BusinessWeek sinks $16m on social media project

NEW YORK - As the bid deadline for ailing BusinessWeek magazine approaches the McGraw-Hill title is revealed to have spent $16m on creating its social networking site, which is generating little cash.

BusinessWeek launched its social networking venture Business Exchange in 2007. By 2008 it had spent $16m on the site, which is estimated by the New York Time to have generated just $600,000 in revenues.

The social networking site, which users can link to their LinkedIn account, allows users to blog, post news and comments, and debate issues in a variety of forums.

In 2008 alone BusinessWeek is said to have racked up $7.6m in expenses with another $4.7m expected this year for which it is drawing only around 1.5m page views a month in the US according to ComScore.

Bids for BusinessWeek are due this week after McGraw-Hill put the magazine on the block in July.

A number of potential investors are thought to be interested in buying or investing in BusinessWeek including Bloomberg, OpenGate Capital (which bought TV Guide for $1 last year) Warburg Pincus, and Platinum Equity, which is also bidding for The Boston Globe.

Others linked to the title include s billionaire financier Bruce Wasserstein who is chairman of boutique investment bank Lazard and owner of the New York and The Deal magazines through his US Equity Partners venture.

However, any buyer of the title would have to assume a considerable amount of debt, which could be as high as $31.9m.