Despite an $80-Million Loss, HBJ Won’t Sell Assets, Chairman Says
Harcourt Brace Jovanovich, which reported an $80-million net loss for the first six months of 1988, will remain an “independent, whole and public company,” HBJ Chairman William Jovanovich told reporters following the company’s annual meeting at HBJ’s Sea World aquatic park in San Diego.
Jovanovich denied persistent rumors that Orlando, Fla.-based HBJ has considered a merger, acquisition, leveraged buyout or the sale of significant assets. Rumors to that effect have circulated since late 1987, when HBJ took on $2.6 billion in debt to thwart a hostile takeover bid by British media tycoon Robert Maxwell.
Higher Interest Cost
“I can’t get the press in my hometown (Orlando) to understand . . . that there will be no more asset sales,” Jovanovich said, refering to the sale of publishing and television properties that HBJ’s lenders demanded as part of the recapitalization.
“That (asset sale) was supposed to be completed by the end of 1988, and we did it by the end of 1987,” Jovanovich said. The company will not sell any more of its publishing, insurance, or aquatic and theme park holdings, Jovanovich said.
Earnings so far this year have been hit hard by the recapitalization, which boosted HBJ’s net interest expense by $118 million during the first six months of 1988.
HBJ’s core publishing and insurance operations showed substantial improvements during the first half of the year, according to Jovanovich, with publishing operations trimming its losses from the previous year and insurance posting operating earnings of $20.3 million. But the company’s parks division reported that operating income fell by 13.4% to $16.1 million for the first half of 1988.
Higher Attendance Predicted
A national decline in park attendance was partly to blame for the drop in attendance at HBJ’s three existing Sea World parks and at its theme parks in Orlando, according to Elizabeth R. Bramwell, director of research with Gabelli & Co., a New York-based brokerage firm. HBJ’s overall attendance was bolstered by the April opening of a $140-million Sea World park in San Antonio.
Jovanovich said Thursday that park attendance would be “substantially better next year,” a prediction that has been repeated by industry analysts.
“Theme park attendance was off nationwide this summer,” Bramwell said. “So next year there will be deferred demand. People who didn’t (visit theme and amusement parks) this year will go next year.”
In August, HBJ eliminated 731 jobs in its parks division. Those cuts followed similar layoffs in its publishing and insurance operations, according to Gabelli.