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New Golden rulers

Publisher shuffles execs in restructuring

NEW YORK — Dick Snyder’s Golden Books Family Entertainment announced a restructuring and management shake-up Monday that brings publishing operations under the purview of former entertainment head Eric Ellenbogen.

The restructuring left no room for children’s publishing group president Willa Perlman, who quit to go to Hasbro Inc., where she’ll be general manager of new business development, global marketing.

Perlman, whose departure was anticipated (Daily Variety, June 5), reportedly walked from a contract that in fiscal 1997 paid $378,000 in salary and $300,000 in bonus.

Crucial time

Ellenbogen’s elevation comes at a crucial juncture for the publisher as its losses continue to widen and its credit ratings deteriorate.

While adding Perlman’s responsibilities to his own, Ellenbogen will focus on streamlining operations by taking a brand-management approach for each major property on Golden Books’ list, including such characters as the Poky Little Puppy, the Lone Ranger and Pat the Bunny.

Full service bunny

“The idea is to manage a character like Pat the Bunny across all businesses — video, consumer products and touch books,” Ellenbogen said.

Golden Books’ stock dropped 6.4% to $6.38 — after hovering around $12 just weeks ago — as investors digested what CEO Snyder called “our transition from a classical publisher to a family entertainment company.”

Golden Books sources applauded the reorganization’s promise to break the company’s bureaucracy. “It shouldn’t take 18 months, as it does now, to produce a color book,” said one insider.

Whether investors will be as satisfied with the changes remains to be seen. Wall Streeters say Golden Books’ main problem, aside from declining sales from its core publishing business, is its $250 million debt load.

Choking on debt

“They’re choking on their debt,” said one industry exec, who believes Golden Books needs to recapitalize its balance sheet by raising new equity. He predicted that “some financial engineering” would occur.

As Standard & Poor’s noted on recently lowering Golden Books’ debt rating, the company’s $30 million new credit line will only “confer a very modest, short-term degree of flexibility” given the red ink flowing from the company.

Raising new equity won’t be easy, however. Investment bankers say a publisher like Golden Books is typically valued at about one times revenue, which would put a valuation on the company of about $250 million — roughly in line with its debt.

Although Golden’s recently installed chief financial officer John Ferrara didn’t return phone calls, another exec claimed Snyder & Co. have retained the support of Barry Diller and Warburg Pincus — major shareholders who paid $10 a share to buy control of Golden Books two years ago.

Still, one banker predicted Warburg would at least bring in a new management team to replace Snyder’s group, unless a buyer is found to take Warburg out.