Monday, February 06, 2006

A Change in the Books Landscape

Back on 11/27/05, I did a blog on the six big media conglomerates. Included among the six was Time Warner.

Time Warner has a piece in almost every media pie. They own CNN and HBO (among other cable stations) plus Warner Brothers production company and Castle Rock Entertainment. They also own AOL, theme parks and magazines. If that weren't enough, they've had a large investment in books (Warner Books and Little, Brown and Company).

Those of you who have been following my blog for some time know that Time Warner has been under a lot of pressure--from within and without. Stockholders like dissident investor Carl Icahn have been hounding the company to beef up its stock price (See my blogs of 12/18 and 12/19). Icahn, a noted corporate raider, has made no secret of his desire to break up the Time Warner empire.

In early 2003, a debt-strapped Time Warner tried to market its books division, but couldn't attract the money it wanted. After months of low bids and facing a maximum offer of approximately $300 million, they withdrew the deal. That failed offering forced Time Warner to write down the book value of the unit to match its market price.

This morning, Time Warner announced it will sell its Book Group to French publishing giant Lagardere for $537.5 million. What a difference thirty months makes.

Lagardere is one of two groups--the other is Wendel Investisement--that dominate French publishing. Lagardere owns Hachette-Filipacchi, one of the world's largest magazine publishers. In addition to magazines, Hachette has newspaper and book publishing operations.

Lagardere has previously voiced interest in developing assets in three languages: French, English and Spanish. According to Reuters, "Lagardere bought Britain's fourth-largest publisher, Hodder Headline, for 223 million pounds ($392 million) in 2004." The purchase of Time Warner's Book Group is a huge step forward in Lagardere's pursuit of its goal. Publishers Lunch speculates that the new purchase will have the result of raising the pressure "at Hachette for an American acquisition of their own."

According to Publishers Weekly, "Lagardère General and Managing Partner Arnaud Lagardère said: 'This acquisition of the Time Warner Book Group represents an ambitious strategic move for our Book Publishing operations, which have proven to be a source of revenue growth and improved profitability.'"

Publishers Lunch describes the scene at Time Warner: "Time Warner CEO Dick Parsons exults at being able to cash out at the top of the market this time around instead of the bottom . . . and wishes his former employees happy travels."

The world continues to shrink in terms of the number of media power players. At the same time, those power players are showing an understanding of their need to be culturally competent as well as physically present on multiple continents.

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