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 information whirlwind of the internet.

Terms of the sale, announced Tuesday, were not disclosed. Citing unnamed people privy to the negotiations, BusinessWeek pegged the acquisition price at $2 million US to $5 million US 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 website 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 as well as media organizations 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.

Ad decline to blame for $40 million in losses

Like many print publications, BusinessWeek has been reeling from a one-two punch: the longest U.S. recession since the Second World War 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 made by 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.

"Norm's role will ensure that we fully capitalize on the combined strengths of Bloomberg and BusinessWeek," said Matthew Winkler, editor-in-chief of Bloomberg's news service.

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 per cent 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.