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Barnes & Noble News, Part I

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There have been a number of important changes at Barnes & Noble, Inc. over the past seven months, regarding both its leadership and organizational structure. All of them relate to the company's proprietary Nook eReader and Nook software.

On Wednesday, January 8, 2014, Barnes & Noble, Inc. announced the appointment of Michael P. Huseby to Chief Executive Officer (C.E.O.). Effective immediately, Mr. Huseby assumed responsibility for all of the corporation’s business units, including Barnes & Noble Retail, Barnes & Noble College, and NOOK Media.

A native of Chicago, Huseby holds a degree in business administration from the Leeds School, University of Colorado at Boulder. He began to report to the Board of Directors and was also elected to serve on the Board. Mitchell Klipper, C.E.O. of the Retail Group, which includes Barnes & Noble.com (BN.com), and Max Roberts, C.E.O. of Barnes & Noble College, began to report to Mr. Huseby, as did the NOOK® device and content unit.

At the time, Barnes & Noble Retail operated 673 Barnes & Noble bookstores in all fifty states, and BN.com. Barnes & Noble College Booksellers, LLC operated 695 bookstores serving over 4,600,000 students and faculty members at colleges and universities across the United States.

“Since the day he joined the company, Mike has proven to be an excellent financial and business executive, whose leadership skills have earned the respect of the entire organization, as well as our Board of Directors,” said Leonard Riggio, Founder and Executive Chairman of Barnes & Noble, Inc. “Although a relative newcomer to the retail book business, he has quickly developed a comprehensive understanding of the unique opportunities and challenges the Company faces, and he has a vision for the future in which I am in complete accord. Mike also has a passion for bookselling, which makes him a perfect fit for this job,” Mr. Riggio added.

“I am excited and honored to have been chosen as CEO of one of America’s most beloved companies,” said Huseby. “I am pleased, as well, to be joining an organization which is driven by both a sense of mission, and by a commitment to achieve excellence in everything it pursues. Led by Mitchell Klipper, Max Roberts and many exceptional leaders, not to mention thousands of dedicated booksellers, the company is well positioned to maintain and grow its leadership position in the worlds of bookselling and the sale of digital media. My role, as I see it, is to enhance and unlock the value of these businesses for our shareholders. We are well-positioned in today’s dynamic reading and learning markets and confident in our ability to provide our customers with the best content offerings, digital media and educational products available in today’s marketplace.”

Huseby joined Barnes & Noble as Chief Financial Officer (C.F.O.) in March of 2012, and led the Barnes & Noble’s financial organization until his appointment as President of Barnes & Noble, Inc. and C.E.O. of NOOK Media, LLC in July of 2013. Prior to joining Barnes & Noble, he had a career in the communications industry having served as Executive Vice President and C.F.O. of Cablevision Systems Corporation, from 2004 until 2011. He also served on Cablevision’s Board of Directors in 2000-2001.

He also served in leadership positions at Charter Communications, Inc., the fourth largest cable operator in the U.S., as well as AT&T Broadband, a provider of cable television services that AT&T sold to Comcast Corporation in 2002. In addition, Huseby spent twenty-three years at Arthur Andersen as a Global Equity Partner.

Barnes & Noble stated, “Mr. Huseby’s broad range of experience includes extensive capital markets transactions; M&A/corporate development; comprehensive operational responsibilities including new product development and roll out; business process improvement; cost management; capital allocation; governance and extensive public company board experience; SEC accounting/reporting; tax planning/compliance and investor relations.”

Thad McIlroy observed in dbw blog entry/article, “He came out of semi-retirement to join the company March 12, 2012 as Chief Financial Officer. When William Lynch was dismissed as CEO last July, Huseby was put in place as acting CEO of the NOOK division and president of Barnes & Noble. The act is now over and he’s the real CEO, with responsibility for all of Barnes & Noble’s (somewhat fragmented) businesses: Barnes & Noble Retail, Barnes & Noble College and NOOK Media.” DBW stands for Digital Book World, a F+W Media company, as in the Digital Book World Conference & Expo, the next one of which will be held in New York City (January 13-15, 2015).

McIlroy wrote a book about Barnes & Noble entitled Stripping Covers off The Hunger Games: How 7 Billionaires are Deciding the Future of Publishing in America, published by Barnes & Noble’s competitor, Amazon, for that company’s Kindle (which is a competitor of Barnes & Noble’s NOOK eReader). McIlroy implied Huesby was appointed C.E.O. of Barnes & Noble, Inc. due to the influence of “John Malone, chairman of investment firm Liberty Media, which holds a significant equity stake in Barnes & Noble. Liberty also has a stake at former Huseby employer Charter Communications and Malone was on the board of Cablevision during Huseby’s tenure.” He, McIlroy, speculated that Huseby’s appointment was a signal that part or all of the company would be sold.

In June, a Reuters journalist reported, “Investment firm G Asset Management said in February it offered to buy a 51 percent stake in either Barnes & Noble or in the Nook digital business, valuing the unit at about $300 million.” WSJLive, The Wall Street Journal’s video unit, also carried that story in February, reporter Joanne Po saying the offer caused an 8% jump in Barnes & Noble stock.

On Thursday, April 3, 2014, Barnes & Noble, Inc. announced that Liberty Media Corporation has entered into agreements to reduce its stake in Barnes & Noble. Liberty Media informed Barnes & Noble that while Liberty has sold the majority of its shares to qualified institutional buyers in reliance on Rule 144A under the Securities Act, it will retain approximately 10 percent of its initial investment. Liberty further informed Barnes & Noble that the sale is expected to settle on Tuesday, April 8.

As a result of Liberty’s reduced ownership, they will no longer have the right to elect two preferred stock directors to Barnes & Noble’s Board. Additionally, Liberty’s consent rights and pre-emptive rights will cease to apply. Due to the loss of the right to elect two preferred stock directors, Greg Maffei will cease to serve on the board as of the closing on April 8. Mark Carleton has been re-elected to the Barnes & Noble Board effective upon the closing on April 8.

“By reducing our preferred position and eliminating some of our related rights, Barnes & Noble will gain greater flexibility to accomplish their strategic objectives,” said Greg Maffei, President and Chief Executive Officer, Liberty Media. “We look forward to maintaining our relationship with the Company and are pleased that Mark Carleton will continue serving on the board. Mike Huseby and his team are doing a great job in the retail, college and NOOK® spaces,” Mr. Maffei added.

“Liberty Media has been a strong supporter of the Company and Greg Maffei and Mark Carleton have been and continue to be tremendous partners at an important time in the Company’s history,” said Leonard Riggio, Chairman of Barnes & Noble, Inc. “Liberty’s decision to retain a portion of its investment and have active involvement on our board underscores Liberty’s ongoing commitment to Barnes & Noble.” Mr. Riggio added that Liberty’s reduced ownership also gives the Company greater flexibility to pursue various strategic options.

Jeremy Greenfield reported on the Forbes Tech blog that Liberty Media owned a 17% stake in Barnes & Noble and would be selling 7% “in a deal rumored to be worth over $250 million… and will relinquish one seat on the board. It will also be giving up its ability to prevent the company from selling off any of its divisions.”

TheStreet, Inc. produced a video stating Liberty Media Corporation would be selling 90% of its 17% ownership stake in Barnes & Noble, but that statement does not reflect the press release issued jointly by Barnes & Noble, Inc. and Liberty Media Corporation. The language used by Liberty Media was identical to that used by Barnes & Noble, “Liberty Media Corporation has entered into agreements to reduce its stake in Barnes & Noble. Liberty Media informed Barnes & Noble that while Liberty has sold the majority of its shares to qualified institutional buyers… it will retain approximately 10 percent of its initial investment. Liberty further informed Barnes & Noble that the sale is expected to settle on Tuesday, April 8.”

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