Reuters:   John Mack will step down at Morgan Stanley’s (MS) CEO.

Reuters:   The SEC vowed reforms after its report on Madoff revealed mistakes.

Reuters:   GM will sell control of Opel to Magna.

Reuters:   Geithner said the need for government support of markets is ending.

Reuters:   Studies show that one dose of H1N1 vaccine may be enough.

Reuters:   Chinese economic data topped forecasts and officials said its stimulus program will stay in place.

Reuters:   Endowments at Harvard and Yale suffered heavy losses.

Reuters:   Bank of America (BAC) wants to end a loss-sharing agreement with the government.

Reuters:   BHP Billiton (BHP) is bullish on it potash push.

Reuters:   Motorola (MOT) released a new phone powered by Google (GOOG) software.

Reuters:   Barrick Gold says it expects  to raise $4 billion from a share offer.

WSJ:   UBS (UBS) e-mails show worries about CDOs.

WSJ:   The recession has increased poverty and cut family incomes.

WSJ:   Bloomberg is considering a bid for BusinessWeek (MGP).

WSJ:   P & G (PG) will cut prices on many of its products.

WSJ:   Google is fighting criticism of its deal with book publishers.

WSJ:   Expiring tax credits are helping home sales.

WSJ:   Dividend payments and stock buybacks may not return for years.

WSJ:   US debt sales continue to do well.

WSJ:   The question is emerging about what Vivendi will do with its 20% interest in the NBCU unit of GE (GE).

WSJ:   Apple (AAPL) approved the use of the RealNetworks (RNWK) music service for the iPhone.

NYT:   Journalism Online, a service to help newspaper internet operations, says it has lots of interest.

NYT:   Ford (F) will back a federal ban on texting while driving.

NYT:   Some media companies and advertisers are looking at measurement data beyond Nielsen.

FT:   China’s economic recovery is gaining pace.

FT:   Japan’s economy expanded less than expected.

FT:   China is opening the door to foreign listings on its exchanges.

Bloomberg:   The Microsoft (MSFT) search deal with Yahoo! (YHOO) faces a lengthy review at Justice.

Douglas A. McIntyre

Reuters:   The US is considering mortgage aid for the unemployed.

Reuters:   The June budget gap was $94 billion.

Reuters:   Rattner stepped down from the auto task force.

Reuters:   The spy probe of Rio Tinto (RTP) workers in China grew.

Reuters:   A new consumer agency won’t cause bank fee hikes.

Reuters:   Exxon (XOM) plans investing in making fuel from algae.

Reuters:   Goldman Sachs (GS) execs sold $700 million in stock.

Reuters:   Lawmakers want more information on the Bank of America (BAC) deal to buy Merrill Lynch.

Reuters:   Facebook employees were allowed to sell some stock, valuing the company at $6.5 billion.

Reuters:   Ford (F) and GM rejected $80 billion in bonuses for Visteon management.

WSJ:   The US is in advanced talks to save CIT (CIT).

WSJ:   Fortress is in complex negotiations over $1.5 billion in loans.

WSJ:   Starwood made a bid for Corus.

WSJ:   The EU may step up pay curbs.

WSJ:   The EU plans a major new gas pipeline.

WSJ:   Dell (DELL) says PC sales are still soft.

WSJ:   The US is looking at aid to the auto supply sector.

WSJ:   McGraw-Hill (MGP) may sell BusinessWeek.

WSJ:   Microsoft (MSFT) will offer software online.

WSJ:   Google (GOOG) is betting on online software.

WSJ:   The $1 trillion deficit is complicating Obama’s objectives.

WSJ:   The UK may be slow to sell its shares in major banks.

WSJ:   China is concerned about banks making loans that encourage easy credit and perhaps cause inflation.

WSJ:   The SEC is looking into practices at credit rating firms.

WSJ:   Shares in Goldman Sachs (GS) and JPMorgan (JPM) may be over-bought.

WSJ:   A much-need shake-out in the magazine industry in on the way.

WSJ:   Honda (HMC) will expand its hybrid line-up.

WSJ:   GM played down a bid for Opel from a Chinese auto firm.

WSJ:   Video game maker Take-Two (TTWO) cut forecasts.

WSJ:   Burger King (BKS) is killing plans for a $1 hamburger.

NYT:   Some airline carriers may not survive.

NYT:   Bing has brought credibility to Microsoft’s (MSFT) search efforts.

NYT:   China may be protecting its wind and solar energy businesses from outside competition.

NYT:   The job growth in healthcare is expected to be strong.

NYT:   South Korea says a trade deal with Europe is near.

FT:   In the US, weeds are growing with green shoots.

FT:   The sale of McGraw-Hill’s (MGP) BusinessWeek may bring only $1.

Bloomberg:   The credit default swap market is being investigated by the Justice Department.

Douglas A. McIntyre

Through the third week in March, McGraw-Hill (MHP) flagship BusinessWeek’s ad pages are down 32%. Time  Inc.’s Entertainment Weekly is off 39%, Time Magazine is off 29%, and the Washington Post’s (WPO) Newsweek is down 34%.  Sports Illustrated is down 29% through the same period.

Douglas A. McIntyre

BusinessWeek has about 150 editorial staff members, based on a count of its masthead. There are probably another 75 people on the publishing side. Since the publication is part of McGraw-Hill’s (MGP) magazine operations, it may be hard to break out all of the discrete costs of operating BusinessWeek. It is safe to say that the print version of the publication is up against insurmountable odds if it ever wants to make money like it did a decade ago.

Many magazine do not make money on their circulations, which includes subscription and newsstand sales. Getting new subscribers often involves expensive direct mail. The offer to new BW subscribers is as low as $20 for 26 issues. It is probably tough to make money on that. Renewing subscribers may be tempted to cancel their print editions and get more of their financial news from the internet, including visits to BusinessWeek.com. The majority of the content on websites which compete with print business magazines is free.

The distribution costs of publications is only going to rise. Gas prices will move postage and trucking prices up. Paper mills are pushing up their charges to offset increasing costs. The business of moving paper magazines around the country, and the world, is a losing game.

Advertising revenue has made up for the fact that the circulation end of publishing is a P&L drain. Circulation brought in the bodies and the advertising sales staff used them as the basis of their pricing. But, between the slowing of the economy and the migration of marketing dollars to the internet, that part of the publishing model is failing as well. BusinessWeek may get back some of its advertisers when the economy improves, but, over time, more and more ad revenue will move to online sites.

BusinessWeek has the opportunity to move completely to the interenet and take out all of its circulation acquisition costs along with printing and distribution expenses. The publication would give up a significant amount of print ad revenue, but most of that is likely to disappear in the next few years anyway.

Based on comScore data, BusinessWeek.com’s unique monthly user base, at 2.5 million a month, is smaller that those at Forbes, CNNMoney, Reuters, TheStreet.com, and The Wall Street Journal’s online edition. BusinessWeek would free up a fair amount of money by eliminating its circulation promotion programs. Some of those marketing dollars could be pushed online to increase the internet audience.

According to Keith Kelly at The New York Post, BusinessWeek lost money last year. That means it will probably lose money this year as well. Moving totally online might change that, perhaps not in the first year, but relatively soon.

Could BusinessWeek keep 150 people on its editorial staff if it existed only on the internet? The answer to that actually may be "yes", if the online property is properly promoted and run. Recent media reports indicate that the magazine is already cutting people to save money. A "digital only" model might save some of the current people their jobs.

A reader going through the current magazine will notice that a good portion of the content is "news". Much of that is old before it reaches subscribers. That problem does not exist online. Longer pieces probably play just as well in either format. And, the internet allows readers to get a huge amount of information on a subject that the print medium cannot offer. And, that makes the digital product even more attractive to readers and advertisers. 

Douglas A, McIntyre 

According to The Wall Street Journal:"Critics charge S&P and others were too optimistic about the market for too long." That will be a battle for debate, and, perhaps, legal action for years to come. How far ahead does a rating agency have to see? How far ahead can it see?

There is clearly an argument that no one could know how fast sub-prime mortgages would come apart. The economy has been strong. Some mortgages have reset at higher rates. But, it would appear that companies like Countrywide Financial (CFC) were not walking around Wall St. several months ago saying that they had a problems. The hedge fund managers at Bear Stearns (BSC) did not issue any bulletins either.

S&P and Moody’s (MCO) seem to have been lax in monitoring a lot of their ratings. Sub-prime is just part of that problem.

Moody’s shares are down from a 52-week high of $76 to $45. McGraw-Hill shares have fallen from $73 to $50.

But, where was Terry McGraw when all of this went on? CEO and great-grandson of the company founder, he must have paid little attention to the financial services unit which brought in $821 million of the company’s $1.718 billion in revenue in the last quarter. The division also contributed $401 million in operating profit according to the company 10-Q.

When an operation is that much of a company’s revenue, the CEO needs to be nearly as aware of what goes on as the person running the business. McGraw cannot escape the fact that he has some responsibility here if the head of S&P did a poor enough job to be fired.

A scape goat. Almost certainly. McGraw will not get pushed out. But, he should.

Douglas A. McIntyre