As previously reported by CNET News.com, sources close to the magazine pegged the purchase at $68 million. That amount was confirmed in a memo from Greg Ingham, CEO of Imagine Media's parent company, U.K.-based The Future Network.
Under the deal, Business 2.0 will merge with its larger rival, eCompany Now, but retain its name for the combined magazine. The bulk of Business 2.0's editorial staff will be laid off, although a handful of staff members will stay with the combined magazine, sources said. Workers will be offered severance packages.
"These have been tough, difficult months for our company, and we still obviously have work to do to revert to the levels of profitability that we've had previously," Ingham wrote. "But there's great determination, energy, commitment and--yes--pride inside this business."
Imagine Media founder Chris Anderson announced the deal to Business 2.0 staff members in the magazine's San Francisco office Thursday afternoon. A public statement was issued later in the day.
The last issue of Business 2.0 in its current form will be published in July. The combined magazine will have a paid subscriber base of 550,000. AOL Time Warner's online service will relaunch Business 2.0 on the Web.
The companies also agreed to a five-year revenue-sharing deal beginning in January 2002, in which The Future Network will receive 25 percent of all annual net revenue exceeding $50 million from the combined magazine, according to the memo from Ingham. The company will also receive 25 percent of annual net revenue exceeding $10 million from any related Web sites and conferences, the memo said.
"Profits on many (magazines), including Business 2.0, were hit hard and were no longer enough to support the (parent) company's debt," according to a separate memo handed to Business 2.0 employees. "This agreement will reduce debt in the short term while also offering the company the prospect of upside from the enlarged magazine over the next five years."
The anticipated purchase signifies attempts by many business magazines and Web sites to stay afloat through an economic storm triggered by the advertising downturn. Some have reduced the thickness of their publications, which once flourished with pages of advertisements. E-business magazines and their Web site counterparts have also attempted to eliminate costs by reducing staff sizes.
Last month, Red Herring Communications, which publishes Red Herring magazine and a Web site, announced its third round of layoffs despite receiving $15 million in funding. In February, Standard Media International, publisher of New Economy business weekly The Industry Standard, slashed 69 jobs, or 17 percent of its staff, following with another 10 percent reduction three months later.
For its part, AOL Time Warner has been making aggressive moves to beef up its offerings and expand its empire. In January, the media giant's America Online unit said it would expand its relationship with Warner Music Group by promoting new releases from Warner's labels, including Atlantic Recording, Elektra Entertainment Group, London-Sire and Warner Bros. Records.
The newly merged media giant has also struck a host of deals with companies such as TiVo, Nortel Networks, Cendant, Compaq Computer and PurchasePro.
Launched in August 1998, Business 2.0 aimed to provide news and in-depth reports on the business landscape. The magazine also publishes online as well as international editions in Germany, Israel, Italy, South Africa, South Korea and the United Kingdom.
San Francisco-based eCompany Now, a monthly business magazine, is published out of the Fortune Group at Time Inc., an AOL Time Warner company.