New joint venture will fund, buy indie presses.(Capital Idea)(joint venture between Cooper Square Funding Corp., National Book Network and Rowman and Littlefield)

Publishers, especially independent publishers, have long felt that the content they publish has been undervalued by banks, and now one of the country's largest financial institutions has agreed. One of New York's major hedge funds--with several billion dollars in assets under its management--has formed a joint venture with National Book Network and its affiliated company, Rowman & Littlefield, that will provide a new source of financing for publishers.

The joint venture, Cooper Square Funding Corp., will provide loans to publishers based on the value of their sales and will also acquire companies. Peter DeAngelo, formerly CFO of Regnery Publishing, has been named senior v-p of Cooper Square and will be in charge of arranging acquisitions and loans. He will report to NBN head Jed Lyons, who will manage the acquired assets, and a representative from the hedge fund, which, for competitive reasons, has chosen to remain anonymous for now.

Lyons said he was approached by the fund last fall about participating in a joint venture, and the deal came together earlier this year. The fund was the financial backer for Lyons this winter when he made a late attempt to acquire the distribution contracts of PGW. Lyons said the fund's leadership believes that the intellectual property owned by publishers is an undervalued asset, in particular that their backlists provide lots of opportunity in the "long tail" era.

Under the model, Cooper Square could lend an amount up to half of a publisher's sales in the previous 12 months. Although Cooper Square is being positioned ...