Many commentators took the announcement by Quercus Publishing plc that “it would be in the best interests of the Company’s shareholders to seek potential offerors by means of a formal sale process” as an important early indicator of the strength of publishing industry disruption in 2014. After all, if the English publisher of Stieg Larsson’s Millennium Trilogy can’t make it in the new publishing era, who can?
This immediately initiates at least one item of publishing M&A. As the formal notice states, “as a consequence of this announcement, an ‘Offer Period’ has commenced in respect of the Company in accordance with the rules of the Takeover Code.”
Jeremy Greenfield in Forbes is now citing this as one potential deal in a likely chain of mergers and acquisitions in “the boring, steady industry of book publishing.” (As it happens, I don’t think things have been boring or steady in the publishing world post-Amazon and post-Apple price-fixing trial for quite some time, but let that pass.) And he’s right at least to point out that the Penguin Random House merger was “the largest merger in book publishing history” – as an indicator of what this means for traditional publishing.
For various reasons, though, I don’t think any M&A deals within the year – with the possible exception of one – will trigger changes within the industry, as opposed to a changing of the guard of its member companies. But first let’s consider the drivers Greenfield cites as the engines of change and consolidation. These are: electronic publishing startups looking for exits or acquirers (like Goodreads); winners or survivors from digital disruption looking to buy losers and casualties; illustrated book publishers also looking to make good on disruption; larger publishing groups looking to build scale against titans like Amazon; and traditional publishers looking to restructure and retool themselves as new generation publishing propositions by buying and selling capabilities (as in Wiley).
Now of those five, I don’t see any of them except perhaps the last leading to big changes in what the publishing industry does, as opposed to who does it. The one deal which Greenfield cites that might change things is a sale by Barnes & Noble of the Nook division – hardly the least expected deal in the industry. And even then, it’s arguable that a Nook sale will just lead to a change of owners, rather than of strategies and capabilities.
But interestingly – and revealingly – the one Big Unmentionable in Greenfield’s article is not the A word, but the S word. Self-publishing isn’t mentioned once. And yet, through Amazon but also elsewhere, self-publishing is now one of the most disruptive influences on the entire industry, perhaps even more so than Amazon itself. It’s certainly spawned an entire sub-industry of its own, with Author Solutions one of the least distinguished examples. Without factoring such influences into the equation, this coming wave of publishing M&A looks likely to be of most interest to M&A bankers and lawyers. The real game changers are likely to come from entirely different directions.