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AOL Time Warner: can't shift books

AOL Time Warner's ability to attract serious interest in its Time Warner books division is in question as few European, or other, potential buyers appear to have stepped forward.

AOL Time Warner reported a loss of $98.7bn (£63.7bn) for last year and while selling its book publishing division won't prove an all-out solution, it might help at least to ease the pain.

WHSmith and Cinven said preliminary discussions regarding the possible purchase of AOL Time Warner Book Group have now come to an end and neither company will be pursuing this further.

Both had confirmed on March 13 that they had expressed an interest in acquiring AOL Time Warner Book Group, which incorporates Little, Brown and Warner Books, with a view to combining WHSmith's publishing business, Hodder Headline, with AOL Time Warner Book Group.

Cinven would have been the sole provider of equity capital to fund the merger of the two businesses.

Lachlan Murdoch, deputy chief operating officer of News Corporation, confirmed at the weekend that his company had also passed up the opportunity of bidding for AOL Time Warner's books. It is thought that this is because News Corp is concentrating all its efforts on acquiring TV broadcaster DirecTV. However, reports have suggested that Bertelsmann and Pearson have remained in the race, although it is believed that Bertelsmann will not make a move until it has finalised the sale of its scientific publishing division, BertelsmannSpringer.

This is due to complete before the end of the second quarter this year. There are also rumoured to be a number of financial bidders in the frame.

Meanwhile, AOL's music division is also the subject of persistent rumour. Blackstone, the US private equity group, has reportedly teamed up with UK music group, EMI, to make a joint bid for Warner Music. Blackstone was reported as having an exclusive agreement to provide financial backing to EMI on mergers with other music companies. It is understood from a recent article that the Blackstone-EMI consortium has held informal talks with AOL about buying the company's music division worth about $1bn (£645m).

At the same time, Blackstone and EMI are believed to be eyeing a tie-up with German group, Bertelsmann Music Group (BMG). All three groups declined to comment. The report says there are numerous other bidders
circling Warner Music, including Sony Music and BMG, as well as Thomas H Lee, Texas Pacific Group and Kohlberg Kravis Roberts.

Blackstone and EMI are also reportedly interested in getting other partners to join the consortium, and TH Lee and Cinven have also reportedly expressed an interest.