Profit and loss statements are all the same. It doesn't matter if the company in question makes ax blades or published books. There's expenses, there's income, and there's a bottom line.
Those involved in the publishing trade think that they're all about art, about the beauty of the written word, but a book is a screw is a bedpan. At least that's how it is when your firm is taken over by a financial guru. Then art lies in rich green American dollars and shining sterling pounds and colorful euros.
When Barry O'Callaghan's Riverdeep swallowed up the Houghton Mifflin whale, he said he'd need to realize lots of synergies. When HMRiverdeep consumed Harcourt, the synergies to be realized only increased.
HMH Executive Editor Ann Patty has been synergized, she's said, along with several other employees whose services are no longer needed.
If the adult trade division is indeed on the selling block, it would make sense to paint an attractive financial picture. It's a going concern, and here's the income statement and the balance sheet and the numbers are pure works of art, aren't they? Sure there's some big name authors in the goodwill calculation, but nobody reads anymore, do they?
Realize some synergies so the financials look good, then unload the adult trade division to get some much needed cash to service the debt that accrued when Barry O'Callaghan, formerly of Credit Suisse, decided he wanted to run an educational publishing materials firm. It's all widgets in the business world. Widgets and synergies and reverse mergers that give a little minnow a bit of a tummy ache.
5 comments:
O'Callaghan's chances of improving his position in 'Ireland's 500 Richest' don't look good next year... if he appears at all.
He only made one mistake. In his ghastly ambition to become a global mogul, he overpaid. In overpaying, he overcommitted, and now he's overabarrel.
Worse still, he didn't overpay in hindsight (what with the global meltdown and all) - everyone *except* him knew that he'd overpaid at the time. Not just once, but over and over.
Considering his exposure to Lehmann Bros., I'd say his star is on the descent. Sadly, there's hundreds of people who were so unfortunate as to be employees of the companies he bought up, and who won't be employed much longer.
About 150 people were synergized out of their jobs Dec 4 across the 6-12 divisions of Houghton Mifflin Harcourt. Various blogs reported Dec 3 that another 200 were let go in the K-5 division. Also this week about 75 people were let go at Riverside Publishing, a division of HMH in Rolling Meadows, IL, that does school assessments. Plus the cuts in HMH Trade. And that won't be the end of it. As school programs are finished, the people on those programs will be at risk.
There were "realized efficiencies" in K-12 supplemental as well, yesterday. One might even use the term "bloodbath."
From the start, they spoke of synergies and cost savings, and this is what they meant. With economic conditions on the downswing, cost-cutting will be even more drastic than originally planned.
The trick is to not cut the workforce so deeply that there's not enough people left to function. And it's a disheartened workforce that's expected to carry a heavier load.
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