MediaWeek (Vol 2, No 4): Houghton Harcourt, Ebsco, Google

This is my 1001st post - wow. Riverdeep, the owner of Houghton Mifflin Harcourt is the subject of a profile by The Boston Globe this morning. The newspaper reports what many have supposed - not least the Irish Press which has been dogging Riverdeep almost since the day they consummated the Houghton sale. In the article, they strongly suggest that the company is now worth far less than the amount of debt owned to their lenders. Any sale of all or parts of the company would be unlikely to cover these obligations and while there are rumors that Hachette maybe discussing acquiring the trade division, I wonder if this could occur if the value is so low and the resulting deal would be a humiliation not just for Riverdeep but also the banks holding the debt. Assuming a sale below book value, that would trigger a revaluation of the whole balance sheet and this in turn would trigger any number of covenants. Missing from the Globe article is that in selling Harcourt to Riverdeep, Reed Elsevier retained a $300mm interest in the business. (Link) What of the value of that and how is it handled on the RE balance sheet.

Moody's last month reported that Houghton, with a debt load estimated at more than 10 times gross earnings, is "a likely default" unless its loans are renegotiated. S&P last month placed parent EMPG on its list of weakest links - companies in greatest danger of debt default. "The debt level is our biggest concern," said S&P analyst Hal Diamond, "given the state of the economy and state budget constraints. While they can reduce costs, they can only go so far."

The Globe's request for an interview with Houghton Mifflin Harcourt chief executive Anthony Lucki or other senior executives was declined. Houghton issued a statement disputing Moody's 10-times-earnings figure, and insisted the company is gaining market share and has ample cash to cover its loans. Spokesman Josef Blumenfeld also said that since Houghton's reported decision last fall to suspend acquisition of new titles, it is signing new books again. He declined to comment on rumors that French-based Hachette Book Group, owner of Little, Brown & Co., might be a suitor.

EBSCO have added a Federated search capability to their suite of offerings and is designed to integrate with their EbscoHost2.0 product they released last year. (LJ)

With Integrated Search, the company aims to capitalize on users’ familiarity with the features and design of EBSCOhost 2.0, which debuted in July 2008, and carve out a role for its interface as a comprehensive destination for user searches. Integrated Search is slated to go live in early summer 2009.

Integrated Search will use connectors to remote content sources similar to those employed by other federated search products, like MetaLib (Ex Libris), Research Pro (Innovative Interfaces), and 360 Search (Serials Solutions). The hook: EBSCOhost will not charge customers for connectors to any EBSCO databases to which they subscribe. For connectors to non-EBSCO sources, the basic cost will be $200 per database annually. There will also be a $1000 annual base fee per site and per configuration. Customers already subscribed to a number of EBSCOhost products could see this translate into significant savings.

Librarything has added a Twitter ap. which looks interesting. (Blog):

We've added integration with Twitter, the popular SMS/microblogging site. Basically, it's an easy way to add a book to your LibraryThing while standing in a bookstore, library or friend's house.

A good summary of the Google Book agreement was presented at a session at ALA (ALA):

ALA’s Committee on Legislation and Office for Information Technology Policy hosted a panel session Saturday at the ALA Midwinter Conference in Denver. The session was called “Google Book Settlement: What’s In It For Libraries,” and aimed to educate librarians on the initial terms of the settlement, hear from leading a few leading library and legal experts, and offer time for audience members to pose questions to the panel participants.

Library Journal reports on the finances of the American Library Association.

As with private investors and endowed institutions, the American Library Association (ALA) suffered significant endowment losses in the past fiscal year, 24.1%, but, thanks to budget adjustments and some new sources of revenue, net operating income in Fiscal Year 2008 actually exceeded expenses more than in FY 2007, ALA officials said yesterday at the Midwinter Meeting in Denver.

Fiscal Year 2008, which ended last August 31, left ALA with net assets of $34.4 million, compared to $33.3 million at the end of 2007. Three months later, net assets declined to $24.1 million, primarily due to endowment losses. ALA has adjusted by reducing expenses, but continued losses in the endowment—which is not relied on for operating income--could cut into scholarships and awards. And the longer term remains a question mark.