Saturday, August 22, 2009

Wasserstein: Will He Be Good for BusinessWeek?

If I were a betting man (and mind you, I suck at betting), my guess would be that Bruce Wasserstein will buy BusinessWeek. That seems to be the conventional wisdom (see here and here), and I agree.

BW's Jon Fine even says, in an casual reference in his latest blog post, that Wasserstein is "the candidate among the known potential bidders most favored by the rank-and-file at BusinessWeek."

I can understand why Wasserstein is the front-runner. That's glaringly obvious, because he's building up something of a mini-empire, including New York magazine and The Deal (and formerly the American Lawyer). When he bought New York he said he wanted to build up its business coverage. Which he did.

But I'm surprised the staff favors Wasserstein, assuming that is true (which I tend to doubt). I recall that once he addressed the staff at a Pennsylvania retreat, but that was many years ago and few survivors of that event are still at the magazine.

I'm surprised for two reasons. The first is that one of the active bidders is Joe Mansueto. He has an association with BW dating back to the 1980s, and he's done a bangup job as owner of Fast Company. The second--and I'm surprised how little this is mentioned in the coverage--is that Wasserstein's purchase of BW would pose fairly glaring conflict-of-interest issues. Hello? The head of not one but two major firms (Wasserstein's private equity shop and Lazard) buying one of the three big business magazines?

Now, I suppose that one could argue that conflict of interest concerns don't always add up to much in the media business. Remember all the furor about Rupert Murdoch owning the Wall Street Journal? Big outcry, "safeguards" adopted. Hah! It now has Rupe's thumbprint and nobody gives a damn.

Back in '92, Worth magazine was started by Fidelity mutual funds. Initially there was a flurry of concern, but it faded away, and Worth was accepted as an established personal finance magazine. But then the magazine had to be sold off because of a conflict of interest with Fidelity's growing financial services unit.

Wasserstein's purchase of New York resulted in an initial bout of concern, such as this piece in the New York Observer, but that faded away too. Hell, a respected business news site-- run by a guy banned from the securities industry, and ditto ditto, and rumors are drifting around that a widely read finance blog is run by an insider trader. Maybe people just don't care about conflicts of interest and stuff like that anymore. Maybe one could argue that McGraw-Hill has a big conflict of interest because it owns Standard & Poor's.

What I do know is that so far there's been zero concern about the obvious conflicts that might arise, certainly regarding Wall Street coverage, from a major investment banker buying one of the Big Three business magazines. I guess that's about the best indication you can find of the really rotten state the magazine business is in.

One thing I can tell you is that if Brucie had bought Portfolio I'd have been the first one to acclaim it, conflicts of interest notwithstanding.

© 2009 Gary Weiss. All rights reserved.

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