Penguin & Random House Merge

News on Sunday that News Corp were considering a look at Penguin suggested that the dealings could get exciting but with this morning's announcement of a merger that will combine Random House and Penguin in a new structure makes clear these discussions were already well advanced. As The Guardian notes the new business will b 53% owned by Random House and Pearson will retain a 47% interest. The management team will be lead by Random House CEO Marcus Dohle. The combined company will have sales in excess of $3billion although this is likely to be subject to some competition scrutiny over the next several months as the deal is reviewed by authorities in the US and Europe. From their press release:

Bertelsmann will nominate five directors to the Board of Penguin Random House and Pearson will nominate four. John Makinson, currently chairman and chief executive of Penguin, will be chairman of Penguin Random House and Markus Dohle, currently chief executive of Random House, will be its chief executive.

In reviewing the long-term trends and considerable change affecting the consumer publishing industry, Pearson and Bertelsmann both concluded that the publishing and commercial success of Penguin and Random House can best be sustained and enhanced through a partnership with another major international publishing house. They believe that the combined organisation will have a stronger platform and greater resources to invest in rich content, new digital publishing models and high-growth emerging markets. The organisation will generate synergies from shared resources such as warehousing, distribution, printing and central functions. Pearson and Bertelsmann intend that the combined organisation’s level of organic investment in authors and new product models will exceed the total investment of Penguin and Random House as independent publishing houses.

The two companies believe that the combination will create a highly successful new organisation, both creatively and commercially, with the breadth and investment capacity to deliver significant benefits. Readers will have access to a wider and more diverse range of frontlist and backlist content in multiple print and digital formats. Authors will gain a greater depth and breadth of service, from traditional frontlist publishing to innovative self-publishing, on a global basis. Employees of the new organisation will be part of the world’s first truly global consumer publishing company, committed to sustained editorial excellence and long-term investment in a rich diversity of content. And shareholders will benefit from participating in the consolidation of the consumer publishing industry without having to deploy additional capital.

Interestingly, with Pearson's big acquisition of EmbanetCompass (for $650mm in cash) earlier this month the company also said that they would be somewhat limited in the amount they could spend on future acquisitions given the size of the EmbanetCompass deal. The Random House deal does not appear to improve that situation and the press release specifies that neither party may sell their shareholding in the combined business for three years.

Finally, this is the big Trade House deal we've been waiting five years for. Will there be another?

Amplified Version of Kerouac's On The Road

Penguin releases "amplified iPad version" of Kerouac's On The Road (Apple Store) and the title is covered by the NY Times Paper Cuts blog:

The “amplified edition” of “On the Road,” released today by Penguin Classics, certainly comes tricked out with more fancy bells and whistles than a BMW M5. It includes the full text of the novel, of course, with expandable marginal notes giving historical and biographical background. An interactive map traces Kerouac’s three real-life cross-country road trips, with links to relevant passages from the novel. There are never-before-seen photos, rare audio clips of Kerouac reading from an early draft, previously unreleased documents from his publisher’s archive, and a slide show of international covers showing how the book has been marketed from Argentina to Ukraine to China.

...

The app’s collection of documents from the archives of Viking, which published the original hardcover, gives insight into the intense corporate efforts to market this most freewheeling of American novels — which surely holds lessons for those selling souped-up e-books today. Here, you find an exchange of letters between Kerouac and his editor, Malcolm Cowley, about how to deal with obscenity issues, as well as a facsimile of a previously unreleased internal memorandum saying the book had great fascination and sales potential despite not being “a great or even a likeable book.” (That last part was penciled out.) There’s also Kerouac’s own sketch for an “appealing commercial cover,” showing all the cities visited in the novel cheek by jowl along a single straight road, under the heading “A Modern Prose Novel by John Kerouac.”

MediaWeek Report (Vol 3, No 45a): Recent Publishers' Financial Headlines- Peason, Hachette, Simon & Schuster

The past few weeks have seen a resurgence of sorts in the fortunes of some of publishing's biggest players. Here is a summary: Pearson noted that their markets were 'subdued' however they continued to produce market gains their competitors probably envy (Press Release):

Demand in some of our markets remained subdued in the third quarter, and the macroeconomic outlook is still uncertain. Even so, Pearson increased sales by 7% and adjusted operating profit 15% in the first nine months of 2010*. All parts of the company continued to perform strongly, with sales growth of 5% in Penguin, 7% in education and 11% at the Financial Times Group. ...

In North America, this strategy enabled us to gain share and grow faster than our market, with sales growth of 5% in the first nine months. Our Higher Education business grew strongly once again. Its market remains healthy (industry sales up 10% in the first eight months, according to the Association of American Publishers) and our leadership in digital learning continues to produce market share gains. More than 3.5m students have enrolled in an online course provided by eCollege in the first nine months, an increase of almost 39% over last year. More than 6.5m college students have registered for our subject-specific digital learning tools (MyLabs), an increase of almost 34%. Our Assessment and Information business remained resilient as we won or renewed a number of contracts including a teacher certification contract in Pennsylvania and student data systems in Utah. The breadth of our School Curriculum business and its strength in digital is enabling us to grow despite weakness in state and local funding and uncertainty around the impact of new Common Core standards. We are planning on the basis that school funding remains under pressure in 2011 and that the total new adoption opportunity will be lower than in 2010. We are accelerating the transformation of our School business, investing to broaden the range of products and services we offer to schools to help them boost student performance and institutional efficiency. Sales in International Education are up 8% after nine months. We are benefiting from strong demand in developing markets and for assessment services, English Language learning in China and digital, while developed markets and school publishing are generally soft. In the first nine months, MyLab registrations outside North America were up almost 40% on the same period last year to more than 460,000. ....

At Penguin, sales are up 5%. Physical retail markets are tough, but are offset for Penguin by strong publishing and rapid growth in eBook sales (which have increased threefold). Penguin continues to lead the industry in innovation in digital publishing, with 16,500 eBook titles now available and a number of children’s apps for bestselling brands. The Fry Chronicles by Stephen Fry became a bestseller in five formats (hardback, ebook, enhanced ebook, app and audio), a publishing first. The fourth quarter is an important selling season in consumer publishing and Penguin has a strong line-up of bestselling authors including Tom Clancy, Patricia Cornwell, Barbra Streisand and Nora Roberts in the US; and Michael McIntyre and Jamie Oliver in the UK.

Hachette (Grand Central Books) reported declines attributed to reduced sales of the Stephanie Meyer 'saga' (Press Release):

As expected, the erosion in sales of Stephenie Meyer's Twilight saga (Twilight, New Moon, Eclipse and Breaking Dawn) had a marked impact on revenue trends not only in the United States, but also in France and the United Kingdom. In France, the postponement of deliveries of secondary school textbooks from the third quarter to the fourth quarter (due to the late announcement of new curriculums) also had a temporarily negative effect. And in Spain, the Education market was more challenging than last year.

After a like-for-like revenue fall of just 4.5% in the first half of 2010, there was a more marked fall (of 6.8%) in the nine months to end September; this was largely due to the sharp decline in the Stephenie Meyer phenomenon and the non-recurrence of the sale of the international rights to the saga, booked in the first half of 2010.

However, revenues for the first nine months of 2010 are slightly ahead of those for the comparable period of 2008, demonstrating the remarkable resilience of the Lagardère group. Numerous literary successes - James Patterson and Nicholas Sparks in the United States, David Nicholls and Sarah Waters in the United Kingdom, and Jacques Attali and Erik Orsenna in France - are testimony to the dynamism of our publishing houses.

Sales of e-books remain strong, accounting for some 9% of revenues in the United States in the first nine months of 2010.

Simon & Schuster (Part of CBS)

For the three months ended September 30, 2010, Publishing revenues decreased 6% to $217.7 million from $230.4 million for the same prior-year period reflecting lower book sales in the adult group from the soft retail market, partially offset by growth in sales of digital content. Best-selling titles in the third quarter of 2010 included The Power by Rhonda Byrne and Obama's Wars by Bob Woodward. For the three months ended September 30, 2010, Publishing operating income increased 11% to $29.4 million from $26.6 million and OIBDA increased 10% to $31.1 million from $28.4 million for the same prior-year period reflecting the impact of cost containment measures, lower royalty expenses and lower production costs from a change in the mix of titles. Nine Months Ended September 30, 2010 and 2009: For the nine months ended September 30, 2010, Publishing revenues decreased 3% to $559.1 million from $573.5 million for the same prior-year period reflecting the soft retail market, partially offset by growth in digital sales of Publishing content. For the nine months ended September 30, 2010, Publishing operating income increased 47% to $44.9 million from $30.6 million and OIBDA increased 36% to $49.9 million from $36.6 million for the same prior-year period reflecting the impact of cost reduction measures and lower production expenses from a change in the mix of titles, partially offset by higher royalty expenses. Restructuring charges of $1.8 million incurred during the nine months ended September 30, 2010 reflect severance costs associated with the elimination of positions.

NewsCorp is done separating out the Harpercollins unit from their other publishing assets. (SeekingAlpha)

McGraw-Hill Education and Professional publishing reported as follows (Press Release):

Education: Revenue for this segment increased by 5.5% to $1.1 billion in the third quarter compared to the same period last year. Including a $3.8 million pre-tax gain on the divestiture of a secondary school business in Australia, the operating profit for the third quarter grew by 19.9% to $357.5 million. Cost controls contributed to the increase in the segment's operating margin to 33.9%, the best third-quarter performance for McGraw-Hill Education since 2007. Foreign exchange rates had an immaterial impact on revenue and operating profit in the third quarter. Revenue for the McGraw-Hill School Education Group increased by 6.7% to $534.7 million in the third quarter versus the same period last year. Revenue for the McGraw-Hill Higher Education, Professional and International Group grew by 4.3% to $520.0 million in the third quarter, compared to the same period last year. A strong performance in the state new adoption market was the major factor in McGraw-Hill School Education Group's third quarter results. The McGraw-Hill School Education Group is on track to capture approximately 30% of the estimated $825 million to $875 million state new adoption market in 2010. In 2009, the state new adoption market was about $500 million. ... In professional publishing, online sales of books and digital products produced solid growth in the third quarter. Double-digit e-book sales were a bright spot in the sluggish retail book market, which continues to be buffeted by difficult economic conditions. More than 5,000 McGraw-Hill professional titles are now available to customers as e-books.

Harlequin a division of TorStar is often beset by forex changes (PR)

Book Publishing operating profit was $23.0 million in the third quarter of 2010, up $0.1 million from $22.9 million in the third quarter of 2009, as $1.4 million of underlying growth offset a negative $1.3 million from the impact of foreign exchange. Year to date, Book Publishing operating profit was $66.1 million, up $3.0 million from $63.1 million last year as $6.2 million of underlying growth more than offset a negative $3.2 million from the impact of foreign exchange. In both the quarter and the year to date, operating results were up in the North America Direct-To-Consumer and Overseas divisions and down in the North America Retail division.

Earlier this month Wolters Kluwer reiterated their full year guidance (PR)

In the third quarter, growth in online and software solutions continued in all divisions. With improving retention rates across the business, subscription revenues, which represent 72% of total revenues, showed improvement over the prior year, especially for electronic revenues. This growth helped to offset the impact of print publishing declines and the continued pressure on advertising and pharma promotional product lines. Book performance improved in the third quarter driven by strong results in legal education and health book product lines. The Health & Pharma Solutions division performed well, with strong growth noted at Clinical Solutions, Ovid, and books. Within Tax & Accounting, new sales and retention rates for software solutions grew at a solid rate which helped offset pressure on print-based publishing. Financial & Compliance Services saw double-digit growth in its audit risk and compliance product lines and cyclical revenues associated with mortgage lending improved in the third quarter. In the Legal & Regulatory division, transactional revenues at Corporate Legal Services continued to grow, reflecting the steady economic recovery underway in the U.S. While online and software products grew globally within Legal & Regulatory, macro economic conditions continue to put pressure on publishing and cyclical product lines such as training, consulting and advertising, particularly within Europe, offsetting the positive trends for electronic revenues.

MediaWeek (Vol 3, No 24): Freak Show, Penguin's Canadian Problem, Textbook Reinvention

On the road with an economist. Steven Dubner and the Superfreakonomics show (Observer):

It's bizarre to think that the crash might have made economics sexy.

I'm thinking it was less like sex appeal and maybe more like a sexually transmitted disease: it made people pay attention. There are a lot of guilds in the world still, professions that want to make their work appear as complicated as possible to protect their ability to charge a price for it. Lawyers, obviously. And macro-economists certainly. They want to seem like the Wizard of Oz. What the crash showed is that the magic doesn't work as well as they wanted us to believe.

Malcolm Gladwell pioneered this kind of roadshow; does he have a lot to answer for?

We owe Malcolm Gladwell a great debt. The Tipping Point made the world safe for a book with many different tales in it that are connected. I like to think we took it one stage further: we have no grand unifying theme. We don't even have a thesis.

Anthony Bourdain: My war on fast food (Observer) and an extract from his recent book:

McDonald's has been very shrewd about kids. Say what you will about Ronald and friends, they know their market – and who drives it. They haven't shrunk from targeting young minds – in fact, their entire gazillion-dollar promotional budget seems aimed squarely at toddlers. They know that one small child, crying in the back seat of the car of two overworked, overstressed parents, will more often than not determine the choice of restaurants. They know exactly when and how to start building brand identification and loyalty with brightly coloured clowns and smoothly tied-in toys. From funding impoverished school districts to the instalment of playgrounds, McDonald's has not shrunk from fucking with young minds in any way it can.

The Toronto Star's headline says it best regarding the resignation of the head of Penguin Canada (Star):

The Plot Thickens:

Last Tuesday, Davidar announced he was stepping down from his position to pursue writing and planned to relocate to his native India. The announcement shocked literary observers who saw the move as a sign the company was retreating from the Canadian publishing scene. Three days later, Penguin and Davidar, clarified the circumstances around his abrupt departure. In a statement Friday, Penguin Canada said Davidar was “asked to leave the company last month.” Davidar went a step farther: “The truth is that a former colleague accused me of sexual harassment and Penguin terminated my employment.”

Lionel Shriver (We Need to Talk About Kevin) is not happy with book prizes and the industry generally (Independent):

"It'd be totally hypocritical to discourage people from joining my profession, which was good to me in the end, but I have qualms about being encouraging. The odds are stacked against you. I want to give people enough of an idea of the capriciousness of the industry." She went on to cast aspersions on the successes of some best-selling authors whose writing was simply not very good, she thought, but whose books were aided by the benefit of the powerful publishing publicity machine – citing Bret Easton Ellis' latest book, Imperial Bedrooms, as one such example. "There are a lot of books that end up selling that aren't very good. I've just read Bret Easton Ellis' new book and it's awful but it's had a big publicity campaign. "I'm writing a 1,500 word review of it – the size of which alone will overwhelm what I say. It's not a case of cream rising to the top but skimmed milk rising – of the 'no fat' kind. The book doesn't deserve the attention. It's ghastly. In the meantime, there are lots of books that will not be reviewed," she said. Shriver's Orange Prize-winning novel has gone on to sell over 600,000 copies in Britain since publication and is currently being adapted as a film starring Tilda Swinton.

Source Books CEO Dominique Raacah is profiled in Naperville Sun:

Sourcebooks was launched in 1987 and has produced more than 2,000 titles in its history, including a number of New York Times best sellers. But in the past two years, the company has been positioning itself to move into the digital age -- a time that Raacah says "we as a company have been very communicative about."

"The subject of the digital transformation of books is something we have been engrossed in and find the work very compelling," she said. "We've wanted to be aggressive about the digital era and were the sixth publisher of over 20,000 in the nation to sign on with Apple allowing access downloads of our titles on the iPad. The digital era will be a very important one for publishing."

In Inside Higher Ed: Reinventing the textbook (IHEd):

The higher education industry should at least agree on one thing when it comes to textbooks: the current system for publishing, distributing and pricing them is rather broken. The challenge lies in reimagining the textbook so that faculty construct the right set of learning materials that engages their students in deep learning, without bankrupting them. The open educational resources movement is already laying a foundation for that type of radical change. We need to move beyond and away from the textbook concept altogether.

In its place I recommend the term Curricular Resource Strategies (CRS), which I first heard used by Mark Milliron, deputy director for postsecondary improvement at the Bill & Melinda Gates Foundation, to describe the new thinking in learning materials. CRS affords faculty greater freedom of choice and flexibility in delivering learning material to their students, offers the possibility of using everything across the content spectrum from costlier traditional print texts to the latest open digital formats, is drastically more affordable for students, allows faculty greater control of their intellectual property -- and still offers revenue streams for traditional textbook publishers and college bookstores.

While it may require more personal effort from faculty, the reward is a unique opportunity to create a new model for publishing academic learning content that avoids the mistakes of the old system. Faculty can learn from their librarian colleagues, whose past experiences in managing scholarly communication offers a lesson in how not to structure a publishing model.

From the twitter:

Demi Moore memoirs set for 2012 BBB news $2mm from Harpercollins.
Why Apple’s iBooks Numbers Are Meaningless - NYTimes
Self-pub and online services, e-books, and digital demand printing are joined into a new and powerful sector. Book Business Mag

And in Sport, Lancashire opened the first stage in their their redevelopment plan (Crains)

oh, and something about butter fingers (Guardian)

Penguin's View of the Future (Video)

Penguin CEO Makinson - Definition of the book itself is up for grabs and we're not sure yet what consumers are willing to pay for. We will only find out via trial and error and 'dynamic' pricing.

Video of his comments:



Video demo of some of their current ideas:



Via Paidcontent

Brand Presence

Most people in our industry recognise the irony inherent in discussing brand management in the publishing industry. Every aspiring author and agent seeks the validation that being published by a major publisher brings, yet most consumers have only a passing awareness of the publishers' brand. There are exceptions--Harlequin, Hungry Minds, O'Reilly- but across the panoply of publishers, brand strength is only partially monetised.

This recognised fact has not stopped publishers from investing heavily in branded web sites that cocoon their authors in an experience that generally is not relevant to the consumers they are attempting to attract. That is not to say that the content and applications available on the websites of most large publishers are inadequate or unsophisticated, but they are misappropriated. I especially like the websites of Harpercollins and Penguin, who have both taken up the challenge of community building, widgets and e-Content. And it is difficult to be critical of these attempts, given the aggressive level of experimentation undertaken.

What seems to be lacking in all publisher websites, though, is a strong sense of engagement. And engagement that is resilient. Just as consumers return to their favorite booksellers, publishers need to believe they can engage their consumer base to such an extent that they return each time they are interested in purchasing a book. And that's any book.

Publishers are best placed to build author-centric and subject/theme-oriented websites--not sites oriented around a "brand" that isn't relevant, but those that focus attention on segments of the business that remain relevant to consumers. Envision the Spiritual segment at a site supported by Harpercollins which has a unique, appropriate and relevant focus far apart from the current 'corporate' approach. All segments are valid candidates for more of a silo approach to marketing publishers' products. And I would go further in recommending that publishers consider marketing within these silos all titles available, rather than just those produced by the publisher. What better way to condense a market segment and become a destination site for Self-Help, Spirituality, Mysteries, Computer and any number of other book-publishing segments. Consumers aren't dumb. Amazon's main attraction is that all the titles in any one segment are available in one place. As long as publishers continue to ignore this fact, they will under-serve the market and under-perform given the investment in their sites.

So, which publisher will be the first to license a "Books in Print" database (as B&N, Google, Borders and many others have already done)? That would be an excellent start; moreover, the publisher is best placed to augment this data with more details, content and community- building applications that will draw in consumers. A quick search for Doris Lessing and George Pelecanos shows that Books.Google.com and Wikipedia are more likely to be the initial reference points for consumers. On their respective publisher's sites, these authors retain a significant presence, but that presence does not appear to be adequately monetized. Many publishers will argue that they are there to support the retail sale and as long as a book gets sold-- based on their effort-- they have done their job. There is something to this argument but the age-old paradigm on which it is based--multiple retail channels, limited retailer power--is long behind us and getting worse for the publisher.

Web presence for many companies (including publishers) remains a fluid engagement. The inherent benefit of the web is that you can try and fail repeatedly, with limited downside, assuming you monitor closely. In the publishers' case, it is important they not attempt use the web to build brand awareness around their trade-marks which continue to be removed from consumers' experience, Internet or not. What their focus should be is building a discernable alternative to the predominant web retailers by segmenting their offerings around logical categories and building their brand around those segments as they use their content knowledge, author relationships and technical expertise to build something powerful for the future.

Digital Stuff: Random House, Macmillan, Penguin

On Monday Random House UK announced that they will make as many as 5,000 titles available for previewing on their web site. The application is available currently on everytitle that has an "open the book" icon over the cover image. Random House like other large trade publishers has been in the process of building a digital warehouse of their content for a number of years. This process looks to be well in hand and at RH and other publishers we are likely to see new and interesting applications appear with regularity. The link for the Wingfield title is here. RH has also said the tool will be available to other sites. The Guardian noted that Play.com as well as bloggers and book fans will be able to use the widget.

Other publishers with digitial news includes Penguin who let it be known they will adopt the .epub IDPF standard for ebooks and release all their titles in this format beginning later in the year.

Over at Macmillan they are experimenting in a number of different ways to create extra value with an e-version of a printed work. (At some point they become entirely different of course). This notion is similar to my suggestions in what to do about Amazon.com but the nice people at Thedigitalist actually have an example:

The idea that a special edition eBook can contain marginal material produced before, during, or after a print edition features in two other eBooks to be published by Picador this year. Sid Smith’s China Dreams, which we published in hardback in January 2007 and in paperback in January 2008, will be issued in a uniquely up-to-date edition, in the author’s latest version, with corrections, changes, and new material, and a foreword in which he considers the process of composition and revision. Cliffhanger, by T. J. Middleton (the alias of our established Picador author Tim Binding), takes this idea in the opposite direction: alongside the print edition, which we publish in October 2008, will be an urtext: a composite version of the novel as it was before it was edited here at Picador, with the text in its original form, reinstated and modified scenes and characters, and a radically different ending, also with a foreword by the author explaining the urtext’s conception and the editing process that turned it into Cliffhanger.

I am sure much more to come.

Penguin Redux

Email subscribers may not have been able to view the Penguin newstory from Reuters that I noted last week.

Here is the link:

http://www.reuters.com/resources/flash/includevideo.swf?edition=US&videoId=78374

Penguin On the March

Penguin continue to innovate and experiment. Last year they launched wiki-novel idea "A Million Penguins" which generated over 85,000 visitors and this week they announced a collaboration project between authors and game producers. This Video from Reuters explains all.



Thanks to April for the link.

Penguin sued Over Dorothy Parker - Update

By way of update, Mr Silverstein has not won the lottery and according to this mornings Telegraph his suit against Penguin has been dismissed. Under the hugely creative headline Poetic Justice, the Telegraph reports that Pearson prevailed in this six year battle. I suspect that Mr. Silverstein is going to have some significant legal expenses to pay.

This is my original post from September:

Mild embarassment could ensue if Penguin were to loose a copyright suit over a compilation of poems the publisher produced in 1999. The wheels of justice appear to move slowly but the story is as follows. One Stewart Silverman took a project to Penguin which they turned down because they didn't agree to Silverman's format choice. Silverman went ahead and published it with Scribner. Three years later Penguin published its own selection of 'lost' Parker poems which Silverman believes was a verbatim version of his own work. Final deliberations are supposed to begin on October 9th in New York.

Penguin's argument hangs on the belief that they owe Silverman nothing for the material they published since all the Parker works were in the public domain. As such, the works are not covered by copyright. The Silverman camp suggests that he asserted copyright to the compilation and that this fact was clearly noted when he originally went to Penguin with the project. The judge will decide the result, but on the witness stand John Makinson, Penguin CEO did admit:

''I think it would have been more appropriate to have given some attribution to Mr Silverstein for those poems; it's just a personal opinion that I have based on my reading of the situation subsequent to my deposition in the initial case here."

Silverstein is looking for $1,00,000 in punitive damages.

Telegraph

Penguin Blog a Classic

Penguin has launched a blog site that seeks both reviews and social commentary on their list of over 1,400 classics. You can register to receive one of their titles in the mail and then 'blog' about it on the site. It launched a few months ago but at the moment this interesting experiment looks like a site for reader submitted reviews. There are some comments attached to some reviews but the site doesn't seem to capture the spirit and spontaneity that blogging could engender.

Blogging can be anarchic and to some extent that's what you would want to see from this project: Someone having a conversation with or interaction with a book as they read it. What they feel, what they don't understand, what happened that day in their lives that reminded them of the book, whatever.... We can get a book review from Amazon. I think Penguin should take the shackles off and loosen up.

Penguin

Do it Your Self Penguin Covers

A new twist on the Penguin initiative that allows you to design your own Penguin classic cover.

At MyPenguin several bands and musicians have added their own covers. Razorlight, Beck, Goldspot, Dragonette, Ryan Adams, Johnny Flynn and Mr. Hudson & The Library all chose the Penguin Classic they most wanted to see NAKED... then they did a cover for it.

At left is Beck's cover.

Reed Looks to Profit From Thomson Learning Multiple

The multiple paid for Thomson Learning was astounding given the general view the business unit would sell for almost $2.0Billion less. Not surprising, Reed Elsevier are as gobsmacked as all of us but think that they can generate something of the same multiple for their learning unit. The comparisons are not exact between the two units however one thing is similar; that both represent unique moments to buy leading players in their segment and it is unlikely that a similar combination of assets will come up for sale within the next five years or so. Here is The Independent:

The analyst Simon Wallis believes valuing Reed's total discounted cash flow
on a multiple of 6 times pre-tax earnings, a typical private equity buyout
valuation, gives the shares a potential value of 930p. The Swiss bank UBS also
believes there is more upside in Reed, giving the stock a more modest 740p price
target. Shares in Reed firmed 3p at 666p while the rivalPearson rallied 17.5p to
908p on news that it has acquired the online learning group eCollege for
$477m.

Reed has already sold some of the Harcourt assets to Pearson but the rump educational business remains and likely will exceed earlier expectations on price.

12/10/97: Reader's Digest, Reed Elsevier, Kluwer, Thomson

Summary
Shareholder Unrest Brewing At Reader's Digest
Dow Jones Teams Up With NBC: Companies Hope to Stem Losses Abroad With TV-Internet Partnership
Wolters Plans Acquisition Of Thomson Publications
Penguin Putnam Inc. Announces Publishing Partnership With DreamWorks SKG
Thomson Financial Publishing to Expand Electronic Commerce Initiatives
Harcourt General Announces Results For Fourth Quarter And Full Year
Reed Elsevier: Update on Trading and on Progress on Proposed Merger with Wolters Kluwer:
National Geographic Chief Quits: John Fahey Moves Up in Society as Reg Murphy Suddenly Moves Out
Wolters Kluwer Reed Elsevier
New York Times Says It Plans Acquisition In 1999

RECENT NEWS

Shareholder Unrest Brewing At Reader's Digest
(Book Publishing Report) A minority shareholder is going forward with its bid to place two candidates on the Reader's Digest board of directors, despite the fact that the company has politely refused its request. Making matters worse for Reader's Digest-which will hold what could be a fractious annual meeting this Friday (12th)-is the fact that shareholder Corporate Value Partners has chosen to conduct its efforts publicly. The shareholder discord is just the latest problem to beset Reader's Digest, which has been struggling to reverse an alarming drop in its financial performance caused by a steadily eroding customer base (BPR, Aug. 18). BPR has learned that Barbara Morgan, senior vice president and editor in chief of the company's Books and Home Entertainment Products division, is leaving the company. The division's operating income sank 37.5% to $201.1 million on revenues that fell 11.9% to $1.85 billion in fiscal 1997, ended June 30. Morgan is the latest in a series of executive departures that began with chief executive officer James Schadt's forced resignation in August. Since then, CFO Stephen Wilson, senior VP of strategic planning Glenda Burkhart, senior VP and general counsel Paul Soden and RD Europe president Martin Pearson have also left.

Dow Jones Teams Up With NBC: Companies Hope to Stem Losses Abroad With TV-Internet Partnership
After a year of talks, media giants Dow Jones & Co. and General Electric Co.'s NBC division announced today that they will form a global television and Internet partnership cementing the brands internationally and tempering losses both companies are experiencing in their overseas operations. The merger will consolidate the two companies' business-news channels in Europe and Asia -- cutting costs and expanding each side's distribution -- while also adding Dow Jones news, and perhaps interviews with its Wall Street Journal reporters, to CNBC's programming in the United States. Dow Jones lost $48 million in its television ventures last year, while NBC 's subsidiary CNBC lost $15 million in Asia. NBC will pay a licensing fee to Dow Jones but did not disclose how much. CNBC will now be known both domestically and internationally as "a service of NBC and Dow Jones. For Dow Jones, the alliance comes at a time when Kann is under intense pressure from the company's board to curtail money-losing operations. Revenue from this deal, as well as the cash from several recent deals to license the well-known market barometer Dow Jones industrial average as a vehicle for the trading of futures and options contracts, will enhance the company's bottom line. But Kann's larger problem, analysts said, is Dow Jones Markets, the real-time news and data service formerly known as Telerate, which is losing market share to competing services run by Reuters Holdings PLC and Bloomberg Financial Markets. Kann announced a controversial plan in January to spend $650 million to revive the ailing unit, which drew the ire of shareholders and certain members of the Bancroft family, which controls 70 percent of the voting shares of Dow Jones stock and has four of the 15 seats on the company's board of directors. After pressure from outsiders and a fresh look at the plan by Dow Jones's board, the company changed course and announced it was "exploring options" regarding Dow Jones Markets, including the sale of the unit. "It has got to be sold," said Michael Price, the influential money manager who holds 4.1 million shares of Dow Jones stock and has been pushing the company since January to sell the flagging unit. Still, one of the things Kann has been criticized for is not doing enough to leverage the Dow Jones franchise as a premiere provider of financial news. Today's deal will help give the company a worldwide television platform to showcase its stories. CNBC will have worldwide television rights to Dow Jones stories and plans to set up studios at the Wall Street Journal's headquarters in the World Financial Center in downtown Manhattan. For NBC , the move strengthens its CNBC subsidiary, which is accessible in 65 million households and is projecting a $100 million profit this year. On the Internet, the Web site run by MSNBC -- an existing NBC -Microsoft Corp. joint venture -- will provide highlights from the Wall Street Journal, flagged under the CNBC/Dow Jones logo. As part of today's deal, Dow Jones acquired a third of MSNBC Business Video, which delivers video clips from corporate speeches and conferences to clients' computers. Both NBC and Dow Jones acknowledged that fourth-quarter earnings may be pinched by restructuring costs related to today's announcement. December 10, 1997 Copyright (c) 1997 The Washington Post Received via NewsEDGE

Wolters Plans Acquisition Of Thomson Publications
AMSTERDAM -- Dutch publisher Wolters Kluwer NV said it agreed to acquire scientific and medical publisher Thomson Science from Thomson Corp. of Canada. Wolters Kluwer didn't provide financial details of the planned transaction. However, the company said it expects the deal to be completed around the end of the year. Wolters said a significant number of Thomson Science's medical publications fit well with those of Wolters' U.S. medical publisher Lippincott-Raven, while its general scientific publications complement those of Wolters Kluwer Academic Publishing. Wolters said the acquisition won't include the German medical and scientific publications of Thomson Science. Wolters Kluwer's core activities include the legal, medical, educational, and other scientific and professional fields. Its principal operations are in the U.S. and eight European countries including Spain, Italy, Germany and France. Copyright (c) 1997 Dow Jones and Company, Inc.

Penguin Putnam Inc. Announces Publishing Partnership With DreamWorks SKG
NEW YORK, Dec. 9 Penguin Putnam Inc. has signed a multi- year strategic license agreement with DreamWorks Consumer Products, it was announced today by Douglas Whiteman, Executive Vice President of Penguin Putnam. The deal grants Penguin Putnam publishing rights for at least the first five animated feature films for DreamWorks Pictures, as well as the option to propose publishing programs for other DreamWorks properties, including live action motion pictures, animated and live action TV programs and direct-to-video films. Penguin Putnam's rights encompass most book formats with a suggested retail price of $4.00 and above. Penguin Putnam is currently working on more than two dozen titles in support of the 1997-1998 motion pictures set for release from DreamWorks Pictures. The first four books shipped in early November and are based on the film Amistad, directed by Steven Spielberg. Penguin Putnam is also developing a range of titles and formats for Small Soldiers (Summer 1998). Directed by Joe Dante (Gremlins, Innerspace) and with special effects from Stan Winston Studio and Industrial Light & Magic (The Lost World: Jurassic Park), the film tells the story of a small town that is overtaken by artificially intelligent toys. Grosset & Dunlap plans six titles, including a movie storybook and a top secret dossier, all capturing the innovative look of the film. In support of DreamWorks' first animated film The Prince of Egypt (Holiday 1998), Penguin Putnam is developing titles in at least a dozen formats, with age-appropriate content for both adults and children, and honoring the ground-breaking animation style of the film. SOURCE Penguin Putnam Inc via Businesswire

Thomson Financial Publishing to Expand Electronic Commerce Initiatives
Thomson Financial Services announced today the acquisition of The EDI Group, Ltd. by its Thomson Financial Publishing unit. Terms of the agreement were not disclosed. The EDI Group is a professional services organization specializing in providing the highest quality research, publication and education services to companies participating in the EDI and Electronic Commerce marketplace. The EDI Group also offers public and private courses in EDI, EC and financial EDI/EFT. In addition, The EDI Group publishes quarterly a professional journal; EDI FORUM: The Journal of Electronic Commerce. Source Businesswire

Harcourt General Announces Results For Fourth Quarter And Full Year
Harcourt General, Inc. (NYSE:H) today reported that its Harcourt Brace publishing businesses achieved strong year-over-year gains in the fourth quarter of fiscal 1997, resulting in a record full-year performance by the Company before non-recurring charges and amortization associated with the acquisition of National Education Corporation (NEC). For the full year, Harcourt General reported that revenues rose 12.2 percent to $3.69 billion from $3.29 billion in 1996. Before NEC-related amortization of goodwill and acquired intangibles and non-recurring charges, operating earnings for the year were $375.7 million, a 9.0 percent increase from $344.7 million in 1996. After $104.1 million in NEC-related amortization of goodwill and acquired intangible assets and $277.2 million in non-recurring charges, the Company had an operating loss in 1997 of $5.7 million. The Company reported a net loss of $115.1 million, or $1.64 per share, for the full year, compared to net income of $190.9 million, or $2.62 per share in 1996. Revenues in the Harcourt Brace publishing operations increased 12.8 percent in the fourth quarter to $398.0 million, while operating earnings were up 22.3 percent to $97.0 million. For the full year, Harcourt Brace publishing revenues increased 14.5 percent to $1.25 billion, with operating earnings before non-recurring charges rising 13.3 percent to $223.1 million.

Reed Elsevier: Update on Trading and on Progress on Proposed Merger with Wolters Kluwer: Reed Elsevier today issues a brief status report on the progress of the proposed merger of Reed Elsevier with Wolters Kluwer and, in line with the practice introduced last year, an update on recent trading and some other material issues. Proposed Merger with Wolters Kluwer: "On 13 October 1997, the Boards of Reed International P.L.C., Elsevier NV and Wolters Kluwer NV announced that they had agreed in principle to propose to their respective shareholders a merger of their businesses. Progress continues to be made in developing the detailed merger proposals. The major steps implemented so far have included relevant employee consultation processes in the Netherlands, as well as the filing of necessary information with the competition authorities in various jurisdictions. "It is expected that, subject to receiving certain regulatory clearances, a circular to the shareholders of Reed, Elsevier and Wolters Kluwer, setting out details of the proposed merger will be issued on 27 March 1998 together with the respective 1997 annual reports. IPC Magazines: "On 27 October 1997, Reed Elsevier announced the possible divestment of IPC Magazines, its UK consumer magazines business. Review of the available options is continuing and if it is decided to pursue such a divestment, it is intended that any transaction would be concluded early in 1998. Update on Reed Elsevier’s Trading: "In September we completed the $447 million acquisition of the Chilton Business Group, a major US business to business publisher. Also, in October, we agreed a merger between Utell, our hotel reservation and representation business, and the US company, Anasazi Inc., which is the leading supplier of technology solutions to the hotel and hospitality market. "Reed Elsevier’s 1997 preliminary results will contain a number of exceptional items, the most significant of which will be substantial provisions in respect of the Reed Travel Group. Since the announcement, on 26 September 1997, of irregularities in circulation claims made by the Reed Travel Group, considerable progress has been made in determining the extent of the misstatements and in developing recompense plans for advertisers in the affected publications. Revised sales and marketing practices have already been introduced and circulation claims are now being rigorously controlled. "It is not possible at this stage in the process to quantify either the full financial effect of the recompense plans or the impact on the future profitability of the Reed Travel Group and the related value of its intangible assets. The exceptional charges will be in relation to the recompense plans, together with a non-cash write-down of intangible asset values. Source: Reed Elsevier

National Geographic Chief Quits: John Fahey Moves Up in Society as Reg Murphy Suddenly Moves Out
The National Geographic Society's chief executive resigned yesterday, only 18 months after taking the top job at the venerable Washington educational and publishing organization. Reg Murphy said he had been planning the move all along and dismissed any suggestions of dissension in his departure. He had been the society's No. 2 executive since 1993. During his tenure, Murphy, 63, a former newspaper publisher, aggressively cut costs and steered the nonprofit society toward profit-making ventures, such as producing dramatic TV movies and starting a chain of National Geographic stores. He also launched new foreign-language editions of the society's famed yellow-bordered magazine in one of the biggest expansion pushes in the publication's 109-year history. The strategic changes made Murphy a controversial figure within the society, a genteel, tradition-bound outfit that has long projected a semi-academic air. Murphy's successor, appointed by the society's board yesterday, is John Fahey, who joined National Geographic just 20 months ago from Time-Life, the direct-marketing arm of Time Warner . Fahey, 45, was recruited by Murphy from Time-Life in Alexandria to run National Geographic Ventures, the for-profit subsidiary Murphy started in 1995. The management changes represent a swift transition at an institution not known for moving quickly. They underscore the ascendancy of executives who've come from outside the organization and have a keener eye on the bottom line. Fahey takes over at a time when the society is in relatively strong shape. Circulation of its flagship magazine, which lost readers throughout much of the 1980s, has stabilized at about 9 million subscribers, who receive the magazine by becoming dues-paying "members" of the society. Its major growth area is its television operations. National Geographic Television produces documentaries and nature programs appearing on NBC and the TBS and Disney Channel cable networks. It has also moved into making dramatic movies for theatrical and broadcast distribution. Its first dramatic offering, "Forbidden Territory: Stanley's Search for Livingstone," was broadcast on ABC Sunday. Copyright (c) 1997 The Washington Post Received via NewsEDGE

Wolters Kluwer Reed Elsevier
The European Union Commission Friday opened a detailed four-month inquiry into the planned merger of Anglo-Dutch publisher Reed Elsevier (N.ELS, U.REE) and Dutch publisher Wolters Kluwer NV (N.WOK), an E.U. source said. Via Newsedge

New York Times Says It Plans Acquisition In 1999
The New York Times Co. said Thursday that it was ``counting on an acquisition to provide considerable future growth'' sometime in 1999. The company also predicted increases in revenues and operating profits, and its stock rose to a 52-week high. ``The next step in our external development plan is to bring an investment banker on board'' to examine potential properties, the company's president and chief executive, Russell T. Lewis, said at a New York conference of investors, sponsored by Paine Webber. But Lewis added that he did not ``anticipate any significant developments in this area until 1999.'' The Times also disclosed that it planned a new section of technology news called Circuits in February and that it would publish seven to nine special one-time sections in 1998. In addition, the company made its earnings predictions, reporting that operating profit for the newspaper group, its largest division, was expected to rise 35 percent from last year to between $430 million and $440 million. The Times also said that earnings before interest, taxes, depreciation and amortization were expected to rise 30 percent, to between $590 million and $600 million. The Times Co., which had revenues of $2.6 billion in 1996, publishes The Boston Globe and 21 regional newspapers in addition to The New York Times, as well as three magazines. The company also operates television and radio stations
Copyright (c) 1997 The New York Times Co. Received via NewsEDGE from Desktop Data, Inc.