Why Bloomberg wanted Business Week magazine

Publishing may be undergoing traumatic upheaval but Mike Bloomberg, mayor of New York, cares not a bit - he's buying Business Week, the publication that's been telling the story of US enterprise and capitalism since the Great Depression.

With nearly $6.5bn in revenue, the financial data giant that bears the mayor’s name can probably afford to purchase any media property it chooses - Bloomberg is rumoured to be interested in the New York Times - yet buying an ink-and-paper magazine at time when most publishers can't jettison them fast enough could be seen as perverse.

But Bloomberg is on a mission. The firm wants to become a more consumer-focused media company. Just as Reuters merged with Thomson publishing, and News Corp purchased the Wall Street Journal, Bloomberg is arming itself in the battle for financial news dominance.

Yet Bloomberg already has TV, radio, a website and – most important - a revenue model that's the envy of the publishing and financial data world: 280,000 Bloomberg terminal subscribers paying upwards of $1,500 a month. So what could it want with a magazine?

The answer’s simple: Bloomberg doesn't have a print presence. Business Week, which cost between $3m and $5m, allows the firm to go up against the Economist, the indisputable king of the business world, relatively inexpensively.

Furthermore, Bloomberg subscribers are almost all people in finance - it has almost no reach into the business community at large - and Business Week, with a circulation of a million, should help extend the brand.

"If businessmen see and believe your product then they're more likely to be forthcoming when you come to them sourcing news," explains an analyst familiar with the company's thinking. "They're going to take you more seriously."

Business Week has seen its revenue drop from $110m to $45m, forcing McGraw-Hill to put it up for sale. Since Bloomberg already generates huge amounts of content it can put into the magazine, the company believes it can run Business Week for no more than $20 million a year - a steal for firm that is believed to throw off cash.

But what does that mean for Business Week's 400 staff and journalists? Deep cuts and job losses, apparently. And what about Business Week’s website? No one’s sure.

Could Bloomberg become the white knight to other struggling media institutions? Possibly. The battle for business dominance suggests the company is willing to move into almost any area it perceives can offer product that adds value for its most coveted possession and the one every other media company envies most – the terminal subscribers.