That has to be unnerving, but I can at least offer a little bit of comfort: The worst-case scenario the employees would be facing had they been purchased by private equity firm ZelnickMedia, which was also bidding for the publication.

The short version: Almost everybody gets fired.

Here’s the longer version of the plan, provided to me by a person familiar with ZelnickMedia’s bid. It sounds like a plausible idea for a PE group that specializes in turning around distressed assets–and a chilling one for anybody who draws a paycheck at BusinessWeek:

• Wind down BusinessWeek’s print business “as profitably as possible”–the company would have to honor existing subscriptions and could still sell ads in the magazine. But the focus would be on building up BusinessWeek’s Web site, which has a decent-sized footprint, though not a huge one.
• Dump almost all of the company’s newsgathering staff and outsource most of that work to Thomson Reuters (TRI).
• Employ a small handful of editorial employees–perhaps 20, down from the 200-plus who are there now. Some of them would run a Huffington Post-style aggregation site that produces no original content, and some more expensive hires would produce a smattering of high-quality reporting and writing designed to burnish/sustain the BusinessWeek brand. “Just to give it uniqueness and sizzle,” my source tells me.
• Dump most of the existing business side, as well, but overhaul and bulk up the sales force.

The insult-to-injury kicker: Under ZelnickMedia’s proposal, the buyer wouldn’t pay a dime for the publication it intended to rebuild. Instead, McGraw-Hill would pay the fund to take the publication off its hands. If that sounds implausible, consider that McGraw-Hill just announced that it will save up to $25 million next year by not owning the title.

Given the above terms, it’s easy enough to see why McGraw-Hill ended up going with Bloomberg. For starters, the winning bidder actually paid cash for the magazine, and McGraw-Hill will end up netting a $5.9 million gain, after taxes, on the deal.

Also important: McGraw-Hill won’t have to anguish as it watches one of its flagship properties get dismantled.

So what will happen to BusinessWeek now that Bloomberg owns it? Nothing nearly so drastic, at least in the short term. For now, Bloomberg is talking about bulking up the title, not shredding it, so that’s a good sign for both employees and readers.

Alas, Bloomberg can’t take on all of the magazine employees looking for jobs, and that pool is only going to get bigger.

Forbes slashed deep into its staff this week, and next week Time Warner’s (TWX) Time Inc. will lay out some of its layoff goals. I’ve heard Time Inc. employees refer to layoff plans as “tree-trimming” or “surgical,” but I think the trimming will feel much blunter to the folks who lose their jobs. The publisher’s cost-cutting plans include hundreds of layoffs–something likely similar to the cuts the publisher went through last year, I’m told.

The New York Post’s Keith Kelly reports today that Time’s News and Finance unit, which includes Time, Fortune and Sports Illustrated, will be particularly hard hit, and I’ve confirmed that myself.

UPDATE: No surprise here: BusinessWeek President Keith Fox is stepping down. Mild surprise: He’s staying on at McGraw-Hill. Here’s his memo:

When we announced that McGraw-Hill was exploring strategic options for BusinessWeek, I promised to communicate with you as openly and often as I could. In this spirit, I wanted each of you to know that I will be remaining with McGraw-Hill after the deal with Bloomberg is closed. I will continue to play a role in the integration post-close and plan to take on a new role at McGraw-Hill in 2010.

During this process, our collective goal was to find the best buyer for BusinessWeek. I am proud that I played a role in ensuring that BusinessWeek has a new home at Bloomberg, where it will thrive under the leadership of Norman Pearlstine. I am committed to the transition and helping in any way that I can.

It’s been a privilege to be the President of BusinessWeek. I thank Terry McGraw for his confidence and trust in me and Glenn Goldberg for his support, direction, clarity, and sense of humor. I’ve also been a member of an amazing team which has navigated the transformation of the media environment with agility, focus, passion, and integrity.

The team–Steve Adler, Jessica Sibley, Tania Secor, Linda Brennan, Roger Neal, and Carl Fischer–is the best in the industry. Like BusinessWeek, they have bright futures ahead of them. I will miss the daily interaction, but I am wiser (and a little grayer) because of their collaborative spirit and desire to make BusinessWeek the global leader in business that it is today.

I also have a special thanks to Patricia Hipplewith, my assistant, who juggled my calendar, protected me from solicitors, and kept me on schedule and well fed! She is the personification of commitment and integrity.

I am humbled by BusinessWeek’s 80-year history. Thank you for allowing me to play a small part in it.

Keith

At a TVWeek conference in Manhattan, Bewkes repeated arguments he has made in the past: Chiefly, that big media mergers have a lousy track record and that he couldn’t see how Comcast (CMCSA) could unlock any value by buying a majority stake in NBC Universal from GE (GE).

“Somebody has finally noticed that these things don’t work out so well,” he said, adding “We love to see our competitors taking risks.”

But just to hammer that point home, Bewkes compared the proposed deal to the one his company made nine years ago when it embarked on an ill-fated merger with AOL. That deal (made when Bewkes was running Time Warner’s HBO unit)  “basically made no sense” at the time, he said.

The main talking point in favor of that transaction–that connecting Time Warner’s content with AOL’s Internet distribution would create synergy–was “nonsensical,” he said. But “these kind of arguments, you’ll hear some of them this week, in the other merger that we’ve been talking about,” Bewkes said.

Clear enough?

Wall Street, by the way, remains unimpressed with the proposed deal as well: Comcast shares are down about 10 percent since word got out.

In other reiteration news, Bewkes also said, again, that he doesn’t plan on selling his Time Inc. publishing unit. Though he left himself a tiny window of wiggling room by noting that “no public company can ever say that it wouldn’t consider restructuring some part, whether it’s Warner, HBO, whatever.”

But Bewkes insisted that Time Inc.’s best-known magazine brands, including “Time, People, Sports Illustrated, InStyle,” are holding their own as print products and that the challenge will be turning them into online successes.

“We have basically a healthy business in terms of our relationship with readers. These brands mean something and they’re evolving…,” he said. “If you can’t take the leading titles that people have known for decades, and use the new world to make them relevant, really, shame on us.”

Crawford’s thinking: After Time Warner ditches AOL, which is scheduled for a spinoff later this year, the company will ditch its magazine business as well. That will leave it with a portfolio made up only of a movie studio and cable networks, and a big cash pile to play with.

Time Warner won’t comment, but I’m sure the company has heard Crawford make this prediction before. His Capital Research Global Investors owns more than eight percent of Time Warner shares, which means he gets plenty of access to Bewkes and his lieutenants.

But here’s the thing: The body language from Time Warner executives in recent months makes me think they intend to keep at least part of their magazine business in the family. More than body language, actually: “Time Warner without People? I can’t imagine it,” one well-placed Time Warner official told me recently.

That said, I won’t be surprised if the publisher employs fewer people, producing fewer magazines in the future.

Time Warner officials have repeatedly said that Time Inc. has too many titles: The magazine unit publishes 23 magazines in the U.S. How many can you name? And last year’s mass layoffs, while unprecedented for the publisher, were still fairly modest compared to other publishers’ cuts. The six percent reduction left Time Inc. with some 9,400 people on the payroll.

But executives at the publisher love to stress, off the record, that its flagship titles–Time, People and Sports Illustrated–are each on track to generate millions of dollars of profit this year, even though ad pages and revenue are down. And while Time Inc. certainly hasn’t figured out its digital business yet, at least some of its print properties could and should do well on the Web, as People.com is already doing.

There are certainly assets that Bewkes and company could dispose of fairly easily. For instance, its U.K.-based IPC Media unit, which handles many of the 90-plus titles it publishes outside the U.S., is frequently brought up as a sale candidate. But I’d be surprised if he got rid of Time Inc. and its iconic brands altogether.

For the record, here’s how Time Inc. performed in the first half of the year. The company has already said it expects similar numbers for the remainder of 2009 (click table below to enlarge).

Time Inc. boss Ann Moore made her case for the survival of magazines, and in a broader sense, traditional media: If they don’t make it, who’s going to do the work to get hard-to-find information?

If she’d just waited a few weeks, she could have saved herself some trouble and simply handed everyone she met a copy of today’s New York Observer, which has a great story about the story behind the Alex Rodriguez/steroids story that her own Sports Illustrated broke on Saturday.

Per the Observer’s John Koblin, here’s some of what SI reporter Selena Roberts (pictured above) went through to get the story:

• Roberts started on the story at least four months ago, when she was assigned a general profile of the Yankees superstar.
• By January, Roberts and colleague David Epstein were confirming rumors that Rodriguez’s name had surfaced in a 2003 drug test. They eventually cobbled together four different sources to confirm their story.
• Last week, Roberts flew from New York to Miami to confront Rodriguez directly. After an encounter with a security guard and the Miami police, she drove by his house, then tracked him down at a local gym.
• After getting a “no comment” from the player, she conferred with her editors, and the SI team then spent another 48 hours dotting i’s and crossing t’s before publishing.

It’s a neat tale, and one the folks at Time Warner (TWX) should be proud of. And it’s a good counterpoint to pundits who assure us that one day soon in the brave new world, old media gatekeepers like SI will be replaced by the collective wisdom of the Web. Because the last time I checked, crowd-sourcing didn’t pay for months of reporting, flights to Miami, a team of lawyers, etc.

Could a dogged individual, working without a net, have gotten this story? Theoretically. And some bloggers working primarily with crowd-sourced tips have done some great work, too–see the great work that  Josh Marshall’s Talking Points Memo did on the Justice Department/Attorney General scandal last year. And, just to knock down that straw man–big media, armed with all sorts of resources, does get all sorts of stuff wrong, as the New York Times has admitted on a couple of occasions now.

But look at how much work Roberts and SI had to invest in tracking down what in the end isn’t a story that’s truly important, in a State-of-the-Union sense of the word. Now think about how much work it takes to suss out answers to much less sexy but more crucial questions, about, say, the way our government works.

I still don’t think that Moore’s argument–that these publications will survive because we need them to–will pan out. And I worry that only a small slice of us will get good info about important stuff. But when that day comes, I hope someone will have created a free Web archive of reporting like Roberts’s story, so that the rest of us can get a sense of what we’re missing.

The New York Post’s Keith Kelly has already reported that layoffs are in motion at People, Time and Sports Illustrated over the next few days; I am told that cuts are also coming to Fortune magazine today or tomorrow. Here’s a Sports Illustrated employee’s take on the situation there:

We are all expecting the hatchet Thursday or Friday. Morale is dismal. One colleague of mine, uber golf writer John Garrity, told several of us that he’s taking the package but will continue on for a while as a special contributor. We expect two or three photo editors to go, and two or three members of the Sport’s Illustrated Latino staff (the Spanish language SI publication, which posted a net profit of approx. one million in ’07 and broke even in ’08, was inexplicably shuttered). Also photographers are rumored to be being cut to half time service and members of our copy desk have been asked to take up to a 30% pay reduction for which they will work fewer hours. Charlie Leerhsen, one of our two executive editors, told a few staff members that he was going to be leaving.”

In other layoff/shutdown news:

• I am told that Forbes (where I worked for many years), is in the final stages of planning cuts as it prepares to merge the editorial operations of its magazine and Web site units. Last month the company began integrating its business groups and laid off about three dozen people in the process.
• GE’s (GE) NBC Universal has laid off at least 30 people in its sales group, reports AdAge. The cuts are part of a previously reported mandate from NBC CEO Jeff Zucker to cut three percent of the company’s budget. The Post says another 80 people could be fired at CNBC.
• Barry Diller’s IAC (IACI) is breaking up its programming group, which includes ventures like College Humor, 236.com and Tina Brown’s DailyBeast.com. Some but not all of the sites will be closed down or sold off. PaidContent has details.

As always, I value reader input: You can reach me directly at peter@allthingsd.com. If you want to be completely anonymous, you can use the blind tip box here.

Last month, the Time Warner (TWX) magazine unit announced a sweeping reorg that is expected to cost about 600 employees their jobs. But the details have yet to be announced.

That started changing today, but my understanding is that the cuts won’t be accomplished with one swing of the ax, which is unfortunate for everyone involved.

Today’s memos will at least add some clarity, and I’ll republish them here as I get them, with your help. As always, I keep all correspondence anonymous: peter@allthingsd.com.

So far I’ve collected memos from four of the five titles, but am still looking for details on Money. Time, SI, People and Fortune are looking for 90 volunteers to leave their jobs.

Bear in mind that these memos only deal with editorial jobs. I’m assuming there are also significant cuts planned on the business side. Details as I get them.

[UPDATE: Some cuts on the business side, too. The company has laid off 92 people from its consumer sales and marketing group.]

Fortune managing editor Andy Serwer doesn’t spell out the number of volunteers he’s looking for in his note, but I’m told he informed staff today that he needs about a dozen positions eliminated:

Unfortunately, we will need to reduce staff at Fortune in the writer-editor, writer-reporter, designer, editorial assistant and copy coordinator Guild categories, and we are asking for a number of volunteers to leave the company with a severance package. If you are interested in confidentially exploring this option, please contact Dawn Dunlop in HR at [redacted] or Edith Fried at [redacted] by Friday, November 21, 2008. If we do not have enough volunteers, we will need to begin a process of involuntary layoffs. For your reference, the Company’s severance formula is in the Guild contract and is also posted on Time Traveler.”

Sports Illustrated needs 40 bodies gone within two weeks, says managing editor Terry McDonnell:

For the reasons outlined in Ann Moore’s reorganization announcement of 10/28/08, the Sports Illustrated Group will reduce the size of its staff across all properties. At the magazine, we will reduce staff in the following guild-covered categories:

• copy editors
• photographers
• designers
• photo equipment technicians
• picture catalogers
• picture researchers
• reporter-researchers
• research assistants
• writer-editors
• writer-reporters

A number of jobs not covered by the guild will also be eliminated at the magazine and across the group.

Approximately 40 guild and non-guild volunteers are needed over the next two weeks to avoid involuntary job eliminations. If the number of volunteers falls short by Monday, December 1, involuntary layoffs will begin.”

People wants to drop 18 editorial employees (via Gawker):

As part of a broad Time Inc. work force reduction, I regret to announce that People magazine will be making cuts in its editorial staff. We are looking for the volunteers to accept severance packages in the following Guild-covered job classifications:

• up to 6 reporter-researchers
• up to 4 Los Angeles-based staff members from among staff correspondents and writer-editors
• up to 4 New York-based staff members from among staff correspondents, writer-editors and writer-reporters
• up to 3 copy editors
• 1 research librarian

We are also looking for up to two Guild-covered volunteers each in the Art Department and photo department, and one in the News Bureau.

In addition to this call for Guild volunteers, non-Guild employees may inquire about the possibility of volunteering for a severance package.

I urge all those interested to contact People’s human resources representatives [redacted] for details regarding their particular package.

In addition to the above cuts, we are looking for savings from full-time staffers interested in working a four-day week (Tuesdays off) for commensurate salary. This call is voluntary, and final decisions will be made based on business needs and management discretion.

The call for volunteers expires on Dec 1. If necessary, after that we will follow the Guild contract procedure for conducting involuntary layoffs in Guild categories.

If you have any questions, please see me or your department heads.”

Time is looking for 20 volunteers (via Newsweek.com editor–and former Time employee–Mark Coatney):

Due to the corporate restructuring, we need to reduce approximately 20 staffers at TIME across the following guild-covered categories: edit traffic assistant, writer-editor, staff correspondent, writer-reporter, reporter-researcher, designer, research cataloger and research librarian.

Volunteers in these positions or any others can raise their hands any time in the next two weeks. If we do not have enough volunteers by Monday, November 24th, we will begin a process of involuntary layoffs.”