Expensive Social Net Will Cost BusinessWeek $4.7 Million In 2009; $21 Million Expenses Till Date

BusinessWeek’s efforts to reinvent itself in the internet age hasn’t come cheap. On the eve of McGraw-Hill’s Sept. 15 bid deadline for the business magazine, The *New York Times* reports that BW’s social net Business Exchange is on track for nearly $21 million in expenses from its 2007 launch through 2009 . Last year’s revenue, according to a memo the NYT says was sent to investors: about $600,000 on expenses of $7.6 million. The memo shows the gap narrowing this year but still with expenses of $4.7 million.

That’s just part of BW’s losses. The mag lost $17 million last year, according to the memo — plus another $26 million in overhead and rent from McGraw-Hill (NYSE: MHP). Part of the mag’s pitch to prospective buyers is those charges have been to high and can be reduced. Projected losses over all for this year: $41 million, slightly better than $43 million in 2008 but still not very attractive for a prospective buyer.

One of the magazine’s problems online is a page-view mix that tilts heavily to slide shows — 45 percent — with only 16 percent of pageviews for the 1H09 going to original stories. The memo also says BW’s online ad sales are down by half from 79 percent in 2006. CPMs are down too.

Rafat adds: On Business Exchange’s $21 million expense: really? With tons of white label social net services out there, and the value of being a media org, BW couldn’t get a cheaper and better deal? Give me that amount of money and I’ll conquer the world with it. No wonder the pub is in trouble…