Jim Cramer: Wall Street Hates Book Publishers


CBS Corp. is a great stock, said author, entrepreneur and stock-picker Jim Cramer, famous for his television show Mad Money, speaking at Digital Book World 2014 in New York.

Why do investors believe in the Simon & Schuster parent so much? Because it mass produces sitcoms that run forever and do well in Europe; and it regularly buys back stock, effectively giving money back to investors.

The hitch?

“CBS stock would jump if it just got rid of Simon & Schuster,” Cramer said.

Simon & Schuster, because of its print business, drags down the valuation of CBS, according to Cramer.

The same is true with the new News Corp, parent to HarperCollins. Wall Street would like the stock better if it just sold the big book publisher.

Houghton Mifflin Harcourt, which recently went public, is an exception on Wall Street when it comes to traditional publishers, but not because investors think that the company has better editors and book packagers, Cramer said, but because the company is seen as one that can grow as there are more families in the U.S. More families means more textbooks and school materials, which is a major business line for HMH.

As for Simon & Schuster and CBS, Cramer suggests that HMH or HarperCollins buys the publisher and frees the television powerhouse from its print shackles, unlocking value. As for the acquiring firms and the future of print, it’s grim, Cramer said.

In promoting his own new book, Jim Cramer’s Get Rich Carefully (Penguin), he said he’s learned that the game is changed in terms of how much people pay attention to books.

On an optimistic note, he said, “I believe people still want to read books.” Whether they will pay any attention to them in the first place to get to do that is another issue entirely.


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