at
it as something we're going to be investing in going forward as
we build the magazine and get it where it ought to be."
Bloomberg's primary audience is the 300,000 subscribers to
its Bloomberg computer terminals. But it also owns a cable
television network that competes with CNBC, a New York radio
station and the Bloomberg Markets magazine.
"BusinessWeek helps better serve our customers by reaching
into the corporate suite and corridors of power in government,
where news that affects markets and business is made by CEOs,
CFOs, deal lawyers, bankers and government officials who
typically are not terminal customers," Doctoroff said.
Bloomberg would keep the magazines separate after the
purchase. BusinessWeek journalists also would work as separate
groups, but with much "cross-pollenization," said Pearlstine,
former editor-in-chief of Time Warner's (TWX.N) Time Inc and
former executive at buyout firm Carlyle Group [CYL.UL].
"The interaction with Bloomberg News is going to be all
pervasive," he said. "We will have editors from Bloomberg News
and BusinessWeek working together."
Pearlstine declined to say when Bloomberg would want
BusinessWeek to turn profitable, but said that the process
would be gradual. The magazine could lose as much as $40
million this year, BusinessWeek reported on its website.
"We don't believe that it has to happen immediately or even
quickly," he said.
The deal is expected to close before the end of the year.
The BusinessWeek magazine may be retitled Bloomberg
BusinessWeek, Doctoroff said.
Doctoroff declined to comment on job cuts, but said, "We
bought the magazine to build it, not to gut it .... Our hope is
to retain as many of them as it is financially prudent to."
McGraw-Hill put the 80-year-old, money-losing BusinessWeek
up for sale in July. The magazine's ad revenue, like that of
other publications, has fallen as more people get free news
online and competition has grown from companies like Bloomberg
and its rival, Thomson Reuters Corp (TRI.N) (TRI.TO).
The recession has accelerated BusinessWeek's ad declines.
Other bidders included an investment firm run by Strauss
Zelnick, chairman of videogame publisher Take Two Interactive
Software (TTWO.O), private equity firm OpenGate Capital and
Boston Properties (BXP.N) co-founder and New York Daily News
owner Mort Zuckerman.
(Reporting by Robert MacMillan; Additional reporting by Yinka
Adegoke; Editing by Phil Berlowitz, Carol Bishopric and Richard