FINANCIAL TIMES: News Corp takes a bet on Christian literature

Date: 31-Oct-2011

By David Gelles in New York

News Corp is bringing together the two largest religious publishers in the US in a big bet on the market for bibles and Christian literature.

HarperCollins, the publishing house owned by News Corp, on Monday announced the acquisition of Thomas Nelson, the largest religious publisher in the US. News Corp already owns Zondervan, the largest US bible publisher and second-largest religious publisher overall.

Terms of the sale were not released, but a person familiar with the deal said News Corp paid less than $473m, the price at which Thomas Nelson was taken private by InterMedia Partners in 2006.

InterMedia sold a majority stake in Thomas Nelson to New York private equity firm Kohlberg & Co in 2010. At the time, Kohlberg installed Jane Friedman, former chief executive of HarperCollins Worldwide, on the board. Peter J Solomon Company advised Thomas Nelson on the sale to HarperCollins.

The deal is the largest in the book publishing world for at least five years, and could signal a new round of mergers and acquisitions as the industry faces stagnant sales and fewer bookstores.

“The industry is only starting to get its head around the fact that it’s going to start 2012 without Borders helping it sling books,” said Michael Norris, trade books analyst at Simba Information, a consultancy. “With fewer book stores around, it would seem there will be some consolidation.”

News Corp has plenty of cash on hand since its $12bn majority acquisition British Sky Broadcasting was scuttled by the phone-hacking scandal in July. And during the company’s fourth-quarter earnings call, News Corp chief operating officer Chase Carey signalled that acquisitions of this size could be attractive.

“We strongly prefer to build rather than buy businesses, so we will focus on modest investments, those in the tens or hundreds of millions, not billions,” he said at the time.

Yet many analysts expected News Corp to spend its cash on emerging market properties or digital assets, such as last year’s $360m purchase of Wireless Generation, the digital education company.

Sales of religious books and bibles have held up surprisingly well despite the publishing industry’s continued struggles. From 2008 to 2010, sales were up 1 per cent, according to the American Association of Publishers. Last year, publishers sold 204m copies of religious books for about $1.35bn.

“Thomas Nelson adds further balance to our existing publishing programmes,” said Brian Murray, HarperCollins chief executive. “Its broad inspirational appeal is a good complement to Zondervan, which will continue to publish books consistent with its mission."

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