Forbes - Jan, 22, 2014
The publishing house that Stieg Larsson built with his Girl With the Dragon Tattoo series is now up for sale. Enthusiast publisher (and my employer) F+W Media made an acquisition last week that added 40% to its revenues. Amazon acquired social media platform Goodreads last year for a rumored nine figures. And the summer of 2013 saw the closure of the largest merger in book publishing history: The combination of the two biggest publishers in the world.
We are now solidly in an era of mergers, acquisitions and other financial activity in the boring, steady industry of book publishing.
Here’s why:
1. The disruption of ebooks and digital publishing has led to the creation of dozens of start-ups now seeking capitalization and exits (see: Goodreads, Bookish).
2. The disruption of ebooks and digital publishing has been good to some companies and not so good to others. Both states create an incentive to both buy and sell. If a company has grown through the disruption, it has cash and can look at acquiring companies that have shrunk and that need to get acquired or fail. If a company has shrunk but has good underlying financials and assets, it may seek to grow again through acquisition, perhaps even of a company that has shown solid growth through the changing industry. For instance, in 2013, publisher Hachette acquired most of Hyperion, a Disney book publishing division.
3. The disruption of the illustrated book market is creating acquisition opportunities for the winners in that market. The example here is F+W Media, which has found a way to develop e-commerce businesses within vertical communities that compliment its content businesses. In the past year, it has acquired two similar, rival companies: Interweave last year and New Track this year. Both were major enthusiast vertical publishers.
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