BusinessWeek’s Pitch to Investors: Buy Us, Then Fire Us
That’s part of the pitch that Evercore Partners has been making to investors on behalf of McGraw-Hill (MHP), which wants to dump BusinessWeek.
The New York Times’s Stephanie Clifford gott her hands on the offering memo Evercore has been circulating to potential bidders, who are supposed to submit offers by today. Reportedly in the mix: Bloomberg; ZelnickMedia; New York Magazine owner Bruce Wasserstein; OpenGate Capital, which bought TV Guide last year for $1 plus debt; and Platinum Equity, which is bidding for the New York Times’s (NYT) Boston Globe.
In a story published yesterday, Clifford reviewed the magazine’s financials, which are miserable. Ditto for the magazine’s Web site. Today she points out Evercore’s plan to entice buyers: A ready-made layoff plan that would lop off 20 percent of the magazine’s staff.
The Evercore memo says the layoffs are actually “in process,” an assertion that seems to surprise BusinessWeek’s staff, which has seen no sign of layoffs. So best to interpret these numbers as suggestions, not plans. That said, here are Evercore’s suggestions:
In editorial, 55 of 217 positions are supposed to be eliminated. Of sales, 9 of 69. Of marketing, 6 of 26. Of technology, 8 of 33. Of circulation, just one of 19. And in the “other” category, 6 of 57. That’s a total of 85 eliminations among 421 jobs – about 20 percent – leaving 336 BusinessWeek employees.
“BusinessWeek will establish a leaner, entrepreneurial staff without affecting the brand, positioning of the franchise or revenue outlook. The eliminations of editorial staff are primarily in editorial support operations (makeup and copy desk), but also include a reduction in the number of journalists to reflect the smaller folio size of the publication. The positions eliminated in sales are primarily for sales support, but also include some consolidation of integrated sales account managers. The remaining positions eliminated are in other business support functions.”
A logical question: If these cuts are so easy to make, why hasn’t McGraw-Hill made them? I know that this strategy isn’t uncommon in auctions: Many moons ago, Time Warner (TWX) held off making cuts at its music unit so that a new buyer could do it itself, and that’s exactly what Edgar Bronfman Jr. and crew did once they got their hands on Warner Music Group (WMG). But the practice still baffles me. Anyone?