Digital opportunities pave way for mergers and acquisitions, Frankfurt fair hears

International publishing companies are looking to acquire businesses with large digital presences and arms "complementary to books" as the industry moves slowly towards digitisation, attendees at Frankfurt's Global 50 CEO Talk heard.

The fair's annual talk was held on 20th October as a hybrid event, hosted by publishing consultant Rüdiger Wischenbart and featuring insights from New York-based investment banker Robin Warner of Oaklins DeSilva+Phillips and Klaus Driever, director of sales at Munich-based Allianz Group. This year's theme was "Consolidation, Consumers and Communities".

Questions were fielded from trade journalists, including Andrew Albanese, senior writer at Publishers Weekly, deputy editor-in-chief at buchreport Lena Scherer, Fabrice Piault, editor-in-chief of France's Livres Hebdo, Carlo Carrenho, a publishing consultant from Sweden, and Yanhong Kung, c.e.o. of the Chinese trade publishing news portal Bookdao.

Warner has closed more than 50 transactions focused on trade publishing, education information services and healthcare involving companies including Amazon, Scribd, Independent Publishers Group, Oracle, Wiley and Macmillan. Commenting on a wave of recent mergers and acquisitions in the US market, including Bertlesmann's $2.2bn deal for Simon & Schuster and Hachette’s $240m purchase of Workman, she said the deals were brought about by "a confluence of things happening versus major changes in the industry".

"For most publishers, revenues went up dramatically as people discovered print, e-books and audiobooks. We're still in the Covid effect time period. Buyers are looking very carefully, they want to pay a fair price, but they don't want to overpay if, after Covid, things settle down a bit".

Warner also said publishing companies are increasingly looking for businesses with ventures "complementary to books". 

She said: "There is a huge push to integrate publishing content into digital, like Netflix and Apple TV, and to adapt it for media interactive content. [Publishers] have the content, the [intellectual property] and that is what is coveted out there — it's an exciting time for book publishing."

"It's all about market share, the big guys are looking for as much market share as possible," she said, indicating that Abrams & Chronicle Books could be another contender ripe for takeover.

By contrast, the German market sees consolidation on the book retail front, rather than publishing, with regulatory laws such as fixed book prices generating a sustainable environment for smaller publishers. Amazon and the Thalia chain dominate the space, which Driever thinks is "positive" as it increases a book's reach.

"Thalia doesn't necessarily want to buy other companies, but it is interested in acting as a platform for other booksellers to sell their stock," he said. "From my point of view, it's a traditional way of growing."

Commenting on the use of technology in publishing, he said the book industry needs more "data driven" approaches to its customers and readers.

He explained: "There may be a feeling in the book industry that digitisation is done. When you see the behaviour of customers, digitalisation is changing that. [Companies] needs to reconnect, they have to reinvent the business on and on, because the environment is changing. What does that mean for our business, for example? What about the cloud? There are interesting times ahead."

Warner added: "Book publishing has been very slow to adapt to technology. When we did e-books, everybody said print's going away, which is ridiculous. Audio is very, very hot right now. It is creeping into book publishing, but it certainly isn't embracing it as quickly as healthcare, finance, all the other industries." 

Kung reported the main aim of publishing companies in China is accelerating digital offerings, as more consumers operate and  buy content online. 

"Chinese publishing groups are focusing on multimedia — digital publishing is a long-term trend, traditional publishing is still important, but cross-media publishing [has become] more and more important. Publishers want to sell their content across media, that's why our publishing groups invest more in digital strategies".