Springer Buys BioMed Central

Just announced from their press release. Looking forward, Springer may be the perfect (only?) partner to continue the experiment with Open Access and ensure BioMed remains true to its purpose.

Springer Science+Business Media has reached an agreement to acquire BioMed Central Group, the leading global open access publisher.

BioMed Central was launched in May 2000 as an independent publishing house committed to providing free access to peer-reviewed research in the biological and medical sciences. BMC is the largest open access provider in the world with over 180 peer-reviewed journals.

BioMed Central’s flagship journals include Journal of Biology, BMC Biology, BMC Medicine, Malaria Journal, BMC Bioinformatics and Genome Biology. BioMed Central has revenues of approximately EUR 15 million per year. The company is based in London, with a second office in Liverpool, and has approximately 150 employees.

Derk Haank, CEO of Springer Science+Business Media said: “This acquisition reinforces the fact that we see open access publishing as a sustainable part of STM publishing, and not an ideological crusade. We have gained considerable positive experience since starting Springer Open Choice in 2004, and BioMed Central’s activities are complementary to what we are doing. Additionally, this acquisition strengthens Springer’s position in the life sciences and biomedicine, and will allow us to offer societies a greater range of publishing options.”

Matthew Cockerill, Publisher of BioMed Central said: “We are very excited about this new phase of BioMed Central's growth and development. Springer has been notable among the major STM publishers for its willingness to experiment with open access publishing. BioMed Central has demonstrated that the open access business model can work, and we look forward to continued rapid growth as part of Springer. The support of our authors, journal editors and institutional customers has been vital to BioMed Central's success and we will continue to focus on offering the best possible service to these groups."

Peter Suber of Open Access News as more thoughts: Link

Frankfurt Next Week

The annual Frankfurt Bookfair starts next Wednesday and it is preceded by the annual International Supply Chain Specialists meeting where I have been asked to speak. My topic is Publishing in the Digital Age for which I have been allotted 20 minutes.

I will be posting the presentation here subsequent to or immediately after the event on Tuesday.

Also, please tell me if you are attending either the Supply Chain meeting or the Fair and would like to meet.

email: michael.cairns @ infomediapartners.com

Greenwood To Close

On the heals of the deal by Harcourt to sell perpetual rights to the Greenwood list, the company will vacate its offices in Westport CT by year end. According to WestportNow, a company source has told them that approximately 150 positions will be lost when the pink slips go out in December.

MediaWeek Report (Vol 1, No 40): UK Publishing Market

The UK publishing market is bracing for potential credit issues with the wholesaler Bertrams. Bertrams were acquired by Woolworths which appears to be in financial difficulties. Publishers are working with Bertrams to ensure supply to the market but also to protect their receivables and stock. As this article indicates, Bertrams are on very short terms. (Telegraph):

Tim Hely Hutchinson, UK chief executive of Hachette Livre publishing group, confirmed told trade magazine that Bookseller that he was in talks with Bertrams about new credit terms. "Following the sudden removal of credit insurance cover from the Woolworths group wholesalers, we have proposed new credit arrangements that will allow us to continue trading together," he said. Bertrams, which is run by Woolworths' entertainment division EUK, is understood to have been in negotiations with publishers for several weeks over demands for quicker payments to compensate for the lack of insurance cover. Woolworths strongly denied reports that major suppliers have temporarily halted trading through Bertrams, while negotiations over credit terms continued. Trade was continuing "as normal" insisted the spokesman.

From Lambeth (and its not often you say that), apparently the desire to pull the sheep over the eyes of taxpayers is alive and florishing (This is London)

Lambeth Council has been accused of inventing “ghost libraries” to con government inspectors and protect its position as London’s most improved local authority in a scandal dubbed “librarygate”. The accusation is based on the mysterious opening of three book-lending, cultural information hubs, the week before a vital inspection into the quality of the council’s cultural services. The centres - one which lent out no books at all - issued only 25 library books before being closed after six weeks but were still used to bolster figures about library opening times in the audit commission inspection, according to an email sent from a cultural services officer and seen by the Streatham Guardian.

Another bone-headed missive from Forbes' Sramana Mitra on Amazon.com. Hardly an objective view of services available to the spectrum of authors and publishers. I didn't bother commenting on the first article she wrote and I am not sure I know why I bother with this one, only, it's FORBES! She signs off with the obligatory blinded me with science (numbers).

What does this mean for the book publishing business going forward? Are we about to see a degree of vertical integration, at least in certain nonfiction genres that have large Web presences? How big a role will Amazon play as it morphs its various on-demand offerings to recruit authors who are also entrepreneurs and Web-savvy marketers? And what about Kindle? While there are no publicly announced numbers about how many Kindle e-book readers have been sold, I know that many early-adopter techies have already standardized on Kindle.

The Techcrunch blog estimates the number of Kindles sold so far to be 240,000. Citigroup analyst Mark Mahaney is among the most bullish, calling Kindle Amazon's iPod. In an August report, Mahaney estimated that Amazon will sell 378,000 units this year and that Kindle will be a $1.1 billion business that accounts for 4% of Amazon's revenue in 2009. Pacific Crest's Steven Weinstein believes Amazon can sell more than $2.5 billion in e-books for the Kindle by 2012.

USS Intrepid Goes and Comes Along the Hudson

This morning the Museum ship USS Intrepid returned from its refurbishment in Bayonne. It is all newly painted and the rust you could see on the waterline on the way south is now all gone. Back at the dock they have also made a lot of improvements. This is apparently one of the most popular tourist attraction in NYC.

ABC-Clio Acquires Greenwood Publishing Rights

In a deal announced this morning, Houghton Harcourt Mifflin has agreed to grant ABC-Clio a perpetual license to use the imprints and publish the titles of Greenwood Publishing Group, including Greenwood Press, Praeger Publishers, Praeger Security International and Libraries Unlimited. The announcement goes on to say HHM will transfer certain intellectual property, contracts and assets to ABC-CLIO and that the agreement is effective immediately. Terms have not been announced.

From the announcement:

"By combining Greenwood Publishing’s impressive and extensive list of titles with our experience in publishing widely respected databases, reference books and eBooks, ABC-CLIO is expanding its role as a leader in the publishing industry,” said Ron Boehm, CEO, ABC-CLIO. “We believe that we will launch the next generation of high-quality reference, professional development and other resources for education and libraries.”

This looks like a good deal for ABC-CLIO. They gain a strong list of reference titles, a reputable publisher with a history of stable consistent operations and a reliable brand particularly in the library and educational community. Greenwood was part of Reed Elsevier for many years and was incorporated into the Harcourt business unit after Harcourt was purchased by Reed. That business was sold and Greenwood ended up at HHM.

Perhaps this is how deals will be done in the short term to compensate for the lack of credit.

Voyager Learning Company First Half 2008 Update

No SEC filing for the first half which is becoming something of a broken record for Voyager. The company held a conference call for investors which did motivate some analysts to participate in contrast to some prior calls.

Read it in full here.

Following are some selected quotes and those about the potential sale and valuation of the business are interesting.

Brad Almond

With that said, when we last provided an update via our July 22 press release, we anticipated that we would file our 2006 10-K by July, 31, 2008. We have obviously slipped from that target. We are in the final stages of preparation for the release of the 2006 10-K and expect to have it filed before the end of this month. We expect to file our 2007 10-K approximately four to six weeks after the filing of the 2006 10-K. We have been preparing the 2007 results and audit work in parallel with 2006 efforts and such work has been progressing very well to date.

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Doug Asiello – Invesco

Hoping you would help me through what the implied free cash flow for your – for the firm will be, so let me just show – let me walk through my math and you can tell me where I am off. So that $19 million your current cash, $45 million from the tax refund, $25 million in operating cash flow, gives you about $89 million, less the uses of cash $5 million from the settlement, $4 million from the wrap-up of the legacy corporate, $3 million from the shut down of the headquarters. So if you expect to have $70 million at year-end, by my math you are generating about $20 million in free cash flow. Is that wrong?

Brad Almond

You are essentially right. We’ve – the math you’ve done, you add up all the pieces and our range would be – these are actually out at the highs and lows, all those ranges that I gave, you probably see something more in the $73 million to $83 million—

Doug Asiello – Invesco

Yes.

Brad Almond

But however to account for any unknowns out there and therefore I gave a range of $70 million to $80 million.

Doug Asiello – Invesco

Alright. Okay, so let me ask a followup then. My enterprise value for your firm is roughly $100 million and you are generating $20 million in free cash flow. That’s five times free cash flow. And then I guess if you layer in SG&A cost and corporate overhead, I have a hard time believing there is not some strategic buyer out there that hasn’t thought that this is – this would be very easy to wrap – to roll up into their existing franchise and sales force at – and then kind of wipe out a good chunk of SG&A and corporate overhead at a extremely inexpensive valuation. What’s wrong with my analysis?