Pirates
Think that those ‘private equity firms’ were out to do good for the companies they were buying up?
As New York’s book world tried to make sense of Rebecca Saletan’s abrupt resignation from Houghton Mifflin Harcourt yesterday, a publishing insider familiar with the situation told us that many at the beleaguered company—already trying to cope with the public fumbling by its corporate spokespeople over whether it’s stopped acquiring books or just buying fewer of them—were just as surprised as the rest of us. Rumors flew around the Union Square office that some sort of announcement was planned yesterday afternoon, we’re told, but the word didn’t go out until early that evening. (Otto Penzler told the AP she called him that day; the time is unspecified.) “I don’t think anybody knew what to expect,” our source said. “It’s all so bizarre… Nobody could see this coming.”
This observer went on to express the opinion that Saletan should receive none of the blame for HMH’s downward spiral over the last two weeks—praising the way in which she was able to distill the combined resources of Hougton Mifflin and Harcourt into an effective publishing house (and noting that Saletan’s Harcourt was, before the merger, probably the more attractive of the two trade publishing programs from a business standpoint). “This is because the company was overleveraged by bankers,” the insider asserted, citing the $7 billion debt incurred by the private equity firm Education Media and Publishing Group when it bought Houghton Mifflin in 2006 and Harcourt in 2007. The publishing veteran compared the situation to the recent mismanagement and degradation of major American financial institutions, fuming: “Those f*****s have destroyed two venerable publishing houses in less than a f***ing year.”
Emphasis added.
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Just another sin that wall street should answer for, but won’t. Maybe another bailout brewing?
Comment by John — 12/3/2008 @ 11:58 am
I think the publishers would be pretty near the back of the line at this point. The automakers and homebuilders are hogging the top two spots for sure.
Comment by BMB — 12/3/2008 @ 12:05 pm
I *really* can’t see congress getting too excited about bailing out a bunch of book people. You aren’t going to be able to claim it’s a big economic train for the nation (whether you believe that or not, no one else is going to believe it!)
No, there are businesses quietly going under, because the credit lines are tight (and who is to say they shouldn’t be? That publisher had 7 billion dollars of debt!) and companies cannot keep operating on 3 month open credit lines–it isn’t being allowed right now.
Comment by Maria — 12/3/2008 @ 1:34 pm
I really don’t think a bailout is brewing. However I can see/hear the case being made that: the children need their school books, we can not give in to the anti- intellectuals, we are falling behind the world in our test scores. Some Congressman represents these people and once the door is open all sorts of things can walk in.
Comment by John — 12/3/2008 @ 3:27 pm