Speculation About The Sale Of BusinessWeek

BusinessWeek - a global source of business insights - is feeling the brunt of the slump in advertising demand, its main source of revenue, amid the global recession.

Speculation is rife that McGraw-Hill Companies (MHP) intends to sell the 80-year old magazine as the company is trying out strategic options for BusinessWeek. There is a rumor that the company has hired investment bank Evercore Partners to manage the sale. But finding a buyer for the struggling asset appears difficult.

Like other print media, BusinessWeek’s advertising revenue has been plummeting year on year. The newspapers and magazines have been most impacted by the economic downturn. This comes in the midst of a longer-term secular decline as more readers choose to get their financial news online, thereby making the newspaper and magazine advertising model irrelevant and reducing print news readership.

According to the Publishers Information Bureau, BusinessWeek’s advertising pages in the global edition for 2008 plunged 16.1% in 2008 compared to 2007, whereas for the first quarter of 2009, advertising pages plummeted 39.8%. Advertising sales during the first six months of the year 2009 fell by 33%.

McGraw-Hill Companies is a diversified publisher and provider of financial information, and also a provider of media services to customers in over 40 countries. The company is a leading textbook publisher and owns one of the top credit rating agencies (Standard & Poor’s). The company’s other businesses are also facing the brunt of the recesssion.

We maintain a Hold rating on the stock with a six-month target price of $31.00.

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