Megamerger Publishing: Purchase or Perish
Bookselling expands to multimedia formats as corporate conglomerates fight to capture buyers
WHEN Charles Scribner III of Scribner's Sons, an imprint of Macmillan Publishing, received the press release with the snow-capped logo announcing Paramount Publishing's purchase of Macmillan for more than $500 million, his first thought, he says, was of his all-time favorite Paramount movie classic, ``Breakfast At Tiffanys.''
Although movies, television, and sports are the glamour girls of Paramount Communications, Paramount Publishing accounts for almost 40 percent of the parent company's revenue. The recent addition of Macmillan to a crown that already includes Prentice Hall and Simon & Schuster will make Paramount, with a combined $2 billion worth a year in sales, one of the most powerful publishers in the world.
The emergence of megamerger superpublishers with super buying power could mean sometimes rapid and sudden change in ownership, corporate management, technology, and marketing methods. Internal consolidation within the publishing industry and its convergence with the cable-television, telephone, and entertainment industries, could have a profound impact on what was once the sleepy ``accidental profession'' of publishing.
Paramount plans to shrink the number of books published under the Macmillan imprint. The name itself will disappear from from adult college textbooks and adult consumer books, and only a relatively small number of serious fiction and nonfiction titles will continue to be published under the venerable Scribner imprint.
The acquisition of a publishing house like Macmillan is part of a strategy on the part of corporate media conglomerates, such as Paramount Communications and Time-Warner, to create what Martin Davis, chairman and CEO of Paramount Communications, calls ``proprietary intellectual properties'' that can be distributed in a wide variety of multimedia markets.
From CD-ROM books or downloading research materials onto a home computer, to the hottest new novel promoted and sold from what may become a little kiosk on an interactive television shopping mall, the current trends in commercial book-publishing are going to favor ``intellectual properties'' that will readily shape-shift into a variety of marketable electronic formats.
``Certainly the problem today is that a retail bookstore only has so much shelf space, and they want to give that shelf space to the book that sells,'' says John Tinker, a financial media analyst at Furman Selz in New York. ``The difficulty going forward is how to promote your book and cut through the clutter with all these choices.''
One way to cut through the clutter will be to promote your book on the MTV or QVC Network Inc. home-shopping channels. Time-Warner also has plans for a special interactive ``bookbuyer'' service that will feature promotional videos and bestseller home shopping at the press of a button.
``The notion that everything becomes more instantaneous, in effect almost televisual, is a good model to use,'' says Rich Macdonald, a First Boston investment analyst. ``If you can't instantaneously create six or seven different products out of a creative idea - usually that originates with the editor - then you're really wasting the internal resources of the business.''
Creating those products will be the job of superpublisher editors like Judith Regan of Simon & Schuster. As the outspoken editor for books by megamouth radio personalities Howard Stern and Rush Limbaugh, Ms. Regan already has a head start on that gold-brick road between publishing and Hollywood.
``The way I view it is that people in publishing basically act as readers for the movie industry, and we see a lot of material before anyone else does,'' Regan says. ``What I really hope to do, especially when Paramount is taken over, is to create an opportunity where I can do all of these [multimedia] things.''
Pocket Books, a division of Simon & Schuster, for example, has come out with a Beavis and Butthead book, for which they paid MTV's Viacom a licensing fee close to $800,000. The book is a likely candidate for marketing on the upcoming MTV shopping channel.
The electronic gold rush for ``creative copyrights'' is on. When publishing companies change hands, writers - the originators of all this creative material - may have reason to be concerned.
``We have always defined ourselves very differently than our colleagues in the publishing industry,'' says Dick Snyder, chairman of Paramount Publishing. ``We are creative copyrights and an exploiter of copyrights. That's all we do, and that's all, I think, we've ever done.''
Following the lead of their sister in the motion-picture business, ``content providers'' like Paramount Publishing are aggressively seeking to buy up electronic rights and submarkets. ``What you want is the same negative sold over and over,'' Snyder says. ``That's the definition of how you get rich.''
``Bargaining power is always an issue when conglomerates merge,'' says Maria Pallante, a legal expert and executive director of the National Writers Union. ``The issues are frightening, because copyright value is changing and who controls copyright is changing.''
Writers' organizations such as the National Writers Union are making the debate over subsidiary electronic rights and other related issues of information access and diversity their first order of business.
``The more conglomerations merge, the less leverage an author is going to have to say, `No, I want to retain those rights,' because even if they retain them, they may not have any way of distributing them or exploiting them,'' Ms. Pallante says.
Just as big-name fashion designers make the greater part of their profits from licensed spin-off products, publishing conglomerates can spin profits from submarket licensing. Industry experts say electronic submarkets may further encourage the trend toward celebrity biographies and brand-name books with marquee value.
``We now have an era where many celebrities are being dragooned into licensing,'' says John Motavalli, editor of Inside Media, an industry magazine. ``If book-publishing goes more and more towards celebrity books written by or about celebrities and that kind of junk publishing - licensed products like a Beavis and Butthead book - then those who own those copyrights and the license to distribute a book on that product will be in the driver's seat.''
``My great great grandfather, who started Scribner's in 1846, did so because he originally wanted to go into law but suffered from frail health and was advised by his doctor to pick a less strenuous career,'' Mr. Scribner says. ``Now ... I would very very much doubt that today a physician would give the same advice.''
And what would Beavis and Butthead, first seen on MTV, a division of Viacom International Inc., say?
Well, look for them in the pages of ``This Book Sucks,'' now available from Pocket Books, a division of Paramount Publishing's Simon & Schuster Consumer Group owned by the very same Paramount Communications that is about to be merged with the cable conglomerate of either QVC or Viacom.
Here are a few choice words of advice from Beavis and Butthead on how to make a million dollars: ``Sell your blood, invent something, make somebody pay you not to blow up something, discover oil like Jed Clampett, wear like a tie ... write a book.''