Polly A.
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Thanks,
Carol N.
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% %
% Carol Avery Nicholson Kathrine R. Everett Law Library %
% Assistant Director for University of North Carolina %
% Collection Resources and Chapel Hill, NC 27599 %
% Bibliographic Services Tel: 919/962-1199 %
% %
% Carol_Nicholson@unc.edu Fax: 919/962-1193 %
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On Mon, 22 Apr 1996 Lawstuff@aol.com wrote:
> I thought I had posted this, but I'm told it didn't get through. I had asked
> Mr. Kehoe to list the benefits that balanced the obvious negatives and caused
> the AALL to take a neutral position. I also asked why a non-publisher would
> spend $2 billion to buy a publishing company if it didn't intend to publish,
> and who these non-publishing offerers are. Mr. Kehoe's answer follows:
> Polly A.
>
> In a message dated 96-04-18 16:12:29 EDT, pkehoe@american.edu (Patrick E.
> Kehoe) writes:
> >Polly, we are preparing yet another article for the AALL Newsletter which
> >was originally scheduled to appear one month after the second of the two
> >columns that I wrote for it but posted yesterday to Law-Lib. The purpose of
> >that article, which is not another President's Column but rather a thing
> >unto itself, is to help educate AALL members about some of the questions and
> >concerns that the Board had to resolve in its own mind when determining what
> >position, if any, to take on the merger. Margie Axtman has agreed to do the
> >article which is to be in the form of a question and answer session with
> >Brian Hall. The questions are now being developed with the help of CRIV
> >people and others including board members. They will be real and the real
> >answers will come from Mr. Hall. We will see just what comes out. The
> >deadline for the article is only about a week away. (about two months before
> >it hits print and your desk in the AALL Newsletter).
> >
> >You might note that there have been many acquistions of old line legal
> >publishers and traditionally relatively little real competition in legal
> >publishing. Until about 1947 there even was an agreement between the various
> >players in the field to carve up the market. After that date when DOJ forced
> >a change, the reality remained much as it had been.
> >
> >The modern era for law publishing began about a generation ago when Shepards
> >was sold by Frank Shepards to McGraw Hill -- then an outsider to legal
> >publishing. Other companies have been bought and sold since then. The most
> >recent before the West Thomson was the purchase of CCH by Kluer last fall.
> >Some of the prices paid have been very high. It appeared that neither AALL
> >nor many of its members seemed too concerned about this kind of thing until
> >Thomson announced that it was acquiring West. Now we are. Yet the whole
> >thing is being driven by market forces beyond anything the AALL can hope to
> >control. All we can try to do is influence the antitrust review so as to try
> >to get some protection from that for consumers from the kinds of things any
> >new owner of West might want to do with it and/or its products.
> >
> >You ask if there were any financial buyers out there. We understand that
> >there were at least three other bidders. The list I have seen does not
> >include any other law book publishers. The chilling possible result of the
> >purchase of West by a financial buyer is only something about which we can
> >speculate. In situations where financial buyers have acquired companies,
> >especially during the 1980's, they frequently did things to imporve the
> >profit line in the relatively short term of say three to five years before
> >unloading them to buyers who then had to deal with the bad effects of the
> >short term thinking. In the case of West, I thought that a financial buyer
> >would probably cut back on production costs. This would destroy the
> >integerty of the final printed product but in ways we might not learn about
> >for years. By then the damage would be done. The buyer would also probably
> >push prices up as far as it could. This has happened in other settings. Then
> >before everything came crashing down, they would unload the company at a
> >hefty profit -- their real original goal.
> >
> >Look at what happened to Safeway in about the mid 80's. Safeway was a major
> >and strong food retainer. Then the Haft's of Washington, DC announced that
> >they were going to acquire it. The Hafts had already purchased some of
> >Safeway stock at low prices before making this announcement. The everyone
> >reacted. The financial markets went wild and the Safeway directors began
> >borrowing money to use in fending off the Hafts. The result was that they
> >were successful in fending them off. The other result is that Safeway was
> >almost bankrupted and untimately forced to divest itself of many of its
> >regional opperations such as the one in Texas. The company has never
> >returned to what it once was. Why did the Board do this at Safeway? Because
> >of the track record of the Hafts once they acquired a company. I guess that
> >the Hafts are financial buyers whose agendas differ from those of many other
> >managers.
> >
> >Could this have happened at West? We don't of course know for sure. In
> >West's situation the owners wanted to sell. Thus noone would have done what
> >Safeway's management did. Still the cost is very high and borrowed money is
> >probably being used by any buyer at this kind of level. That much debt is
> >problematic in its own right. Thomson at least has some kind of track record
> >as a legal publisher. Will they too raise prices? We know that they have in
> >the past. I guess we really will have to wait and see. This certainly is a
> >high risk world in which we are living.
> >Patrick E. Kehoe, Director, American University Law Library
> >4801 Massachusetts Avenue, N. W. Washington, DC 20016-8182
> >Phone: voice 202 274 4374 fax 202 274 4365
> >
> >
>
>
> Polly A. >>
>
>
>
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