Wiley to Sell Frommer's to Google

Wiley announced Monday morning it has "entered into a definitive agreement to sell all of its travel assets, including all of its interests in the Frommer's brand," to Google. The deal is said to include approximately 350 travel guides and the Frommers.com website. Terms of the sale were not released, which seems a little silly, since it's material enough to Wiley that they will report it eventually. "A person close to the deal" tells the NYT Google will pay about $23 million, while "a person briefed on the deal" tells the WSJ the price is "around $25 million." That's not inconsistent with the size of the larger basket of trade and professional publishing assets Wiley has had up for sale.

The publisher had said in March it intended investigate the sale of "a number of consumer print and digital publishing assets in its professional/trade business that no longer align with the company’s long-term strategies." Those properties included Frommer's, as well as CliffsNotes, and Webster's New World. Prospective buyers reported to us that they were originally told Wiley preferred to find a single purchaser, but given the diversity of the properties--which are verticalized across many interests (also including culinary, general interest, nautical, pets, and crafts)--locating a single buyer presumably proved difficult.

For Google, the purchase builds on their acquisition of Zagat's in September 2011 for approximately $151 million, and provides them even more significant book publishing-related IP. The company said in an email statement, "The Frommer's team and the quality and scope of their content will be a great addition to the Zagat team. We can't wait to start working with them on our goal to provide a review for every relevant place in the world." Or at least part of the Frommer's team; Skift, co-founded by former Frommers.com online editor Jason Clampet, cites sources that "say all of the Frommers.com team was gutted today as editors, developers, producers, and other staff were told they would be let go."

What also may or may not be a great addition is those print books. Google's Bernardo Hernandez told the WSJ,  "Our commitment is to keep things as they are today and once we combine operations, we'll know better what the future looks like," but the paper says that "Google said Monday it hasn't yet decided whether the Frommer's guidebooks will continue to be published in print or whether they will eventually migrate entirely to online."

Google appears to be purchasing book-derived IP that they can give away through their own services. (Frommers.com has been part of a successful online advertising and services program for Wiley. In their recent fiscal year, websites and digital products other than ebooks  produce $26 million in revenue.) But these have been openly auctioned franchises, and at least in the case of Zagat's Google paid below the reported asking price, so they are not necessarily purchasing content at any cost. In the the short term, the move has cost Google's competitors a lot more than the search giant is paying; TripAdvisor.com lost $224 million in market cap on Monday alone, when Yelp.com's stock shed $120 million of value, and both of those issues are down again in early Tuesday trading.

There is a lot of confusion in other reports about Wiley's trade/professional group that we should clear up. In March the company said they would look to sell selected consumer assets from across the group; they are not selling the entire division, which had sales of $434 million in the recently-finished fiscal year. The assets to be sold come from across the group, including "assets...in general interest," but they are not selling all of the general interest titles. When they first announced the possible sale in March, they did say the group of assets for sale drove approximately $85 million in annual revenues--but in the June earnings release, they revised that amount down to $80 million. Those assets produced only $6 million in direct contribution to profit, before shared expenses, so they are low-margin assets with declining sales. (The whole division had a 26% profit margin before shared expenses for the year.)

Monday's announcement indicates that other deals "may arise from the sale of other consumer assets," and all proceeds "will be redeployed to support growth opportunities in Professional/Trade; Scientific, Technical, Medical, and Scholarly; and Global Education businesses."