MediaWeek (Vol 5, No 31) Financial Results: Informa, WoltersKluwer, Pearson, Reed Elsevier, Cengage, McGraw-Hill

Informa post half year results (Press Release)

• Resilient profit performance – adjusted operating profit growth of 0.6% to £160.1m; 0.3% on an organic basis
• Improved margin – adjusted operating margin 25.8% (H1 2011: 25.1%)
• Strong cash flow – cash conversion rate increased to 76% (H1 2011: 56%)
• Revenue decline of 2.4% (organic decline of 1.2%) – proactive reduction in marginal product.
• Statutory loss before tax of £27.4m (H1 2011: £66.5m profit) – reflecting impairment charge of £80.0m and losses on disposal of £24.4m relating to European Conference businesses. 
• Earnings increased – adjusted diluted earnings per share growth of 3.4% to 18.3p (H1 2011: 17.7p)
• Dividend increased – interim dividend increased to 6.0p (H1 2011: 5.0p)
• Net debt/EBITDA ratio of 2.3 times (H1 2011: 2.5 times)

Operational

• Academic division continues to trade well – organic revenue growth of 3.7%
• Total cost savings delivered at PCI of £12m
• 9 new large events run in H1
• Forward bookings on leading events remains strong
• Restructure of conference portfolio to reflect prevailing market conditions in Europe
• 20% of revenue from emerging markets (H1 2011: 19%)
• Acquisition of market leading exhibition and conference business in Canada

Wolters Kluwer reports half year results (Press Release)

• Full-year 2012 guidance confirmed. 
• Revenues up 3% in constant currencies and up 1% organically.
• Deterioration in Europe offset by improved organic growth in North America.
• Recurring revenues up 2% organically (76% of total revenues).
• Online, software and services revenues up 4% organically (75% of total revenues).
• Health and Financial & Compliance Services grew organically 5% and 6%, respectively.
• Ordinary EBITA €346 million; Ordinary EBITA margin of 19.9%. 
• Leverage ratio net-debt-to-EBITDA improves to 2.9x (2011 year-end: 3.1x).
• Expect to approach target of 2.5x by year-end.
• Healthcare Analytics disposal completed in May as part of pharma divestiture program.
• €100 million share buy-back completed on July 9; program will be expanded by up to €35 million under new policy to offset dilution from stock dividend and performance shares.

Pearson report half year results (Press Release):

Sales up 6% to £2.6bn*

• Strong growth in Education (up 9%) and the FT Group (up 7%).
• Penguin sales 4% lower on phasing of publishing schedule and continued industry change.

First-half operating profit lower, as expected, at £188m (2011: £208m)

• Education profits up 6% on growth in North America (up 30%) and International (up 17%).
• Professional profits £17m lower. New funding criteria for 16-18 year old apprenticeships result in sharp decline in volumes; UK training business reshaped.
• Sale of FTSE International reduces first-half operating profit by £10m; excluding FTSE, FT Group profits level in spite of increased restructuring charge.
• Penguin profits lower at £22m (H1 2011: £42m) on drop-through from lower first-half sales; stronger publishing schedule in H2.

Rapid growth in digital and services businesses and developing markets

• Sales up approximately 20% in developing markets (headline growth)
• Education digital platform registrations up 30%; FT digital subscriptions up 31% and now exceed print circulation; Penguin ebook revenues up 33% and now almost 20% of Penguin’s revenues.
• Revenues from digital and services to exceed traditional publishing businesses in 2012.

Full year outlook reiterated

• At this early stage, Pearson sees good trading momentum in North America, International and the FT Group offsetting weakness in Professional Education and Penguin.
• Pearson reiterates full year outlook of growth in sales and operating profits at constant exchange rates, with margins reflecting acquisition integration costs and the FTSE sale. 

Reed Elsevier report half year results (Press Release):

Financial highlights

• Underlying revenue growth +5% (+3% excluding biennial exhibition cycling)
• Underlying adjusted operating profit growth +7%; overall growth +8% at constant currencies
• Adjusted EPS +11% to 24.7p for Reed Elsevier PLC; +18% to €0.47 for Reed Elsevier NV
• Reported EPS growth +52% to 24.0p for Reed Elsevier PLC; +57% to €0.47 for Reed Elsevier NV
• Interim dividend growth +6% to 6.00p for Reed Elsevier PLC; +18% to €0.130 for Reed Elsevier NV
• Net debt of £3.3bn; 2.3 times adjusted 12 month trailing EBITDA (pensions and lease adjusted)

Operational highlights

• Underlying revenue and operating profit growth in all five business areas
• Growth driven by usage volume, new product development and expansion in high growth markets
• Further improvement in format mix; good growth in online and face to face
• Profitability gains driven by on-going process efficiencies
• Continued portfolio development improving revenue growth and profitability profile 

Selective divestitures

• Process accelerated in H1. Disposals of Totaljobs, MarketCast, and other small publishing and services assets completed. Planned disposals of Variety and RBI Australia announced. We expect completed and planned disposals to be mildly dilutive to EPS in the short term. However, we intend to use gross divestment proceeds to buy back shares this year, mitigating this impact. In H1 gross cash proceeds from disposals were £158m/€193m.

Cengage presents full year estimates (Press Release):

• Revenue for the fourth quarter of fiscal 2012 is estimated to be between $499 million and $505 million as compared to $473 million for the same period in the prior year. Excluding National Geographic School Publishing (“NGSP”), acquired on August 1, 2011, revenue for the fourth quarter of fiscal 2012 is estimated to be between $482 million and $488 million, driven primarily by growth in Domestic Learning.
• Adjusted EBITDA for the fourth quarter of fiscal 2012 is estimated to be between $187 million and $193million. NGSP’s contribution to Adjusted EBITDA during the fourth quarter is estimated to be between $2million and $3 million. The prior year fourth quarter Adjusted EBITDA of $202 million included a minimal expense for domestic incentive compensation. On a comparable basis to include this year’s fourth quarter domestic incentive expense, Adjusted EBITDA for the fourth quarter of the prior year would have been approximately $185 million.
• Revenue for the full year ended June 30, 2012 is estimated to be between $1,985 million and $1,991 million as compared to $1,876 million in the prior year. Excluding NGSP, revenue for the full year ended June 30, 2012 is estimated to be between $1,910 million and $1,915 million.
• Adjusted EBITDA for the full year ended June 30, 2012 is estimated to be between $781 million and $787million. NGSP’s contribution to Adjusted EBITDA during the fiscal year is estimated to be between $12million and $15 million. Similar to the fourth quarter, the prior year Adjusted EBITDA of $780 million included a minimal expense for domestic incentive compensation. On a comparable basis to include this fiscal year’s domestic incentive expense, Adjusted EBITDA for fiscal 2011 would have been approximately $737 million.
• For the last twelve months ended June 30, 2012, Bank EBITDA is estimated to be between $817 million and $823 million.
• Full year investor call August 8th (Link)

McGraw-Hill reports second quarter results (Press Release):

• Key management for McGraw-Hill Education is now in place, including Lloyd G. "Buzz" Waterhouse as president and chief executive officer and Patrick Milano as chief financial officer and chief administrative officer.
• The Form 10 SEC registration statement was filed on July 11, 2012.
• Cost reductions are accelerating towards the goal to achieve at least $100 million in cost savings, on a run-rate basis, by year-end.
• Key workstreams are well underway to drive the separation of numerous finance & accounting, human resource, information technology, and other support services.
• The S&P Dow Jones Indices, the world's largest provider of financial market indices, was launched on June 29, 2012.

Education

• Revenue for the segment declined 12% to $474 million while operating profit improved by 36% to $57 million in the second quarter, compared to the same period last year. The improvement in operating income was primarily the result of restructuring actions and ongoing tight expense management.
• Higher Education, Professional and International Group (HPI): Revenue decreased 2% to $241 million in the second quarter compared to the same period last year. Higher Education revenue growth was offset by declines in International revenue, predominately related to the strong U.S. dollar. Higher Education's digital and customized products are being well received in the marketplace. In particular, sales of homework management product Connect, which is sold with LearnSmart, an adaptive learning system, grew by 65%. LearnSmart, designed to help college students learn faster, study more efficiently, and retain more knowledge, is available for approximately 150 different college course titles. 
• School Education Group (SEG): McGraw-Hill Professional continues to lead the transition to digital materials with 34% of revenue in the quarter derived from digital products and services. Of particular note was the 33% growth of digital subscription platforms, which include AccessMedicine, a product suite of subscription-based Websites that feature regularly updated medical content and access to more than 65 medical titles.Revenue decreased 20% to $233 million for the quarter. The elementary-high school market continues to be impacted by the economic issues facing the states and local school districts. In addition, the state new adoption schedule for 2012 offers the lowest revenue potential for publishers in many years. As a result, the School Education Group anticipates an overall reduction of 10% in the K–12 market this year, which represents the lowest spending level in over a decade. Despite the difficult environment, SEG continues to provide innovative products including new testing materials and programs in reading and mathematics that meet the new Common Core standards. All of its major new programs include digital components, and increasingly many products are wholly digital.

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.

Wolters Kluwer Reports

Half yearly results at Wolters Kluwer were mixed with organic revenue growth up 1% and revenues at constant currency rates up 4%. Overall reported revenues were down 4%. Operating expenses held constant with the prior period resulting in a slight reduction in operating margin.

Total half year revenues were $1,608mm versus 1,677mm and EBITA was $288mm versus $304mm.

Highlights from the company's press release are as follows:

Double-digit earnings growth, stable profit margin, and solid cash flow performance give confidence for achieving the full-year targets. With its diversified and defensive portfolio, Wolters Kluwer has the foundation in place for sustained profitability and long-term growth.

• 20% diluted ordinary earnings per share growth in constant currencies
• 4% revenue growth in constant currencies (1% organic revenue growth)
• 8% growth in higher margin electronic products in constant currencies
• Resilient profit margins despite weaker market conditions
• Solid free cash flow underpins strong balance sheet and liquidity
• Reiterate progressive dividend policy

Under the hood: The company has to be worried about the results in its Health segment which industry wide has been one of information publishing's more vibrant sectors. For the half year revenues are down 14% (2% CC) and EBITA down 51% (49% CC). On $305mm in revenue the Health segment is almost a breakeven business which must be a concern. The company's Tax and Regulatory business was a highlight and helped mitigate some of the reduction in Health. Overall, the company remains confident of hitting its full-year growth targets between 3-4% despite the retraction in Health and their other slow segment Corportate & Financial Services.

Wolters Kluwer, Thomson Acquire Accounting Firms

Earlier this month, two of the big players in information publishing purchased accounting firms. Nonsensical? Not really, when you consider that both companies are in the business of offering a suite of products and services to their customers that encompass not only what we may traditionally think of as publishing products but also services and solutions that leverage or embed the information and expand the relationship with the customer. (I touched on this at a recent industry conference).

In the case of Wolters Kluwer, they have taken over the UK offices of Melbourne, Australia based accounting software firm MYOB (Mind Your Own Business). WK reportedly paid £35.5m earlier this month for MYOB. From AccountingWeb:

The MYOB Accountants Division product range includes PerTax and Viztopia accounts production and practice management programs acquired from MYOB's fellow Australian software Solution 6 in 2004. MYOB also produces the Singleview
knowledge management portal, plus corporation tax, trust and insolvency practice programs.

CCH's ProSystem portfolio includes many similar applications. In an email to customers CCH UK managing director Martin Casimir said the long term plan was to migrate all the solutions to a single range of best of breed products. "Please rest assured that this will be done in a considered and carefully controlled manner," he wrote.

CCH is WK existing software division.

Competitor Thomson has purchased tax software company Digita within the same time frame but after considerably wooing of the Digita founders. Thomson's UK and European market share is far smaller than their US position and they see Digita as enabling a rapid development of that market. As core markets mature, similar companies will be looking to the international market for growth performance. Additionally, in the case of both companies, the acquisitions will enable the companies to further expand the range of business solutions and services that they offer to their key markets.

Thomson will place Digita with Sweet & Maxwell.

Wolters Kluwer Reports Results

Wolters Kluwer appear to have completed a strategic transformation of their business which began more than three years ago as the current CEO Nancy McKinstry took up her role. The company did not see significant top line improvement in 2007 - up 4% - but they have gained in operating margin to 20% and with a better product mix they should continue to see improvement. During 2007, the company divested their education division and booked a nice gain (similar to Reed and Thomson in that respect).

In her comments, McKinstry noted that over half the companies revenues come from online and electronic products and services, and she believes improved results will derive from this better product mix. As the company continues to invest in work-flow solutions and integrated products she went on to say "I am confident in our ability to leverage our superior market positions, our improved organic growth and more efficient operating structure to achieve enhanced value to our customers and shareholders."

Other highlights from their press release:

• Organic revenue growth was 4% (2006: 3%)
• Reported revenues of €3,413 million, grew 6% in constant currencies (2006: €3,377 million)
• Ordinary EBITA margin improved to 20% (2006: 17%)
• Ordinary EBITA of €667 million increased 27% in constant currencies (2006: €556 million)
• Diluted ordinary EPS increased 25% to €1.38 (2006: €1.10), 35% in constant currencies
  Free cash flow of €405 million (2006: €399 million, which included a €53 million one-time tax refund)
• Revenues from online and workflow solutions grew 9%
• Structural cost savings of €161 million, an increase of 26% (2006: €128 million)
• Divestment of Education: sales price €774 million; book profit €595 million; net proceeds €665 million
• Share buy-back program completed (€645 million returned to shareholders)
• Net profit for the full year was €918 million (compared to 2006: €322 million), supported by he divestiture of the Education division

Reed Business Expect Slower Growth

Reed Business Chief Executive Gerard van de Aast spoke to Dutch daily De Telegraaf (via Reuters) and indicated that revenue growth in 2008 could slow due to continued weaker US dollar rates and a general economic slow down. He did confirm that results for 2007 show significant improvement over 2006 with internet revenues up 25-30%. Naturally, since the discussion was in the Netherlands he was asked about a proposed merger between Reed and Wolters Kluwer which he dismissed as pure speculation. He indicated that on paper it could make sense but culturally the two companies were not compatible.

Wolters Kluwer Reports

Wolters Kluwer reported third quarter results inline with expectations and also announced the completion of their initial share buy back scheme and the launch of a second buy back. The company says it expects to buy back €175mm in shares over the next several months. Highlights from the press release are as follows:

Third-quarter 2007:

• Organic revenue growth of 4% (2006: 4%)
• Ordinary EBITA of €153 million, grew 18% and 24% in constant currencies (2006: €130 million)
• Ordinary EBITA margin improved to 19% (2006: 16%)
• Revenues of €799 million, grew 2% and 6% in constant currencies (2006: €786 million)
• Structural cost savings increased to €41 million (2006: €33 million)

Nine months ending September 30, 2007:

• Organic revenue growth of 3%, on track to meet the full-year guidance (2006: 2%)
• Ordinary EBITA of €457 million, grew 20% and 26% in constant currencies (2006: €381 million)
• Ordinary EBITA margin improved to 18% (2006: 16%)
• Revenues of €2,476 million, grew 2% and 6% in constant currencies (2006: €2,431 million)
• Structural cost savings increased to €117 million (2006: €91 million)
• Free cash flow of €194 million (2006: €232 million including €53 million one-time tax refund)
• Divestment of Education generated a sales price of €774 million, a book profit of €595 million and net proceeds of €665 million

Nancy McKinstry, CEO and Chairman of the Executive Board, commented on the company’s third-quarter performance:

“Wolters Kluwer continued to successfully execute our strategy of accelerating profitable growth during the third quarter of 2007. Our good organic growth was fueled by new products and strong growth in online and software solutions. Importantly, all divisions contributed to the significant increase in operating margins realized through revenue growth, operational improvements, and prior restructuring programs. We have a strong, balanced portfolio which enables us to continue our clear growth momentum. Our performance over the first nine months of 2007 has put us well on track to meet our full-year guidance.”

Macomber appointed President & CEO Wolters Kluwer Health

Wolters Kluwer Health, a division of Wolters Kluwer, a leading provider of information and business intelligence for students, professionals, and institutions in medicine, nursing, allied health, pharmacy and the pharmaceutical industry, announced today the appointment of Gordon Macomber as President & CEO of its Professional & Education business unit, with responsibility for the Lippincott Williams & Wilkins product lines.

For the past four years, Macomber had been President of Thomson Gale Reference in Farmington Hills, MI.

"The appointment of Gordon Macomber brings us extensive publishing experience as well as the leadership skills and business proficiency to take our books and journals business into the next era of content-in-context," said Jeff McCaulley, President & CEO of Wolters Kluwer Health. "We could not be more thrilled to have Gordon join our leadership team."

Press Release

Reed Elsevier Bid Speculation

There has been some movement in the share price of Reed Elsevier over the past several days due to renewed speculation the company would make a revived bid for Wolters Kluwer. On Friday the stock was up 6 1/2p to 608 and this morning the stock is up further. Today (Monday) citibank raised their recommendation from hold to buy referencing Reed's market position in legal, medical and the european market.

Wolters Kluwer: Share Buy Back - Is this all they could think of?

Anyone owning WK shares should be thinking that their investment will increase in value as WK embarks on a $1.obillion share buy back scheme over the next 18mths. (Link) I am sure it is important to shareholders that the company stock price increase but wasn't selling the educational unit a way to get rid of an under performing asset and thus a deflated share price?

In an environment where information assets are going through the roof in terms of value is this the only thing they could come up with that could add long term value for shareholders? Without an aggressive business development strategy - that is acquisitions - is the company not a target themselves with $1.obillion from the education sale and a low share price? WK operate in a rapidly growing health care information market and thus one very appealing to PE or a well placed trade buyer. Why would either wait for the share price to go up?

Weekly Update: May 13th

Deals:
Silliness Regarding B&N/Borders Combo: Forbes
Thomson Transformation: Global&Mail
Spring Deals Rekindle M/A Market: Financial Week
Murdoch and Dow Jones: NYTimes

Publishing:
How Publishing Works: NYTimes
Holt on Reviews
News Corp 3Q Results (Harpercollins): Yahoo
Perseus Reorganization: PW
Wolters Kluwer 1Q Results: Webwire
EBrary Expands Publisher List Including ABC-Clio: Businesswire
Bloomsbury and Libre Digital: OhMyNews
Publishing Books On Line: The Times

Other News;
LOL Borders News: Businessweek
Launch of Amazon Author PodCasts: Businesswire
FT Reports Content Piracy Far Lower Than Estimated: FT LawGeek
Too Many Books? Design Observer Blog
Does Chaney Own an I-Pod? M&C
McCartney Goes Digital and The Beatles to Follow: Billboard
Review of IRex Illiad e-Reader: Guardian
Reflections On The Relationship Between Libraries and Publishers: Brantley

Weekly Update

As mentioned London Bookfair is next week and posts will be sporadic.

Deal News:
Wicks buys Thomson Education Direct (Distant Learning) Times Tribune
Torstar may be under attack and what of Harlequin? National Post
A possible buyer of the Borders' Australia and New Zealand stores. NZ Herald
Media finance conference in Europe announced. Release
Buyers are less then enthused with Primedia enthusiast magazines. Reuters
Reed Elsevier advised to gear up. The Independent
Nancy McKinstry thinks Germany is ripe for new deals. Reuters
Axel Springer likely to do more deals soon (doubtful in publishing). The Australian

Google News
Lorcan Dempsey linking to comment on Google and Publishers Blog
Adam Hodgkin on publishers grumbling about Google Blog

Education:
Harcourt have had a lot of problems in School academic testing this year. Casper Trib. ZDNET
Thomson revolutionizes marketing text Release
There will be more on this: Wikipedea 'broken beyond repair' according to founder. ITNews

Other News:
Penguin obsession Blog
Peter Brantley's lively discussion over a $58 Paperback Blog
Mike Hyatt on Imprints and the decision to do away with them Blog
GalleyCat linking to a Bookseller article about what works here but not there. Blog
Joe Wikert gets all riled up about the logic of Print Blog
Reed Elsevier can't trade mark 'Lawyers.com' Bloomberg
SmartMoney wonders why no one is excited about Gannett. Smartmoney
The commercial E-Book market is broken. Blog

People:
McGraw Hill Hire Dan Caton as Head of Learning Group Release
New Board Members for SIIA. Release
Riverdeep/Houghton Mifflin announce appointment of President. Release

Sport:
Man Utd into the Champions League semi-final in style BBC

Wolters Kluwer Education Sale Confirmed

WK confirmed the sale of its education unit to Private Equity fund Bridgeport Capital for $1.0billion. As mentioned last week this represents a good price and WK, Reed and Thomson Learning should all be happy with the valuation.

Reuters

Wolters Kluwer in Divestiture Talks

According to (Dutch) BNR newsradio Wolters Kluwer has entered into exclusive talks with investment fund Bridgepoint for the sale of its Education unit. This would seem to confirm that the front runner Pearson is not in the running to acquire this business. Speculators commented that the price PE were willing to pay was simply too much for Pearson. Bridgepoint have invested in media in the past but nothing this large; there other investments span industries.

The IHT is also reporting that the unit will be sold for as much as €775million. First out of the gate with a sale agreement, this sales price sets a high mark that may lead to high sales values for Thomson Learning and Harcourt.

Reuters

Wolters Kluwer Education

Reuters are reporting that Pearson may not be one of the final two parties negotiating to buy the WK educational assets. Apparently, the price greater than 700mm euros has eliminated them from consideration. All conjecture of course until the deal is announced which is expected by the end of the week.

Deals: Wolters Kluwer

Wednesday was the day that offers were due to be submitted for the Wolters Kluwer educational assets. According to Reuters, the interested parties include Pearson Education and Wendel Investissement (French Educational company) and a number of private equity firms. Reuters went on to suggest that the company could fetch close to a $Billion.

It is hard to see which way this one will go. My guess is on one of the operators rather than PE. The unit is small relative to the other companies on the market and has some fairly specialized publishing programs which could limit effective cost restructuring and limit the potential for closer integration with a second follow-on acquisition. The integration with an existing publisher, such as Pearson, could be similar to a list acquisition meaning they could effectively eliminate all expenses other than those directly attributable to content development.

Wolters Kluwer Posts Full Year

Dutch publisher Wolters Kluwer posted a top line increase of 9% (0rganic growth of 3%) and an EBITA increase of 16% to €618million for the full year.

Following is are highlights from the company press release:

• Revenues increased 9% to €3,693 million (2005: €3,374 million)
• Organic revenue growth of 3%, in line with full-year outlook
• Ordinary EBITA increased 16% to €618 million (2005: €533 million)
• Ordinary EBITA margin of 17% (2005: 16%)
• Investment in product development reached €272 million (an increase of 9% over 2005)
• Structural cost savings of €128 million (an increase of 28% over 2005)
• Strong free cash flow of €443 million (2005: €351 million)
• Ordinary diluted EPS increased 16% to €1.23 (an increase of 15% at constant currencies)
• Selective acquisitions to strengthen leading positions and enter high-growth adjacent markets

Fourth-Quarter 2006:

• Revenues increased 8% to €1,003 million (2005: €932 million)
• Organic revenue growth of 6% (2005: 3%) Ordinary EBITA increased 17% to €173 million (2005: €148 million)
• Ordinary EBITA margin of 17% (2005: 16%)
• Investment in product development reached €74 million (an increase of 7% over same period 2005)
• Structural cost savings of €37 million (an increase of 32% over same period 2005)
• Strong free cash flow of €204 million (2005: €208 million)
• Ordinary diluted EPS increased 9% to €0.34 (an increase of 15% at constant currencies)

A more detailed review is in the press release. Most of the business units are doing OK with Corporate and Financial Services showing the largest percentage revenue growth. Of Education they say the following:

Organic revenue growth of 2% with particularly strong performance in the United Kingdom following new product introductions. The review of strategic alternatives for Education announced in 2006 is expected to be completed in the first half of 2007.

The company has announced that this group may be sold and the statement seems to indicate that will be completed by the middle of the year.

The company is looking to build on the gains they have made over the past two years to migrate revenue to online, attack their cost structure and reinvigorate product development. Margin improvement was seem 2006 vs 2007 - of 1.0pt - but they are suggesting their EBITA margin will grow from 17% to closer to 20% which is significant progress.

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.

10/15/97: ReedElsevier, Bertelsmann, Readers Digest, WoltersKluwer,

Summary:
Reed Elsevier to Acquire Wolters Kluwe
Bertelsmann Reports Earnings
Yet Another Afternoon Newspaper Bites the Dust
Readers Digest Problems Continue
L.A. Daily News on the Selling Block
NYT Sells More Magazines
Britannica Online to Offer Free Content
International Data Corporation Reports Exploding Internet Activity
Breakthrough Will Bring Internet to The Home via Power Wires
School text books
Recent News:

Reed Elsevier to Acquire Wolters Kluwer
Reed and Wolters Kluwer announced Tuesday that they would merge creating an $8.1Bill global publisher concentrating on professional and trade journal publishing. Reed owns Lexis-Nexis, Reed Travel Group (including OAG) and is the largest worldwide publisher of academic journals. Wolters Kluwer dominates legal and tax publishing in Europe and is based in the Netherlands. In 1996 Reed Elsevier reported sales and income of $5.42Bill and $1.2Bill and Wolters Kluwer reported sales and net income of $2.7Bill and $429MM. Analysts suggest the combined company will be in a strong position to share the costs of moving to electronic publishing away from paper.

Bertelsmann Reports Earnings:
Sales increased year on year to $12.8Bill (4.2% increase) and net income was $582MM. Bertelsmann is the third of the large media firms after Time Warner and Disney but is much less geared - debt represents less that 5% of turnover versus TM and Disney of 97% and 62% respectively. Books (WW) constituted $4.1Bill in sales and were the second largest group after Music. Of this amount the US represented (only) $1Bill in sales. According to reports Bertelsmann is actively looking for a publishing acquisition in the US. (A number of companies have been mentioned and John Wileys chairman recently sent an internal memo to employees stating that Wiley was definitely not for sale). Due to their deal with AOL, Bertelsmann are the European on-line leader - they have a 50-50 partnership with AOL.

Yet Another Afternoon Newspaper Bites the Dust:
E.W. Scripps recently announced that it has been forced to discontinue a local afternoon newspaper The El Paso Herald-Post due to rapidly decreasing sales. Scripps publishes the Herald-Post, whose last edition goes out Saturday, in cooperation with Gannett Co., which owns the related daily The El Paso Times, and leads promotion and distribution for both newspapers. The El Paso Times will not be affected by this decision.
Cowles Business Media: MediaCentral 10/7/97

Readers Digest Problems Continue:
The Reader's Digest Association Inc. recently said that it expects to report a loss of $.05 to $.10 per share for its fiscal 1998 first quarter ended Sept. 30, lower than analysts' estimates. Reader's Digest also expects lower than expected revenues. The publisher cited lower than anticipated expected response to promotional mailings in most major markets. The financial report, to be released on Oct. 29, will include non-recurring charges of approximately $70 million. In the fourth quarter ended June 19, the company reported a net loss of $22.8 million or $.22 per share.
Cowles Business Media: MediaCentral 10/7/97

L.A. Daily News on the Selling Block:
Reuters reported that the merger and acquisition firm Dirks, Van Essen & Associates of Santa Fe, NM, has been retained to handle the sale of The Los Angeles Daily News which was acquired in 1985 for $176 million from the Tribune Co. Observers expect the sale can fetch as much as $200 million to $250 million.

The daily has a circulation of 203,000 weekdays and 218,000 on Sundays. Prospective buyers include Rupert Murdoch's News Corp., Denver Post parent MediaNews Group, Orange County Register parent Freedom Communications and Toronto-based publisher Thomson Corp.
Cowles Business Media: MediaDaily 10/6/97

NYT Sells More Magazines:
The New York Times Co. will sell six sports magazines to Miller Publishing. The titles involved are Tennis, Tennis Buyer's Guide, Cruising World, Sailing World, Snow Country and Snow Country Business. The transaction is expected to be completed by year end. The Los Angeles-based purchaser is a partnership between private equity investment firm of Freeman Spogli & Co. Inc. and Robert L. Miller, the group's president and a former Time Inc. executive.

On-line/New Media News:

Britannica Online to Offer Free Content
Encyclopedia Britannica Inc., whose core online product is subscription-based Web service Britannica Online, launched the latest in its series of Spotlights, its free quarterly Web sites dedicated to a particular, timely topic. In honor of the Nobel awards this month, the Nobel Prize Web site http://www.nobel.eb.com) illuminates in text and multimedia clips of past winners and the innovations and efforts singled out to receive the world's most prestigious awards.

Through the free in-depth coverage of historical and current issues, EB hopes to lure subscribers to Britannica Online (http://www.eb.com), which presently claims 10,000 users. The big deterrent, company research found, was the relatively high cost for Web-based material, for which until just weeks ago an annual subscription cost $150 or $12.50 per month. In response on On Sept. 15, the service slashed its prices to $8.50 per month and has seen subscription rates rise by 10%.
Cowles Business Media: MediaCentral 10/7/97

International Data Corporation Reports Exploding Internet Activity:
Research presented at the recent Internet 98 Conference in Burlingame, Calif. by IDC, a Framingham, Mass. Based market research firm, indicates there are currently 53.2MM Internet users worldwide with 44.2MM of those using the World Wide Web. (About 9MM people use e-mail but not the Web.)

At the current rate of growth, IDC projects that there will be 60MM Internet users and 50MM World Wide Web users by Dec. 31 which represents an increase of more than 26MM Internet users and 22.4MM World Wide Web users since 1996.

According to the study more than $10Bil in goods and services are expected to be purchased on the WWW by the end of 1997. IDC estimated that 2/3 of this amount was generated by corporations using the Internet as an effective method for ordering and paying for products and services. (Companies like Cisco Systems and GE use the internet extensively for this purpose). There may be close to 1MM Internet transactions occurring each day on the Internet. (www.idc.com for more information).

Breakthrough Will Bring Internet to The Home via Power Wires:
The London Times reported recently that two companies, Northern Telecom and Norweb Communications, have found the "holy grail" of telecommunications ­ the ability to send vast amounts of data along power lines without its being distorted by interference. In future, every home in the country (UK) could be connected to the Internet in this way, providing increasing competition for telephone companies, especially BT.

Norweb intends to offer a commercial trial to 2,000 homes in the North West next spring. The two companies said yesterday that their service could offer an Internet connection 20 to 30 times faster than commonly available through today's telephone modems and that the cost would be lower by up to 50 per cent.

BT said last night it did not believe its business would be effected. Strong content, BT said, was the key to success on the Internet.

Did You Know....

Texas, facing the potential cost of $1.6Bill for school text books over the next six years is reviewing the possibility of buying laptop computers with CD ROM drives as an alternative to printed texts. The cost of acquiring texts for the 2000-2001 (two year period) is expected to roughly double what the cost was for 1996-1997 ($360MM vs. $600MM). Trials are currently underway in some MA school districts using computers rather than texts and information via inter/intranet is transmitted to each laptop via infra-red nodes in the ceiling of each classroom. Naturally, the computers are designed to be pretty hardy.