TW, Viacom may merge book units

Congloms want bigger piece of pub pie

NEW YORK — Time Warner and Viacom are in discussions to merge their book publishing units, creating a joint venture encompassing Simon & Schuster, Warner Books and Little, Brown.

The negotiations reflects increasing consolidation among book publishers — a trend that is making life tougher for smaller players. Last year German media giant Bertelsmann, owner of Bantam Doubleday Dell, acquired Random House in a deal that doubled Bertelsmann’s U.S. market share in the adult trade area.

That left other publishers, such as News Corp.’s HarperCollins and Viacom’s Simon & Schuster, far behind. In response, HarperCollins agreed recently to buy the Hearst Book Group for an estimated $150 million-$200 million, strengthening its position in the marketplace, especially in mass market paperbacks.

Talks between Time Warner and Viacom are aimed at giving both entertainment congloms a stake in a bigger publishing entity, ensuring greater economies of scale.

In a venture in which the two would be equal partners, TW’s Time Warner Trade Publishing unit, which owns Little, Brown and Warner Books, would be wedded to Viacom’s Simon & Schuster, which includes the imprint Scribners.

Time Warner’s Book-of-the-Month Club and Time Life Books, both direct-marketing operations, are not thought to be included.

A deal is still some way off, however. Neither Viacom nor Time Warner would comment.

Merged venture would have sales of about $1.1 billion, still well behind the merged Random House-Bertelsmann but likely bigger than the newly expanded HarperCollins.

Time Warner authors include bestsellers Nelson DeMille, David Baldacci (“Absolute Power”) and Nicholas Sparks (“Message in a Bottle”). Simon & Schuster boasts Jackie Collins, Larry McMurtry and Stephen King.

Viacom sold all but its Simon & Schuster consumer publishing businesses to Pearson for $4.6 billion last year, dramatically reducing the size of the company. Viacom’s 1997 publishing revenues were $2.47 billion, whereas the remaining consumer publishing unit’s sales last year were $565 million. This year it is expected to generate revenues of $598 million, according to a report by Nationsbanc Montgomery Securities earlier this year.

Time Warner does not break out financial details for its book publishing unit, but J.P. Morgan analyst Matt Harrigan estimated last year that the trade books division would generate revenues of $488 million in 1999.

Bertelsmann execs said last year that the company would have revenues of about $1.5 billion after its acquisition of Random House.