After months of uncertainty and several false endings, Random House and Classic Media have been approved as the winning bidder for Golden Books' assets. The price was $84.4 million, plus assumption of most liabilities, an increase of more than $5 million over the group's original bid.
On August 15, Judge Roderick McKelvie of U.S. bankruptcy court in Delaware ruled that Golden could decide who would acquire its assets. Golden had supported the Random-Classic bid.
To gain that support, Random, which had joined with entertainment-investment company Classic Media, revised its position two days before the court met to mollify Golden's employees, who said the original bid didn't go far enough in providing benefits to more than 1,000 retirees or in reassuring current staff about their job status. Random came up with a plan that, according to spokesperson Stuart Applebaum, will make all Golden retirees eligible for health benefits." He added that, after the closing of the sale, all Golden Books employees will be offered jobs at Random or Classic, according to the nature of their previous jobs.
Like the Poky Little Puppy character that helped make it famous, Golden Books has gotten waylaid several times on its path to a final sale. Earlier this summer, it seemed a given that TV production firm DIC would buy rights to the publisher's myriad characters. Then, when Random and Classic unexpectedly outbid them last July, it looked like Poky & Co. would go to the world's largest publisher. All Random needed to do was win the bankruptcy judge's approval. But on August 10, HarperCollins, which had provided DIC with about $30 million in cash, complicated matters when it joined DIC as an official bidder.
"We always look for the right company at the right price, and at that price we thought it was something we wanted," said Harper spokesperson Lisa Herling. Initially, DIC bid $73 million, but raised its bid to $82 million when it went in with Harper, to best Random's price of $79 million. The Harper-DIC bid also assumed more liabilities, so Random decided to raise its offer to $84.4 million and assume an equally large share of the liabilities. Whether that amount proved too high for Harper-DIC's tastes is an open question. DIC CEO Andy Hayward implied that it was, telling the New York Post that "DIC and HarperCollins saw a fixed value that they were prepared to pay. Any further spending would have made it a questionable business proposition." Such a comment was dismissed by Random House, with Applebaum saying it "directly contradicts" what the Harper-DIC team said in court.
Random House explained that assets would be roughly split between itself and Classic, with Random taking the book properties and Classic receiving movie- and TV-related ones. Applebaum did acknowledge the possibility of "shared opportunities."
The deal also marks the final act of Richard Snyder's shaky stewardship of Golden Books Family Entertainment. Snyder had presided over a company whose shares lost nearly all of their value in six years.
The resolution of a messy fight for Golden's assets leaves a larger question: Why were those assets so hotly desired in the first place? The publisher's balance sheet, after all, has been in the dumps for some time, and its characters are sometimes perceived as past their day. And the sales price, while a relative bargain, is no blue-light special considering the tens of millions in liabilities.
Still, there's something appealing about what Golden does. The ability to license characters to TV and movie studios makes the Golden deal not just a sideline but an attempt at diversification. In a time when characters are more license ready, and consumer bookbuying is more tenuous than ever, this could be an important (not to mention cuddly) way to keep revenues high.
