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For Sale or in Flux, a Big Year Looms for Business Magazines

Forbes Seeks Buyers, Fortune Builds a New Website and Competitors Keep Coming

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With Forbes for sale, Fortune's website divorcing from CNNMoney.com and Bloomberg Businessweek getting assessed as part of a companywide strategic review at Bloomberg, the year ahead could see a dramatic shift for top business magazines.

Bloomberg Businessweek is part of a broader assessment taking place at Bloomberg.
Bloomberg Businessweek is part of a broader assessment taking place at Bloomberg.

The category offers a glimpse into the publishing world at large, where 2014 will see traditional media companies continue to do battle with digital upstarts and new players emerge. Already this year, the former editors of AllThingsD introduced their new website Re/code with backing from NBC Universal, adding another prominent combatant to the field.

The good news for business magazines, according to media buyers and marketers, is that they offer a strong editorial product at a time when advertisers are eager to appear in, around or near high-quality content. The magazines themselves also point to their broadening portfolio of conferences, foreign licensees and other new revenue streams. Forbes, for example, is building a Forbes-branded office tower in the Philippines and putting its name on the business school at Ashford University in Iowa. Fortune events such as The Most Powerful Women Summit and the Global Forum are generating growing profits in their own right.

But the future for these titles arguably depends most on their digital platforms, where competition is fierce and ad rates are under pressure. Business magazines once upon a time reaped print ad pages simply for "showing up," as one media executive put it, but core advertisers are now buying inventory across a range of websites, from AOL's Daily Finance to Business Insider, sparking a street fight over advertising dollars.

"Various media brands have different legacy mediums that they were founded in -- TV, magazine, newspaper, professional services, web, etc. -- and we are all meeting in the digital space," said Jed Hartman, group publisher of news and business at Time Inc., owner of Fortune and Money.

That means magazines -- with print encoded in their DNA -- must determine what value they offer to readers and advertisers in the digital space, according to Ken Doctor, a media analyst with Outsell.

"Print ad pages are very problematic in that whole industry and so the new product set isn't Forbes and Businessweek by themselves, but a combination of other business brands," said Mr. Doctor. "They have new competitors in the digital world that they weren't competing with in the magazine world."

Marketers looking to buy the Fortune or Businessweek audience, he continued, can seek it out across a range of business-oriented websites through sophisticated ad targeting. "If they want to play in this environment," he said of the business magazines, "they need to change their value proposition."

And that could mean going big to meet advertisers' demand for big reach. The large web portals already have it, and so does Forbes, whose website attracted 16 million unique visitors in the U.S. in November, a 21% boost from the year prior, according to ComScore. But Forbes has also grown its traffic using tactics that Fortune and Businessweek have largely avoided, throwing open its website to a vast network of paid and unpaid bloggers. (Forbes Chief Product Officer Lewis D'Vorkin said Forbes.com has "some of the best minds in business posting content on its contributor network, as well as 150 respected freelance journalists, though leaders and influencers.") It's also eagerly pushed so-called native ads, paid posts that are meant to resemble the surrounding editorial content.

Those native ads have fueled a growth in digital ad revenue, which now comprises 55% of Forbes' ad revenue. In November, the company said that it had begun working with Deutsche Bank to explore a possible sale, a move born from the many unsolicited offers it had received, according to CEO Mike Perlis. But Forbes is also likely under some pressure to provide Elevation Partners -- the company that bought a reported 45% stake in the company in 2006 -- with some liquidity, media executives and investment bankers have said.

A new capitalist's tool?
The magazine's asking price is said to be $400 million, though one investment banker has pegged its value at closer to $200 million. The ideal buyer, this person said, is a strategic investor, such as another media company. Others have pointed to vanity buyers -- moguls who might enjoy the cachet of owning a magazine that calls itself a "Capitalist Tool."

A Forbes spokeswoman declined to comment on a potential sale.

One media company that could possibly benefit from buying Forbes is Time Inc. Its Fortune and Money brands are slated to unmoor themselves from CNNMoney on May 31 as part of the company's separation this year from Time Warner, which will cost it CNN as a corporate sibling. To make up for the lost fire hose of traffic from CNN, Time Inc. is "aggressively" seeking partnerships with larger web portals, Mr. Hartman said, declining to identify them, and adding editorial staff to produce a greater flow of articles.

Time Inc. could separately boost traffic by acquiring Forbes and somehow integrating the business magazines' websites. Time Inc. has at least looked closely at Forbes, according to people familiar with both Forbes and Time Inc. What would become of Forbes' print edition in the event of a purchase is unclear, but Time Inc. could fold it and start sending its subscribers copies of Fortune instead. Both Forbes and Fortune saw print ad-page declines of 10.3% and 3.3%, respectively, in 2013, according to the Media Industry Newsletter.

Forbes' native ad strategy would be also be in play if Time Inc. took over, perhaps spreading more quickly to other Time Inc. titles -- or getting hemmed in if Time Inc. determines it doesn't meet the company's editorial standards. (The American Society of Magazine Editors recently updated its guidelines to advise several practices, such as different fonts for ads and editorial, with which Forbes does not comply.)

Businessweek, for its part, has seen ad pages decline 12.2% in 2013, according to Media Industry Newsletter, but has also enjoyed something of a new life in recent years. Bloomberg bought the magazine from McGraw-Hill in 2009, when the title was reportedly losing as much as $60 million a year. Under the leadership of new editor Josh Tyrangiel, who helped steer a bold redesign, the magazine saw an uptick in paid and verified subscriptions to nearly 1 million from about 923,000 in 2009. But Businessweek continues to lose money, although a spokeswoman for Businessweek said it has cut that $60 million annual loss in half.

The magazine is now part of a 100-day strategic review by Justin Smith, who became CEO of Bloomberg Media in September. He joined from The Atlantic, where he is credited with helping infuse a magazine more than 150 years old with a digital-first mentality. He is now trying to apply a similar eye to Businessweek and other parts of the company.

Mr. Smith is expected to wrap up his review in the next four to six weeks.

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