Report: Microsoft offers Barnes & Noble $1B to acquire Nook Media

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Microsoft (NASDAQ:MSFT) is offering $1 billion to acquire the digital assets of Nook Media, its joint venture with bookseller Barnes & Noble, TechCrunch reports.

Based on internal documents obtained by TechCrunch, Microsoft would redeem preferred units in Nook Media, which includes Nook-branded e-reader and tablet hardware as well as e-books and mobile applications. The documents also reveal that Nook Media plans to discontinue its tablet business by the end of its 2014 fiscal year in favor of licensing its digital content to other device manufacturers. The New York Times first reported on the digital transition in February: "To be clear, we have no plans to discontinue our award-winning line of Nook products," a Barnes & Noble spokesperson said at that time.

The documents obtained by TechCrunch do not make it clear whether licensed Nook tablets would run Microsoft's own Windows 8 OS, competing software platforms or both. These third-party tablets are not slated to launch until 2014. Nook e-readers are slated for a more gradual phase-out process, mirroring general consumer trends away from e-reader hardware towards more full-featured, connected tablet products.

Both Microsoft and Barnes & Noble declined to comment.

Barnes & Noble kicked off its Nook e-reader line in 2009, and in late 2011 the company introduced the Android-based Nook Tablet, touting a wealth of e-books, mobile applications and HD video content in its bid to rival Amazon's (NASDAQ:AMZN) Kindle Fire as well as Apple's (NASDAQ:AAPL) market-leading iPad. Microsoft invested $300 million in Nook Media in May 2012, and late last year, British textbook publisher Pearson acquired a 5 percent stake in the unit for nearly $90 million.

Barnes & Noble has sold more than 10 million Nook tablets and e-readers and currently has more than 7 million active subscribers. Nook Media revenues slumped 25.9 percent year-over-year during the 2012 holiday season to $316 million, but content sales increased 6.8 percent compared to year-ago totals, indicating strong demand for Nook apps and services.

Earlier this month, Barnes & Noble introduced Google (NASDAQ:GOOG) Play support across the Nook HD and Nook HD+ suite, offering users access to more than 700,000 Android applications and games as well as millions of songs, movies and television programs. Nook owners were previously limited to downloading apps and content offered via the bookseller's own Nook Store.

Barnes & Noble said it will continue to support the Nook Store, which boasts thousands of apps tailored expressly for Nook devices, all organized by subject area, alongside more than 3 million e-books. In recent weeks, the company has also announced Nook Video deals with Paramount Pictures and MGM, additionally partnering with mobile payment services firm Fortumo to offer Nook in-app purchase capabilities and preloading popular social media apps Facebook (NASDAQ:FB), Twitter and Pinterest.

For more:
- read this TechCrunch article
- read this Seattle Times article

Related articles:
Barnes & Noble's Nook tablets add full Google Play app support
Barnes & Noble's Nook preloads Pinterest, overhauled Facebook app
Barnes & Noble, Fortumo team for in-app purchases on Nook
Barnes & Noble boosts Nook Video with Paramount, MGM content deals
Barnes & Noble launches multi-platform Nook Video service
Barnes & Noble's Nook sales plunge 26 percent despite digital media gains

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