updated 10/13/2009 8:56:41 PM ET 2009-10-14T00:56:41

Bloomberg LP is buying BusinessWeek magazine in a deal that brings together a financial news service specializing in rapid-fire updates with a print publication struggling to adapt to the Internet's information whirlwind.

Terms of the sale announced Tuesday were not disclosed. Citing unnamed people privy to the negotiations, BusinessWeek pegged the acquisition price at $2 million to $5 million in cash.

Bloomberg also would be responsible for paying other costs, such as severance pay to any of the roughly 400 BusinessWeek employees who might be laid off, the magazine's Web site reported.

Bloomberg LP, a privately held company started by New York Mayor Michael Bloomberg, expects to take control of BusinessWeek by the end of the year. That ends BusinessWeek's 80-year run as part of McGraw-Hill Cos., which also owns the Standard & Poor's credit rating agency.

New York-based McGraw-Hill put BusinessWeek on the auction block in July, apparently fed up with the losses that have been mounting at the magazine as its advertising revenue plunged.

The acquisition represents one of Bloomberg's boldest and possibly riskiest attempts to extend its audience beyond its main mode of communication — the roughly 300,000 electronic terminals that it has set up in the offices of money managers, traders, bankers and other financial services professionals around the world.

"BusinessWeek helps better serve our customers by reaching into the corporate suite and corridors of power in government, where news that affects markets and business is made by CEOs, CFOs, deal lawyers, bankers and government officials who typically are not terminal customers," said Daniel L. Doctoroff, Bloomberg's president.

Like many print publications, BusinessWeek has been reeling from a one-two punch: the longest U.S. recession since World War II and a massive shift in media consumption that has driven more advertising online, where the prices are generally much lower than in print.

BusinessWeek also has been trying to figure out how a weekly magazine can remain relevant at a time when financial and corporate news is plastered all over the Web around the clock. As part of its coping mechanism, BusinessWeek has sharpened its focus on its corporate audience and trimmed its coverage of general-interest topics, such as sports and culture.

Bloomberg didn't immediately discuss how it might reshape the magazine's coverage or how its takeover will affect the publication's staff.

It appears those decisions will be left to Norman Pearlstine, a former managing editor for The Wall Street Journal and Time Inc.'s former editor-in-chief. Currently Bloomberg's chief content officer, Pearlstine will become BusinessWeek's chairman.

"It's kind of an old fashioned idea but I still very much believe that a rich and smart weekly can find an audience in this space," Pearlstine said in an interview.

Although Bloomberg spent weeks poring over BusinessWeek's books and operations, Pearlstine said he still hasn't had time to talk to the magazine's editors to get a better idea on what to do next.

"The first thing I want to do is sit down with them and try to learn from them," he said. Pearlstine described BusinessWeek's current top editor, Stephen Adler, as an old friend. The two men worked together for several years while they were both still at The Wall Street Journal.

With a circulation of about 921,000, BusinessWeek has been doing a better job retaining subscribers than advertisers. The total number of advertising pages sold by the magazine has plummeted from a peak of 6,000 in 2000 to fewer than 1,900 last year, according to the Publishers Information Bureau.

The ad decline has deepened this year with the volume falling another 37 percent through June. The deterioration is expected to saddle the magazine with about $40 million in losses for the second consecutive year, including office rent and other overhead, according to internal figures cited by BusinessWeek.

Despite BusinessWeek's woes, the magazine attracted interest from several private equity firms and other media investors, including Bruce Wasserton, the owner of New York magazine, and Joe Mansueto, the owner of two business publications, Fast Company and Inc. The other bidders were reported by BusinessWeek.

Other struggling magazines haven't even had a chance to turn around under new owners. Just last week, Conde Nast Publications decided to close 68-year-old Gourmet magazine, devastating food connoisseurs. Earlier in the year, Conde Nast pulled the plug on a BusinessWeek rival, Portfolio magazine.

Besides distributing stories generated from Bloomberg's staff of 2,200 reporters, editors and photographers, the terminals also display a wide range of market and economic data that help shape investment decisions. The service is the main reason Michael Bloomberg ranks among America's richest people, with an estimated fortune of $17.5 billion, according to Forbes magazine estimates.

This is the second deal announced this month that gives Bloomberg a new springboard to reach a wider audience. It is also joining forces with The Washington Post in a partnership that will put Bloomberg stories in the Post's print edition and Web site and include a jointly operated news service targeting other newspapers.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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