BusinessWeek’s subscription liabilities

By Felix Salmon
August 19, 2009
column today, in which he writes:

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We know that BusinessWeek is for sale. But is there a good chance the print magazine could die completely? That would seem to be the subtext of Keith Kelly’s column today, in which he writes:

OpenGate, at least on paper, might be considered a likely candidate as well. However, even with magazine veteran and acting CEO Jack Kliger on hand for the management presentation from McGraw-Hill, OpenGate might not be able to absorb the estimated $40 million in subscription liabilities that would come with the 900,000-circulation weekly.

What’s a subscription liability? It’s basically all the money which BusinessWeek has already been paid, in subscription revenues, for magazines it has yet to deliver. It’s a liability because if it can’t deliver the magazines, BusinessWeek would have to refund its subscribers their money, or somehow try to fob them off with an equivalent product.

One would assume that the winner of the BusinessWeek auction, which is currently being conducted between nine different potential acquirers, would intend to continue to publish the magazine weekly. If they do so, however, the subscriber base isn’t really a liability at all: it’s an asset, to be treasured. The only time you start worrying about things like “$40 million in subscription liabilities” is if you’re thinking about going web-only, or biweekly, or something like that. Which would be especially difficult given the name of the book.

So for all that numbers in the $35 million range have been bandied around as the purchase price for BusinessWeek, that might just be the headline number, which would then be offset by a “refund of subscription liabilities” or the like. We might yet end up with another $1 purchase price.

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