Sterling Opportunity: More on B&N's Plunge Into Publishing
by Jim Milliot and Steven Zeitchik, PW Daily for Booksellers -- Publishers Weekly, 12/13/2002
As reported here yesterday, Barnes & Noble took a major step in growing its publishing operation by signing an agreement to acquire Sterling Publishing. Some more information has emerged:
- Terms of the deal, which is expected to close within 45 days, weren't disclosed, although it is reported to be close to $100 million.
- Sterling will be run as a separate business unit and will be headed by Charles Nurnberg, who had been executive v-p; Sterling president Lincoln Boehm is retiring. Nurnberg will report to B&N CEO Steve Riggio, who told PW that the company's other publishing operations will continue to run as is.
Riggio said B&N was attracted to Sterling because the company "prices their books right and publishes into categories we do especially well with." Riggio also noted that the purchase solves B&N's own distribution problems. "Our distribution to the trade has been very limited," Riggio said, "Sterling has a great sales force, and as we publish more books, it gives us a great vehicle" to reach other retailers. Riggio said he hoped other retailers would base their buying decisions on the specific titles, not on who the publisher is.
While general-interest publishers felt some unease about the deal, the unhappiest were publishers who compete in some of Sterling's niches. An executive at one such house noted, "If I paid that much money for a company, I'd promote those books," adding that the creation of a "Sterling section" in B&N stores is a possibility. Another niche publisher said the deal "might limit what we can sell to Barnes & Noble." Riggio said other publishers should not be concerned by the deal, adding that B&N stocks millions of titles and that the acquisition of Sterling "is about expanding the market."
While one executive wondered about the "transferability" of some of Sterling's agreements, Boehm said he doesn't expect its distribution deals to change. "Everyone was really happy," Boehm said, when he told them about the new owner at Sterling's sales conference last week. Sterling also has a licensing deal with Hearst Books, another arrangement Boehm said will remain. In addition, Sterling is set up to be a category management captain at Borders. Boehm said he hoped that would not change. "Hopefully, it will not raise their competitive spirit to the point where they may walk away," he said.
Borders spokesperson Anne Roman indicated that while Sterling is a category management captain, the consulting relationship is more or less complete, since many of Sterling's stock recommendations have already been made. When asked whether or not B&N's ownership of Sterling would affect stocking decisions, she said, "Borders decides what books to carry based on customer needs, not who the publisher is." However, she said, Borders will continue to assess its relationship with Sterling as developments move forward.
Boehm said originally he had wanted to buy out partner Burton Hobson, who has not been involved with the day-to-day operations for some time. But he found raising capital to be difficult, and so set out about six months ago to find a buyer. In B&N, he said, he had the answer: "They're a very paternalistic company. I can't imagine a more perfect partner."
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