BusinessWeek Dilemma: Content Bests Brand

McGraw-Hill is making a big mistake. It's trying to sell BusinessWeek as a cohesive branded entity that should command a premium price based on posterity, when in fact its content is the real prize. But selectively packaging and selling the magazine's individual features and byline writers could collectively yield a bigger payday from Web aggregators -- such as AOL's MediaWorks -- seeking to bolster their ranks of paid contributors.

Such an approach could establish a template for transforming other legacy print-media publications into prosperous digital content factories. Fortune and Forbes are among other struggling business magazines in a similar death spiral.

There are reasons why this makes sense:

• Various online news sites grabbed some of the editorial in the aftermath of Conde Nast's decision to discontinue Portfolio. That fierce competition among segmented sites means you can never have too many differentiated writers.
• Content suitors could pressure McGraw-Hill to include data-sharing arrangements with its Standard & Poor's ratings agency and other data-gathering units that provide content to BW, opening up new sources of revenue.
• Prospective buyers such as Bloomberg, Dow Jones and Thomson Reuter do not want to compound their own physical expenses and legacy issues by acquiring all of BW. Online contributes only about a quarter of Business Week's estimated $125 million in revenues against mounting losses from secular advertising and subscription declines. The magazine is expected to more than double last year's $20 million in losses in 2009.
• Setting a justifiable valuation will be challenging even for Evercore Partners, the savvy boutique investment bank hired by McGraw-Hill to sell the magazine franchise. BW's advertising revenues declined by a third during the first half, according to Publishers Information Bureau. Dire economics and increasing debt will weigh down BW's price. Precedents are ominous: Macrovision sold TV Guide to OpenGate Capital last year for a mere $1 and debt assumption.

The notion of changing the name to Business Second -- however amusingly floated in Editor Stephen Baker's blog -- overestimates the power of the struggling brand. Two costly, extensive redesigns in as many years didn't increase advertising sales or readership. BW editors should have tried returning to the magazine's justly vaunted history of enterprise reporting instead of relying on quick-hit rehashes of day-old news.

In a digital age when words and data are boundless, survival these days depends on providing content that is relevant to the lives and interests of consumers, and ways to interactive with it that add value and insight. McGraw-Hill has failed to make those connections at BW.

Microsoft CEO Steve Ballmer provided an engaging sense of what that means in a recent speech at Cannes. Digital content and advertising of the future will be collaborating, integrated and interactive at the behest of consumers, he said: "People will pull what they want; they're not going to get things pushed on to them. Not content, not advertising."

BW's problems "are potentially fixable," contends Alan Webber, the co-founder of Fast Money. "The business community hasn't lost its appetite for smart, informed analysis and thoughtful opinion," he writes. A renewed BW could cherry pick the best old school business journalists and a new generation of academics and trend-spotters at the center of a continuous online conversation.

But McGraw-Hill would probably rather bail on meaningful business journalism than to invest in it at a time when the void in that niche deepens with each publishing breakdown that tosses skilled journalists to the wind. That kind of apathy's not even worth a dollar.