Expert publishing blog opinions are solely those of the blogger and not necessarily endorsed by DBW.
This week, Barnes & Noble announced the appointment of Michael Huseby as CEO. He came out of semi-retirement to join the company March 12, 2012 as Chief Financial Officer. When William Lynch was dismissed as CEO last July, Huseby was put in place as acting CEO of the NOOK division and president of Barnes & Noble. The act is now over and he’s the real CEO, with responsibility for all of Barnes & Noble’s (somewhat fragmented) businesses: Barnes & Noble Retail, Barnes & Noble College and NOOK Media.
What’s Huseby’s background? Most significantly senior financial roles at Cablevision Systems, Charter Communications, and during the merger of AT&T Broadband with Comcast Corporation in 2002.
According to the Wall Street Journal, “Mr. Huseby said he left Cablevision after the AMC spinoff closed at the end of June, which allowed him to spend the rest of the summer with his two teenage sons.” Hmm. A 58-year-old rich guy, who has realized that his teenage sons are growing up without him, decides to take a job in retail. Why would he do that?
The media followed the party line: Bloomberg: “Barnes & Noble Names CFO With Spinoff experience.” The Wall Street Journal: “Bookseller Barnes & Nobel Hires a Spinoff Veteran.” CFO Magazine: “Barnes & Noble’s Choice of Cablevision’s Ex-CFO Points to Digital Future.” Well, yes, the appointment did point generally to a digital future. But it pointed very specifically to John Malone, chairman of investment firm Liberty Media, which holds a significant equity stake in Barnes & Noble. Liberty also has a stake at former Huseby employer Charter Communications and Malone was on the board of Cablevision during Huseby’s tenure.
To quote one article: “Malone joined Cablevision’s board in March, in the midst of a battle between Cablevision founder and chairman Charles Dolan and his son, Cablevision CEO James Dolan, over the money-losing satellite TV service Voom.” To quote a second: “…Cablevision filed another 8-K after 5 p.m. yesterday as well — this one noting that the company paid outgoing Chief Financial Officer Michael P. Huseby just shy of $4 million in cash, more than $800,000 from his deferred compensation account, and unspecified pension and equity benefits, for his departure, which the company described as a resignation.”
This week’s announcement leaves little doubt about Huseby’s mission. He’s quoted as saying, “My role, as I see it, is to enhance and unlock the value of these businesses for our shareholders.”
Enhancing the business means continuing with the day-to-day drudge that has become increasingly unsustainable. The NOOK business is a shambles, with its 2013 holiday sales quarter another disaster, with revenue declines of 60% versus the same period last year. The company is rapidly closing unprofitable stores to shore up the retail division. And the college division is facing strong headwinds as students move from expensive textbooks to online texts and open source learning materials.
Unlocking the value of the business for shareholders is a euphemism for a sale of some or all of the company. For example, in 2011, when “activist shareholders” forced McGraw-Hill to dice itself into two companies Jana Partners referred to the process as unlocking shareholder value. And for the largest stockholders in a company, quite a bit of value can be unlocked through these maneuvers.
Malone’s Liberty Media still holds enough shares in the company that nothing much can be done without its approval. The Wall Street Journal notes that “at an investor conference Tuesday evening, Liberty Media Chief Executive Greg Maffei said that while Barnes & Noble has a “fairly strong” retail business, the “tablet space, the e-reader space has been very difficult.” Does this sound like an investor in for the long haul?
Thad McIlroy is a publishing analyst who has been following Barnes & Noble closely for several years and has published one book about the company.