(Fortune) -- BusinessWeek relaunches this week with a new name, a new design, and a new editorial vision, just four months after it was bought by financial information giant Bloomberg LP. Viewed through the lens of an acquisition, it's therefore perplexing that Bloomberg executives have declined to talk about when and how this new version of the 80-year old weekly will make money. Instead they tell Fortune their plan is to focus on their consumers and deliver a great product. Those notions seem impossibly idealistic in a world where print advertising revenues are likely to be permanently impaired by cheaper online ad rates, and where nearly every major magazine publisher has recently shuttered unprofitable titles, a fate BusinessWeek, under previous owner McGraw-Hill, very nearly met.
The fluid criteria for success arises from Bloomberg Businessweek's new corporate owner and its billionaire founder, who still harbors grand ambitions. Mayor Michael Bloomberg, who started the eponymous company in 1983 and still own two thirds of its stock, has told people that he wants to make the magazine into the American version of the Economist. In doing so, the company would also introduce the Bloomberg brand to millions of people who have never heard of its terminals and don't knowingly read its wire copy.
Bloomberg Businesweek is new, so it's impossible to declare whether or not it will rival the Economist, a profitable newsweekly with a significant subscriber base and devoted, elite following. But as a marketing tool the magazine will have an immediate impact on Bloomberg as a company and institution.
"The acquisition of BusinessWeek gives Bloomberg a promotional and advertising platform, as well as a branding tool," says Peter Appert, a media analyst at Piper Jaffray. "Bloomberg isn't a household name. By putting the word Bloomberg on the cover what you have really is a marketing investment, and that is effective immediately."
The magazine's 4.5 million readers were a big draw for Bloomberg. That's 4.5 million more impressions of Bloomberg as a brand name provider of business content. Its own Bloomberg Markets print title is distributed to only its roughly 300,000 terminal users. And while 80 million people may read Bloomberg wire copy, most read it syndicated in newspapers worldwide.
Most surprising in the world of print media, Bloomberg executives may be launching the first magazine whose success isn't measured in dollars and cents. While it paid a measly $5 million for the magazine (less than 1% of its 2008 revenues) it also took on its losses and liabilities. BusinessWeek, as a unit of McGraw-Hill, reportedly lost $40 million in 2008 and the Wall Street Journal estimates that losses ran closer to $60 million in 2009.
Analysts believe that the magazine may still be losing hundreds of thousands of dollars a week, simply because it takes so long to rationalize costs and attract advertisers. "The advantage of being private is that you don't have to talk about the financial side like other publishers have to," says Paul Bascobert, who came on as president of Bloomberg Businessweek from Dow Jones this January. "You can build a consumer product first and foremost." He adds that Bloomberg has made dramatic improvements in terms of financial performance. He wouldn't give a timeline, but he said that Bloomberg does intend to make the magazine a profitable business.
So just how much money can Bloomberg Businessweek lose before the company and its largest shareholder-the mayor of New York City-tire of losses? The answer is likely, a lot. Unlike most magazines that depend on the cyclical nature of advertising and subscription incomes for survival, Bloomberg Businessweek's parent depends on terminal sales, which provide ever more valuable financial data-and speed-for its revenue.
Since Fortune wrote a 2007 story about the success of Bloomberg and its terminals, the company has continued to grow. It made $6.1 billion in revenue in 2008, up 13% in a year, according to Crain's New York Business. Analysts estimate that about 90% of that was generated by sales of Bloomberg terminals to a legion of devoted financial professionals. Revenue is projected to top $6.3 billion in 2009, according to Crain's.The number is growing, but not at the double-digit pace Bloomberg has seen in recent years.
Bloomberg can spend while most publishers are forced to cut back on pages and employees. It has improved its paper quality, increased editorial pages by 20% and doubled the number of stories. It has access to Bloomberg's 1,700 reporters in 145 bureaus around the world.
All that money is meaningless without an editorial vision. At the time of its acquisition, BusinessWeek was the real estate equivalent of a tear down. From employees to editorial process, everything was razed, in order to be rebuilt in the image of its new owner. That wide open space could give rise to competing ideas, and both the serendipity and disorder that can arise therein.
"Mayor Mike" might want the American Economist -- and there are certainly echoes of it in the reconstituted magazine, according to Bloomberg employees familiar with it --but there are a lot of big personalities tasked with turning the pages into a must-read product. Norman Pearlstine, the former Editor-in-Chief of Time Inc., who is Bloomberg's Chief Content Officer, is usually most identified with defining the new Businessweek. Pearlstine was also a respected managing and executive editor of the Wall Street Journal who later advised the private equity firm the Carlyle Group on the media industry before joining Bloomberg.
At Bloomberg since 1989 is Editor-in-Chief of the news organization Matthew Winkler, who helped build Bloomberg's wire services into a money machine by enforcing a strict, literal, style called the Bloomberg Way. It's Winkler's army of journalists that the Bloomberg Businessweek's editor, Josh Tyrangiel, has cited as being at his call to produce feature style material for the magazine.
Tyrangiel is a former Time editor who made Time.com among the most successful magazine websites before being picked to lead the new venture. His deputy is Hugo Lindgren, the editor at New York magazine most identified with its business coverage, which was known for a distinctly hip style that is more Fear and Loathing than "just the facts."
Though the magazine is four months old as a Bloomberg property, and is only just relaunching under the vision of these four men, clashes over style between some of these top editors are already becoming lore. In interviews, Pearlstine and Tyrangiel dismiss much of this as ordinary M&A growing pains. But such apocrypha makes this curious project all the more interesting. If the magazine is to succeed, it seems it will almost have to violate the strictness of the Bloomberg Way, which is practically written into the corporate charter.
Whether or not the Bloomberg brain trust succeeds in breathing life back into the old McGraw-Hill BusinessWeek, their challenge is to take the Bloomberg reach and brand to new heights at a time when terminal sales are slowing. Short of that, the magazine could become a distraction and bone of contention at the famously disciplined organization. The eventual outcome will certainly be a business story worth watching.
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