October 5, 2012, 10:57 AM

Barnes & Noble and Microsoft name their Nook partnership

Nook Media LLC includes Barnes & Noble’s digital reading business.

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Barnes & Noble Inc. and Microsoft Corp. have assigned a name, Nook Media LLC, to the business arrangement the companies announced in April. Microsoft made a $300 million investment in Barnes & Noble’s digital reading and college business in exchange for a roughly 17.6% interest in the newly formed subsidiary company.

The investment means Barnes & Noble will now operate its digital reading and college businesses as Nook Media LLC, a subsidiary company to Barnes & Noble Inc., separating the retailer’s digital business from its store business. Barnes & Noble says Nook Media LLC will continue to have a “very close and mutually beneficial” relationship with Barnes & Noble retail stores, adding that the creation of the subsidiary is not an assurance that Nook Media LLC will be spun off as its own company.

Investors have put pressure on Barnes & Noble to separate its Nook digital reading business from its retail business, which has struggled. Barnes & Noble closed 29 Barnes & Noble retail stores (excluding Barnes & Noble College retail stores) between 2010 and 2012. In its first quarter earnings, Barnes & Noble says sales of Nook digital content grew year over year 46% but didn’t reveal specific numbers. Retail sales, which now include the retailer’s remaining e-commerce business from BN.com, increased 2.8% to $1.12 billion from $1.09 billion. Barnes & Noble is No. 32 in the 2012 Internet Retailer Top 500 Guide. Microsoft is No. 74.

Microsoft will preload a Nook application in the next version of its computer operating system, Windows 8, which is expected to hit the market at the end of this month. The inclusion of a Nook app in Windows 8 will extend the reach of Barnes & Noble’s digital content to Windows users around the world, the companies say.  

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