Company shelving HarperCollins buy
NEW YORK — Bertelsmann AG would be interested in bidding for U.K. music group EMI but only at a lower price from its current level of about $5 billion, top execs said Thursday, adding that there are no discussions currently.
Michael Dornemann, CEO of Bertelsmann Entertainment, told a briefing for reporters in New York that “for sure” the company would be interested in EMI at a lower price than it is currently trading.
Speculation about a takeover of EMI has revived in recent days after the company warned that a slow-down in music sales in Asia and Latin America was expected to reduce its first half 1998 profit by 20%. At the same time, EMI chairman Colin Southgate revealed that he would be looking for a replacement in the coming months.
Lack of diversity
Unlike most other major music companies, EMI has not diversified into other areas of the entertainment business and is therefore more vulnerable to slowing conditions in music sales. Bertelsmann has been seen as a possible suitor for EMI, along with Walt Disney Co. and News Corp.
Dornemann told reporters that “some years ago we had some discussions with EMI, but it’s very expensive.”
He noted that “our strategy in general is to grow from inside the company,” although outgoing CEO Mark Wossner interjected to say that “we are always interested” in acquisition opportunities.
“Let (the price) fall further down,” Dornemann added. EMI’s stock price has come down sharply in recent months, but its market worth is still at least $5 billion.
U.S. now biggest market
Dornemann and Wossner were speaking at Bertelsmann’s U.S. press conference a day after the company reported earnings which showed that the U.S. is now Bertelsmann’s biggest market.
“I promise we will always try to be good citizens,” Wossner said about the company’s expanding U.S. presence.
He told the briefing that he hoped Bertelsmann would be able to grow the U.S. business between 6% and 10% per year in coming years. “That would be wonderful,” Wossner added.
Wossner, who will be succeeded by Thomas Middlehoff as chairman in November, said that Bertelsmann’s acquisition earlier this year of Random House will mean that by next year books will most likely surpass music as the company’s top revenue maker.
No new pubs sought
Bertelsmann executives indicated that further acquisitions of U.S. publishers are unlikely at this time, answering in unison with a resounding “no” when asked if there was still interest in acquiring HarperCollins. Bertelsmann made overtures to HarperCollins parent company News Corp. last year.
Bertelsmann also downplayed any interest in troubled children’s book publisher Golden Books.
The focus in the short term is finessing the Random House-BDD merger, execs said. Random House CEO Peter Olson has established a sales force steering committee to look at streamlining processes and expects its work to take at least one year.
An inkling of change that will most likely come was Wossner’s slip that the company has plans to expand space in its Times Square headquarters by finding a second building in the area.
Olson told Daily Variety that Bertelsmann would like to see its new publishing divisions in more closer quarters, making it likely that the Random House imprints will move from their current East 50th Street location.