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Old 11-12-2012, 12:18 PM   #23
fjtorres
Grand Sorcerer
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Quote:
Originally Posted by DrNefario View Post
The fact that both owners are trying to cash out makes me think that maybe this isn't the great deal those analysts seem to think.
Not necessarily.
The hints I'm seeing suggests it is probably a great *financial* deal. Especially if they can convince people to overpay for the IPO on the basis of the "combined market power".
The problem is that a lot of analysts are projecting their own wishes/expectations onto the deal instead of asking *why* the two biggest publishers with such a large degree of overlap want to combine their operations.
The overlap suggests to me that there will be big cuts coming, resulting in a company that will not be much bigger--in current operations--than either of the two components are now but with a deeper back catalog and stronger financials (presumably from lower overhead instead of higher pricing). This is the typical outcome of mergers in industries under disruption...

Basically this merger/divestiture is to me confirmation that in *consumer* publishing there is excess capacity among the Big Publishing houses and getting(slightly) bigger is one way to restructure and shed excess capacity...

Other explanations welcome.

Last edited by fjtorres; 11-12-2012 at 12:20 PM.
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