Quote:
Originally Posted by DrNefario
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.
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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.
