TORONTO/NEW YORK - For Harlequin Enterprises Ltd, the romance novel publisher that News Corp agreed to buy for US$415 million, the title of one of its latest offerings, "My Fair Billionaire," could well refer to Rupert Murdoch.
Murdoch's News Corp said on Friday it would purchase Harlequin from Torstar Corp, owner of the Toronto Star, Canada's largest daily newspaper by circulation.
With backing of the billionaire's global empire, the deal will give a more secure financial footing to Harlequin - known for churning out more than a thousand "bodice ripper" books every year, with titles like "A Game of Seduction" and "The Heartbreaker Prince."
The C$455 million purchase is News Corp's largest since its assets were split off last year from its cable, TV and movie studio properties, now known as 21st Century Fox Inc
News Corp will pick up a dusty book company, albeit one with global and digital distribution that News Corp plans to use to extend its footprint. Harlequin, to become a unit of News Corp's HarperCollins book publishing subsidiary, gets about 40 per cent of its revenue from e-book sales in North America and about 20 per cent outside the region. Worldwide, HarperCollins generates about 20 per cent of its revenue from digital sales.
Torstar shares surged 17.7 per cent on Friday.
News Corp Chief Executive Robert Thomson said it was quicker and cheaper to buy Harlequin than to build a distribution and digital platform.
"The amount of work you have to do to build and structure that sensibility is both expensive and time consuming," he said in an interview. "This acquisition is not only about sense and sensibility but structure and sensibility."
Wells Fargo analyst Eric Katz noted the deal would boost News Corp's book publishing revenue as a per cent of its total revenue to 20 per cent from 16 per cent and also increase earnings.
"We like the strategic fit, larger international footprint, and News Corp's move into a business with visibly improving margins," Katz said in a note to clients.
Harlequin, which owns the Mills & Boon British imprint, publishes more than 100 novels a month in 34 languages across six continents. It has published more than 6 billion books since it was founded in 1949 and has branched out into e-books, downloadable audio and smartphone apps.
Roughly 40 per cent of Harlequin's revenue comes from books published in languages other than English, while 99 per cent of HarperCollins books are published in English.