BusinessWeek was in danger of being closed before it was sold to Bloomberg

Stephen B. Shepard, the former editor in chief of BusinessWeek from 1984 to 2005, has a forthcoming autobiography called “Deadlines and Disruption: My Turbulent Path from Print to Digital.”

Shepard, who is now dean of the CUNY Graduate School of Journalism, spends a good part of the book discussing his time at BusinessWeek as well as the sale of the magazine by McGraw-Hill in 2009 to Bloomberg since he was called in by CEO Terry McGraw to discuss options.

Here is an excerpt:

I left BusinessWeek on March 31, 2005. I decided to keep my distance, allowing Steve Adler to take hold, and I made a policy of not commenting on any stories the magazine ran, any changes in strategy or any personnel shifts. He deserved his best shot without any comments from the peanut gallery. I did hear about people leaving, including several I admired, and about changes in approach. But that’s what always happens, I figured, when a new boss takes over. Unfortunately, the editorial direction and design shifted over the next two or three years, in ways I thought weakened the magazine. Though BusinessWeek still published many good stories, including investigative reporting, it was slow to cover major news, especially the tumultuous events developing on Wall Street. There were many fewer big stories about companies and the people who ran them. And Washington coverage was seriously cut. I began to hear a lot of complaints from staffers and outsiders.

The advertising climate soon weakened,and the shift to digital media began hurting many mainstream publications. Within two years, even before the financial crisis exploded, BusinessWeek lost money for the first time since the 1930s. By the time Lehman Brothers collapsed in September 2008, the magazine was hemorrhaging. Operating losses topped $44 million in 2008 as revenue nosedived, and BusinessWeek was on track to lose even more in 2009, perhaps as much as $60 million, according to insiders — an astonishing amount of red ink on revenue of less than $150 million. Other publications suffered too, but few quite as badly as BusinessWeek.

In the summer of 2009, Terry’s assistant called, asking me if I would please come see Terry. We met on July 7 in his large paneled office on the 49th floor of the McGraw-Hill Building. I had been in his office with him many times over the years, but now, in obvious distress, he seemed swallowed by it. A short, handsome man, very much a patrician, he tended to talk in a roundabout way that I had learned to decipher. This time, he was very direct. The situation was dire, he told me strictly in confidence. He was looking to sell BusinessWeek, and he had hired investment bank Evercore Partners to help find a suitable buyer. A public company like McGraw-Hill, he said, simply could not sustain such losses with little prospect of recovery. He asked my thoughts about potential buyers, and we discussed the usual suspects — from equity investors to big companies, such as Bloomberg. Mayor Michael Bloomberg, who had a vacation house next to Terry’s in Bermuda, had already told him he wasn’t interested in buying BusinessWeek, and Terry was determined, he said, not to sell to a private equity firm that would strip the magazine to nothing. He would rather close it, he told me, and he was prepared to do so.

Though not completely surprised, I was nonetheless stunned and deeply saddened. Terry looked deeply stricken. The scion of the McGraw-Hill family, great-grandson of the founder, he was now in the awful position of having to sell or fold the magazine that had been the crown jewel of the family for 80 years. All I could do was nod in profound sympathy, as if I were at a funeral.