четверг, 13 сентября 2012 г.

AOL TW: books to get hook.(AOL Time Warner Inc. ponders sale of book division to reduce massive debt) - Daily Variety

Add book publishing to the mix of sports and cable holdings AOL Time Warner may dump as it seeks to pare down a massive $26 billion debt load.

The giant conglom is said to be eyeing a sale of the unit, which includes Little, Brown and Warner Books, but no formal talks are under way.

Move underscores an emerging trend as media congloms grapple with mounting debt and falling share prices. Book publishing is no longer the strategic asset it was once envisioned to be.

Publishers have speculated that News Corp.'s HarperCollins and Bertelsmann's Random House may bid for the unit, which has long been rumored to be on the block. European players like Pearson or Wolters Kluwer could emerge as well.

'Certainly we will take a look at the company and we will do what's best for HarperCollins,' a spokeswoman for the publisher said.

But some Wall Street and industry players see buyout firms stepping up to the plate first, as they did last year when Vivendi sold Houghton Muffin to a consortium including Thomas H. Lee Partners, Bain Capital and Blackstone Group.

AOL Time Warner declined comment. But people at the company said shopping or selling the book publishing arm is a move that jibes with CEO Richard Parsons' oft-stated commitment to reinforcing AOL TW's balance sheet, with debt reduction the main focus.

Huge multibillion-dollar divestitures helped Vivendi Universal slash its debt by about $16 billion last year. The sales AOL TW is mulling -- not only of the book publishing unit but of its Atlanta sports teams and interests in Comedy Central and Court TV -- aren't in that league. Its book biz would only garner something north of $200 million.

On the Case

But the publishing sale is of symbolic importance, and that's something that appears to matter for battered AOL TW Now that Steve Case has resigned, many think the company may drop AOL from the name.

'It's positive in that they are looking to strengthen their balance sheet,' said analyst Mark Zadell of Blaylock & Partners.

The biggest repercussions will be for the publishing biz. Random House, the largest English-language publisher, already releases more than a quarter of the trade books sold in the U.S. HarperCollins parent News Corp. needs to husband its cash for DirecTV, and most other media companies are strapped for cash. Viacom owns Simon & Schuster, but that publisher has been subject to nearly annual rumors that it's on the block -- meaning Viacom is considered more likely a seller than a buyer of a book publisher.

That leaves cash-rich investment firms, which have been on the prowl in media and entertainment. 'I think it's likely over the next several years that we'll see (new) groups of publishers created' by financial players, said one industry consultant who expects continued merger activity in the sector.

Synergics elusive

For the major media companies, synergies among book publishing, movies and TV have proven elusive, creating tougher financial expectations for a traditionally low-margin business.

'It's clear overall -- in film, music and now books -- that shareholders are expecting the businesses to perform. The days of the vanity presses are gone,' one insider said.

Last week, Random House fired influential editor and head of its trade group Ann Goodoff for failing to meet profit targets.

Reports of a sale gave a tidy boost to AOL Time Warner stock Thursday (up 4.67% to $14.56) -- a nice prelude to fourth-quarter and full-year earnings the company plans to report next Wednesday. Wall Streeters expect upbeat numbers with higher revenue and cash flow driven by film and cable networks. They see another gloomy quarter for America Online. AOL TW has already said it plans to take another hefty charge -- analysts say $10 billion-$20 billion -- to further write down the value of AOL.

The AOL Time Warner Book Group came into existence when Time Inc. and Warner Communications merged in 1990.

Warner Books publishes books by Nicholas Sparks, David Baldacci and Jack Welch. Little, Brown publishes James Patterson and Alice Seybold's bestseller 'The Lovely Bones.' In addition, AOL's book group distributes publishing lines for Hyperion, Harry Abrams, Time Life Books and Microsoft.