SCHOLASTIC ANNOUNCES FISCAL 2008 RESULTS AND FISCAL 2009 OUTLOOK

From the company's press release:

New York, NY (July 24, 2008) -- Scholastic Corporation (NASDAQ: SCHL), the global children’s publishing, education and media company, today reported its results for the fiscal 2008 fourth quarter and full year and its outlook for fiscal 2009. It also announced that its Board of Directors has declared a quarterly dividend of $0.075 per share to be paid on September 15, 2008 to shareholders of record on August 4, 2008.

“Given our track record of strong free cash flow, generating $188 million in fiscal 2008, and low debt levels, we repurchased $220 million in stock last year while continuing to invest in strategic growth opportunities,” stated Richard Robinson, Chairman, CEO and President. “Initiating a regular dividend allows us to return additional cash to Scholastic shareholders.”

For the fiscal year ended May 31, 2008, the Company had revenue from continuing operations of $2,205.6 million, up 15% from the prior year. Earnings from continuing operations rose to $2.82 per diluted share from $1.70 per diluted share in fiscal 2007. Fiscal 2008 results benefited significantly from the publication of the seventh and final book in the Harry Potter® series.

Revenue from continuing operations in the fourth quarter of fiscal 2008 declined 2% to $536.1 million. Earnings from continuing operations were $0.75 per diluted share compared to $1.04 per diluted share in the fourth quarter of fiscal 2007, primarily reflecting continued investment in the Company’s growth initiatives.

The Company reported that negotiations for the sale of its direct-to-home continuities business, which it previously announced it would exit, moved forward during the quarter, and that it expected to finalize terms in the first quarter of fiscal 2009. Scholastic also announced that it shut down its school-based continuities business effective May 31, 2008. As a result, both businesses have been classified for accounting purposes as discontinued operations in current and prior periods.

In fiscal 2008 the loss from discontinued operations, net of tax, was $3.39 per diluted share, compared to a net loss of $0.29 per diluted share in fiscal 2007. In the fourth quarter the loss from discontinued operations, net of tax, was $1.09 per diluted share compared to a net loss of $0.11 per diluted share in the prior year period. The greater loss in the current year and quarter primarily reflects non-cash asset write-downs, net of tax, of $2.62 and $0.79 per diluted share, respectively, recorded following the decisions to exit these businesses. In the current year and quarter, the net loss associated with direct-to-home continuities was $0.61 and $0.21 per diluted share, respectively, and with school-based continuities the net loss was $0.16 and $0.09 per diluted share, respectively.

Including continuing and discontinued operations, the fiscal 2008 net loss was $0.57 per diluted share compared to net earnings of $1.42 per diluted share in fiscal 2007. In the fiscal 2008 fourth quarter, the net loss was $0.34 per diluted share compared to net earnings of $0.93 per diluted share in the prior year period.

“Scholastic made important investments in fiscal 2008 to achieve ongoing revenue and profit growth and to reach 9 to 10% operating margins in 2010,” Mr. Robinson added. “These initiatives include:
1. Building and testing a second generation, online selling platform for School Book Clubs to launch in fiscal 2009, which improves on our online system that already handles 60% of Club orders;
2. Expanding the use of point-of-sale equipment and online tools in School Book Fairs, to improve merchandising and the book fair experience;
3. Developing new publishing and online properties, like the innovative multi-platform adventure series The 39 Clues™, which combines books, collectible cards, online games and an interactive website;
4. Investing in a stronger sales and service organization for Scholastic Education and in new technology products like System 44™, a prequel to our top-selling reading-intervention program READ 180®;
5. Accelerating investment in China and Southeast Asia to serve the growing market for English-language books and learning, where Scholastic’s business expanded by more than 20% in fiscal 2008.

In fiscal 2009 we also have plans to reduce costs by $25 to $35 million, through reductions in headcount and other spending areas. Based on these elements, this year’s plan delivers profit and margin growth (excluding Harry Potter) and moves us toward our goal of 9 to 10% operating margins in fiscal 2010.”

Fiscal 2009 Outlook

The Company expects total revenue from continuing operations in fiscal 2009 of approximately $2.0 to $2.1 billion, and earnings per diluted share from continuing operations in the range of $1.75 to $2.10. This guidance reflects growth in revenue of approximately 3 to 5%, and in earnings per diluted share of approximately 10 to 25%, excluding the benefit of Harry Potter in fiscal 2008. Free cash flow is expected to be approximately $90 to $100 million.

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Scholastic Beat Estimates

Scholastic reported second-quarter profit above analysts' estimates, helped by revenue and profit growth in their International segment. The company also announced they are divesting the direct to home continuity business. From the press release;

Revenue in the second quarter was $746.2 million compared to $735.5 million in the prior year period, and net profit was $75.6 million versus $75.1 million. Earnings per diluted share rose to $1.93 from $1.75 in the prior year period, primarily reflecting accretion from the previously announced $200 million accelerated share repurchase. In the quarter, Direct-to-Home Continuities contributed revenue of $33.2 million and resulted in a pro forma net loss of $6.1 million or $0.16 per diluted share, based on the Company's normal effective tax rate of 37.0%; this is compared to revenue of $38.1 million and a pro forma net loss of $2.8 million or $0.06 per diluted share in the second quarter of fiscal 2007.

"In the second quarter, Scholastic's businesses, excluding Direct-to-Home, performed on plan, and the Company's operating income and margin improved year-over-year," commented Richard Robinson, Chairman, CEO and President. "Profits from School Book Fairs, Clubs and Trade Publishing all rose, while Scholastic Education made progress investing in a reorganized sales force, increased technical support and consulting services, and new technology products. In addition our International segment recorded double-digit revenue and profit growth."

The company has retained Greenhill & Co. and has begun the sales process and will also report direct to home as discontinued operations.

The company maintains their full year revenue forecast of $2.3 to $2.5 billion and earnings per diluted share of $2.35 to $2.85, noting that they expect the solid performance in their core businesses to offset the lower than expected results from Continuities. Full year net income may be impacted by write-downs associated with the sale of the business unit but there is no expectation that cash flow will be adversely impacted. The company also announced a modest stock repurchase plan and is authorized to purchase $20mm of its common stock.

Highlights:

• Harry Potter's boxed set helped the consumer segment to achieve flat revenue and profit
• In education, revenues were flat with prior but operating income was lower due to planned investments
• Large gains in international revenues and profits offset declines in other segments.
• Revenues were up 13% and profit up $4.5mm (22%)

Replacing Harry in 39 Steps

Scholastic will announce a new publishing program that they hope will replace the Harry Potter franchise. In this case, they will retain all rights to the intellectual content so while traditional published product may not reach the heights of success that Harry did, Scholastic will be able to leverage the content in a much broader fashion than the Potter series. Rowling retained most rights to negotiate directly with other third parties such as movie producers without having to pay Scholastic or Bloomsbury a percentage.

From the NYTimes:

The series, to be officially announced by Scholastic on Tuesday morning, will be aimed at readers 8 to 12 and offer mystery novels telling the story of a centuries-old family, the Cahills, who are supposed to be the world’s most powerful clan. According to the books, famous historical figures ranging from Benjamin Franklin to Mozart were members of the family. The plots will revolve around the race by two young Cahills, Amy, 14, and Dan, 11, against other branches of the family to be the first to find the 39 clues that will lead to ultimate power.

Scholastic intend to make non-print publishing a key component of this program recognizing that not only is print less appealing to younger readers but that the web related product could actually create a larger more compelling product.

As a side note, I thought it curious that NYT has chose not to place this story in the media & advertising section of the times but in the Arts section. Seems to me that this is both: Certainly from a business perspective, replacing Potter revenues at Scholastic will be of interest to the business community.

Not Your Ordinary Publishing Contest

There has been a veritable explosion of publishing contests in the past two years, all with the intention of seeking that needle in the hay barn, the next great book. In contrast this contest announced by Scholastic and Coldwell Banker of all people seems to have little point -at least as far as its relevance to publishing. Perhaps I am missing something but it does seem to stretch the logic of strategic alliances very thin.

Coldwell Banker Real Estate Llc Announces The Launch Of Its Third "my Home: The American Dream" Contest. In Collaboration With Scholastic, The Global Children's Publishing, Education And Media Company, Coldwell Banker® Invites Students In Kindergarten Through Eighth Grade To Tell Their Personal Stories, Through Images And Words, About How Their Houses, Apartments, Or Condominiums Are Not Just Places They Live, But Homes Where Dreams Are Shared And Memories Are Made.

(Mrs PND would be going crazy with all the caps in that press release).

I'm not really a fan of similar competitions but this one appears to be pure publicity stunt and the advantage for Scholastic escapes me.

Scholatic Reports

Scholatic reported first quarter revenue of $586.9million which was 75% higher than the same period last year. The last Potter title accounted for the increase. Scholastic routinely reports a loss in its first quarter and their net loss this period was $2.8million or $0.07/share. From the press release:

“This summer Scholastic again broke publishing records with the launch of Harry Potter and the Deathly Hallows. Exceptional promotion and marketing combined with overwhelmingly favorable publicity resulted in unprecedented sales, while efficient distribution and execution helped us achieve high sell-through and improved margins. Sales of READ 180® and educational technology also rose solidly in their primary selling season, reflecting Scholastic’s continued success raising student achievement,” commented Richard Robinson, Chairman, CEO and President. “These positive first quarter results position us well to meet our fiscal 2008 goals while making planned investments to drive long-term growth, in particular in our education and children’s book businesses, and progress toward our 9 to 10% operating margin goal.”

The company reaffirmed its forcast of full year revenues between $2.3 to $2.5 billion and earnings per diluted share of $2.35 to $2.85.

Other highlights from the press release:

• Children’s Book Publishing and Distribution. Revenue for the quarter was $342.5 million, up over 200% from prior year. Potter revenue increased to approximately $240 million from $5 million reflecting the launch of Harry Potter and the Deathly Hallows, and higher sales of the first six Harry Potter titles. Operating profit for the quarter, improved to $2.7 million compared to a loss of $67.3 million a year ago
• Educational Publishing. Revenue for the quarter was $127.8 million, level with the prior year period. Educational technology sales rose 9% largely due to solid sales of READ 180 and FASTT Math™. This was offset by schools’ continued weak spending on supplemental materials, which resulted in lower sales in Paperbacks and Library Publishing. Segment operating profit was $30.6 million compared to $32.7 million in the first quarter of last year
• International. Revenue of $99.6 million was up 26% (17% in local currencies) from the prior year period. Segment operating loss improved to $2.7 million compared to $5.5 million in the prior year period, primarily due to strong export sales of Harry Potter and improved results in Australia and Asia.
• Media, Licensing and Advertising. Segment revenue for the quarter rose 8% to $17.0 million, due in part to higher sales of interactive products. Segment operating loss improved to $5.1 million from $6.1 million
• Other Financial Results. Corporate overhead in the quarter was $20.3 million compared to $19.9 million in the prior year period, reflecting higher Harry Potter-related expenses, partly offset by company-wide efforts to reduce costs

Scholastic: The Future

As the end of the Harry Potter era dawns - with millions still to be made from product extensions and paperback rights - some are wondering whether the time is ripe for the sale of the company. The most likely buyers would be (no surprise) private equity; however, there remains an obstacle in the form of the owner. Richard Robinson inherited the company from his father and has grown it into a $2.0billion diversified trade publisher and, while the company is public, he controls 4/5's of the board seats. It is unlikely that the company will be sold despite the arguments contained in this article by Bloomberg.com,

shares of Scholastic, the book's U.S. publisher, are trading at 0.66 times annual sales, compared with 1.04 times sales for rival U.S. book publishers. The shares would be worth more than $50 each, or 48 percent above their current price, if the company were to sell itself, Boyar and Stifel Nicolaus & Co. analyst Drew Crum said.

The Bloomberg authors argue that because Scholastic has not adequately reinvested the Potter windfall and found replacement revenue sources, now is the time to generate a high sale price. In reality, there can't be too much motivation to sell from Robinson since the company will continue to make reasonable profits and high cash flows. In addition, the company has had similar transitions before (Goosebumps and Clifford, the big red dog) - although the Potter franchise dwarfs earlier product successes - and at those junctures commentators wondered where the next earnings generator would come from.

The Bloomberg article does discuss continued operational issues most recently in their direct mail business,

Scholastic's latest stumble is in its direct-mail business, where subscriber delinquencies are rising. Yesterday, the company reported fourth-quarter profit of $40.4 million, or 93 cents a share, missing analysts' average estimate.

Nevertheless, the company has a plan to address these issues and shows no sign of preparing itself for an auction. As the largest Childrens' publisher, the company will have its pick of the best new children's products and, as it has in the past, will re-establish a new product franchise. The company may also acquire companies where the product mix could be leveraged to greater extent via Scholastic's distribution and management structure.

As a shareholder, there should be some concern over earnings growth in the next 12-24mths; however, assuming a premium will drive the stock price because of an anticipated acquisition would seem to be ill-advised.

Scholastic Earnings

A big day for earnings reports today and first up is Scholastic which is reporting 3rd Quarter results today. They have narrowed their loss versus the same period last year but they are cutting their full year outlook. Watch the stock price later in the day. The company's year ends in May and the last Harry Potter book is due in July. (Reuters)

Here is the full press release and an excerpt:

Results in the third quarter were generally positive. Strong sales in the core clubs and improved efficiencies sustained an impressive profit turnaround in School Book Clubs and drove higher margins in the Children's Book Publishing and Distribution segment. Robust technology sales also improved results and margins in Educational Publishing. In addition, the Company's cost reduction efforts remained on plan," commented Richard Robinson, Chairman, CEO and President. "While customer acquisition through the Internet remained strong in Continuities, higher bad debt and promotion amortization hurt the quarter's results and have caused us to reduce our outlook for the fourth quarter and full year.

Results for the quarter:

• Company now expects full year earnings in the range of $1.40 to $1.60 per diluted share on revenues of $2.1 to $2.2 billion
• Free cash flow for the fiscal year is now expected to be between $50 and $70 million
• Childrens segment revenues in the third quarter of fiscal 2007 were $280.1 million, up 3% from $270.9 million in the prior year period
• Educational segment revenue increased slightly to $74.6 million from $73.5 million in the prior year period, and operating results improved to a loss of $3.0 million from a loss of $3.5 million in the year-ago period.
• International segment revenue rose 5% (or 1% in local currencies) to $101.5 million from $96.9 million in the prior year period and operating profit improved to $3.5 million from $2.3 million a year ago, primarily as a result of higher export profits.
• Media, Licensing and Advertising revenue in the segment declined 12% to $40.8 million from $46.4 million in the prior year period.
• Corporate Overhead declined 20% to $15.7 million from $19.7 million in the prior year period.

Rowling Suing EBAY

News from The Times via Richard Charkin that J.K. Rowling has initiated a suit against Ebay in India for selling pirated copies of her work. From The Times article:

Neil Blair, Rowling’s legal adviser at the Christopher Little Literary Agency, said that she welcomed the court order. “Over the years eBay has appeared to be unwilling to control sellers on their site offering pirated or forged Harry Potter items for sale to innocent fans,” he said. “We have asked eBay on numerous occasions to assist by taking preventative steps to avoid these sales – steps that we are aware they can introduce. As these requests were not heeded we had no choice but to seek judicial intervention.

Ebay has played the innocent in other similar cases - Tiffany in NYC and Dior in Paris - suggesting that it isn't partical for them to monitor every sale to ensure that the goods are legitmate. They just don't want to do the work.

12/28/97: Barnes Noble, Pearson, Readers Digest, Scholastic

Summary:
Sun Media Corporation IPO
Readers Digest Annual Meeting: No Family Affair
For the Kids, Scholastic Says 'So Long, SOHO'
Board Changes at Pearson plc
Starwood to sell ITT directories unit for $2.1 billion
Town & Country
Knight-Ridder, NYT Report Online Losses
Barnes & Noble, AOL Make Deal

RECENT NEWS

Sun Media Corporation IPO
TORONTO, Dec. 3 /CNW-PRN/ - Sun Media Corporation announced that it has filed a prospectus with the securities regulatory authorities in each of the provinces of Canada for a combined initial public offering and secondary offering of approximately 23 million common shares in such provinces at a price of $13.50 per share. Sun Media is the second largest daily newspaper publishing group in Canada in terms of circulation and currently publishes five daily newspapers in major urban centers in Canada (The Toronto Sun, The Edmonton Sun, The Calgary Sun, The Ottawa Sun and The London Free Press) and The Financial Post, which is 80% owned by Sun Media. Sun Media's Community Newspaper Group also publishes five daily community newspapers, 80 weekly community newspapers and shopping guides in Canada and in Florida and 17 farming and other specialty publications. SOURCE Sun Media Corporation

Readers Digest Annual Meeting: No Family Affair
Reader's Digest held its annual shareholders meeting last week and, unlike many of the 75-year old company's publications, it was far from family fare. Angry shareholders complained about flagging share prices, fiscal irresponsibility and ineffective leadership, according to Reuters. Among the complaints: the company reportedly borrowed $100 million this year to pay out a 90 cent dividend. Under questioning, the company reportedly admitted that it actually had not earned its dividend for the past three years. Meanwhile chairman and CEO George Grune urged dissenters to be patient. As part of a promised turn-around, he reportedly said the company was re-evaluating its business alliances with Meredith Corp., PBS, Sears, Roebuck and Co., Spiegel Inc. and Avon Products Inc.

The company also was lambasted for its aging board. For example, one shareholder reportedly singled out board member Melvin Laird who, at 75, was the U.S. Secretary of State under former President Richard M. Nixon. The company paid Laird $400,000 for consulting services last year. Mediacentral: 12/16

For the Kids, Scholastic Says 'So Long, SOHO' (Folio: First Day)
Scholastic Corp. certainly is serious about this core-business-focus stuff that corporations are always prattling about in their life-imitates-Dilbert manner. To hear Scholastic executive VP Hugh Roome tell it, the $1-billion children's publisher will unburden itself of several profitable operations when it completes the sale of its SOHO Group [small office/home office] to privately held CurtCo Freedom Group in the next four weeks. The plum properties in the deal, announced last Thursday and valued at $20 million, are Home Office Computing -- launched 15 years ago by Scholastic as Family Computing -- and HOC offshoot Small Business Computing.

Roome, hired by New York-based Scholastic seven years ago to re-launch Family Computing as HOC, says that both HOC and SBC are profitable; so, he said, is Scholastic's six-year-old SOHO Custom Publishing unit. Its projects have included Small Business, produced for Microsoft, and Small Business Handbook, of which it sold 100,000 copies to AT&T. The unit also puts out four newsletters with total circulation of 2 million. Other properties acquired by CurtCo include HOC Online (www.smalloffice.com), which Roome said has sold out its banner-ad space 18 months running. Roome said the SOHO Group's 50-odd employees will move to Curt Co's expanding offices on West 56th Street in Manhattan and that he doesn't believe any of those personnel will be cut. In its announcement of the acquisition, the privately held CurtCo, based in Malibu, CA, pointed to the "synergy" Scholastic's SOHO Group has with such CurtCo magazines -- it publishes 21 along with 27 daily newspapers -- as Portable Computing Direct Shopper, Mobile Computing & Communications and Sales & Field Force Automation.

HOC's paid circulation rose by 2.4% to 461,353, thanks to a 20,000-plus increase in subscriptions to 441,000 in the first six months of 1997 compared with the first half of '96, according to the Audit Bureau of Circulation’s. Single-copy sales averaged 20,361, a 32% decline. Ad pages through November totaled 903, a 1.5% improvement over 890 in the first 11 months of '96; ad dollars rose 15.8% to $22.4 million from $19.4 million, according to Publishers Information Bureau. Small Business Computing, launched in January 1996, has controlled circulation of 140,000. CurtCo president and CEO William J. Curtis didn't return calls from First Day, but Roome said CurtCo "has intentions to expand the magazines' circulation’s in many dimensions and build other spin-off properties."

Sources familiar with the transaction's history said bidders for Scholastic's SOHO Group at one time or another have included Inc. magazine and Cowles Business Media. Roome acknowledges that it received unsolicited bids for the SOHO Group four years ago; at that time, those same sources said, the SOHO Group could have fetched a much higher price. New York investment banking firms DeSilva & Phillips Inc. and Veronis, Suhler & Associates Inc. represented CurtCo and Scholastic, respectively, in the transaction. (Neil Cassidy) Source: Mediacentral 12/15

Board Changes at Pearson plc
David Veit and Pehr Gyllenhammar are to step down from the board of directors of Pearson plc. David Veit, 59, an executive director and president of Pearson Inc, will retire at the company’s annual general meeting next May. He has been a Pearson director since 1981 and the senior Pearson executive in the United States for more than twenty years. Pehr Gyllenhammar, 62, who has been a non-executive director since 1983, will retire from the board at the end of December 1997. Source: Pearson plc 17th December 1997

Starwood to sell ITT directories unit for $2.1 billion
NEW YORK, Dec 18 (Reuters) - Starwood Lodging Trust, the victor in one of the year's biggest takeover fights, began on Thursday to break apart its prize. The real estate and hotel investment trust announced plans to sell ITT Corp.'s highly-profitable telephone directories business for $2.1 billion to Dutch publisher NV Verenigd Bezit VNU (OTC BB:VNUNY - news; VNUN.AS). The sale, which is contingent upon the completion of the proposed $10.2 billion ITT-Starwood transaction, came sooner than expected and is the first of several non-core assets expected to be sold by Starwood. Phoenix-based Starwood said it would use proceeds of the sale to reduce debt associated with the acquisition of ITT.
VNU, one of the world's largest information companies, is the dominant publisher of consumer magazines in the Netherlands and Belgium. It said the directories business had sales of about $545 million last year and earnings before interest, taxes and depreciation of about $178 million. ``This fits very well with our present portfolio. Half of (ITT World Directories) is aimed at the consumer, but the other half is aimed at the business to business segment,'' VNU Chief Financial Officer Frans Cremers said in Amsterdam. The Dutch firm was one of several companies that had expressed interest to ITT earlier this year when it was selling assets to defend itself against Hilton's hostile bid. ITT later abandoned that plan and sealed a transaction with Starwood. Although the unit has strong profit margins, it is a slow-growth business and was not considered to be a core asset for either ITT or Starwood.
VNU also publishes newspapers in the Netherlands and is active in business information in the United States and Europe. Cremers said in an interview that the ITT directories business was about evenly split between consumer and professional markets, like VNU itself. ``We are committed to both sectors. We want to grow in three areas: marketing information, trade journals and consumer information,'' he said. Cremers said VNU also had been attracted to ITT World Directories because the company.

For Those Last Minute Gifts… Town & Country's Top Ten Gift Ideas for the Holiday Season
Addressing different aspects of life such as beauty, kitchen and home, clothing and charity, Editor-in-Chief Pamela Fiori suggests imaginative gifts in a variety of price ranges. With that in mind, her favorite beauty picks include: --Estee Lauder Re-Nutriv Intensive Lifting Cream ($150) --Annick Goutal Eau d'Hadrian in a Baccarat bottle ($550) --Bliss Spa Gift Basket ($50-$200); call 888/243-8825 Kitchen and Home. Among Fiori's suggestions for the domestic sphere are: --Fresh caviar from Caviarteria --Aluminum cultivator from Smith & Hawken ($7) --Magafesa Rapid II 8 quart pressure cooker ($109) --Hurrell's Hollywood Portraits (Abrams, $39.95). Classic clothing and accessories, can have added panache when special attention is paid to choosing unique fabrics or decorations. to bring an imaginative touch to these standards try: --Anything cashmere --Costume Brooches, Art Deco Jewels ($65). With respect to charity; "Giving to a charity of a favorite cause unites friends and family in the true holiday spirit -- thinking of others," states Fiori. She suggests: --A donation to the African Wildlife Foundation (202-939-3333) or the Nature Conservancy (800-628-6860) in a friend's name.

ON-LINE NEWS:

Knight-Ridder, NYT Report Online Losses
Both Knight-Ridder and The New York Times reported tens of millions of dollars in losses for their New Media ventures for 1997 at the Paine Webber Media Conference here in New York. Yet both companies emphasized their optimism that revenues will increase next year, with possible profitability by 2000. Knight-Ridder will spend about $27 million this year on its 32 web sites but will take in only $11 million in revenue, according to chairman P. Anthony Ridder. Outlays for next year probably will be the same if not higher, but revenue also is expected to grow. Meanwhile the Internet is a valuable investment, said Ridder, pointing to his San Jose Mercury News, which has a daily circulation of 287,000 while drawing 1.2 million readers a month to its Web site. Knight-Ridder also is talking with the Tribune Co. and Washington Post about developing their online real estate and auto classified businesses. Knight-Ridder may part in the real estate portion, but Ridder said his company is not interested in becoming the third, full partner in the effort. Ridder said that he was "disappointed" with this year's debut of the New Century Network -- nine major newspapers sharing a common Web site aimed at luring national advertisers online -- and is looking at ways improve the site. Meanwhile, The Times expects a $12 million to $15 million loss for 1997 and an $8 million to $11 million loss next year, when it will launch its New York Today local content Web site and broaden its Boston Globe (http://www.boston.com) site. Despite its red ink, The Times' Web site (http://www.nytimes.com) has nearly 3 million registered users and is growing at the rate of about 200,000 users per month. Source: Mediacentral 12/12/1997

Barnes & Noble, AOL Make Deal
Barnes & Noble on Tuesday said it is paying America Online $40 million to be the exclusive seller of books on the nation's largest online service, shutting out Amazon.com and other major sellers of books on the Internet. Amazon.com, based in Seattle, is not currently promoting its books across America Online's network. But the Barnes & Noble Inc. deal locks up AOL for the next four years and expands where the bookseller can show ads, including the service's financial, travel and entertainment sites, and with its international subscribers.
The deal is the latest this year with America Online Inc., which has staked its future profits on revenues from advertisers. In exchange for helping to promote their products, the Dulles, Va.-based company is receiving more than $225 million from companies including CUC International Inc., a buying club, and Tel-Save Holdings Inc., a seller of long-distance telephone service.
By clicking on the Barnes & Noble icon, AOL's 10 million subscribers can link up to the company's Internet site and order books. "Effectively it gives us great positioning, locks out the competition, and gives us the next four years" of exclusive advertising, Barnes & Noble vice chairman Steve Riggio said. An Amazon.com did not immediately return a phone call seeking comment. America Online declined to comment. Amazon.com continues to sell books over AOL's World Wide Web site. December 16, 1997 By THE ASSOCIATED PRESS