Three years after bookseller Borders filed for bankruptcy, is another bookstore staple getting closer to the chopping block? Barnes &
Barnes & Noble and Liberty Media jointly announced Thursday morning that Liberty Media has cut its 17% stake in the bookstore to a roughly 2% holding. The billionaire-backed Liberty -- its chairman is billionaire John Malone -- acquired its Barnes & Noble stake in 2011 for a little more than $200 million. Though Liberty tried to couch its stake-slashing by saying that it will retain 10% of that initial investment, that figure works out to a stake worth a mere 1.7% of the company.
“By reducing our preferred position and eliminating some of our related rights, Barnes & Noble will gain greater flexibility to accomplish their strategic objectives,” Greg Maffei, Liberty's president and CEO, said in a statement Thursday morning.
The sale of Liberty's stake, which is expected to close April 8, means that Liberty loses the right to elect two preferred stock directors, so Maffei will cease to serve on Barnes & Noble's board as of April 8 but Mark Carleton, Liberty's senior vice president, has been re-elected to the board.
“Liberty Media has been a strong supporter of the company and Greg Maffei and Mark Carleton have been and continue to be tremendous partners at an important time in the Company’s history,” Leonard Riggio, Barnes & Noble chairman, said in a statement Thursday morning. “Liberty’s decision to retain a portion of its investment and have active involvement on our board underscores Liberty’s ongoing commitment to Barnes & Noble,” he said, adding that Liberty’s reduced ownership also gives his company greater flexibility to pursue various strategic options (but did not clarify what those strategic options are).
Despite these optimistic tones, other Barnes & Noble investors were not quite as satisfied with the news, sending shares of Barnes & Noble for a near-12 drop in Thursday morning trading. Shares of Liberty, meanwhile, were relatively unaffected by the news, trading for an 0.53% decline Thursday morning. Interestingly, it's the struggling bookseller that's had the better 2014 on the market: Liberty is down 7.7% in 2014 trading, while Barnes & Noble is up a whopping 50% for the year.
Part of the Barnes & Noble stock boost traces back to its third quarter earnings report, which was released in February and revealed that the company turned a profit despite a decrease in revenue. However, as Forbes' Steve Schaefer reported at the time, the Nook tablet business, which was supposed to be a shining star for the company, posted a more-than 50% drop in revenue for the quarter and its profit was even worse. "Sales of the actual device and its accessories dropped 58.2% to $100 million due to both lower volumes and lower selling prices, while sales of content for the Nook fell 26.5% to $57 million," he wrote, noting that Nook’s quarterly loss was 62 million. The silver lining? This loss was 67.5% smaller than a year earlier.
