Penguin, Hachette Gained in Tough 2008

Despite a weak economy, the five largest American trade publishers generated revenue of $4.60 billion in 2008, according to PW's ranking of the major houses. Although three of the five publishers are owned by foreign companies, the American market is still key to the overall performance of the big five publishers.

Nowhere is that clearer than at the country's largest trade publisher, Random House, where a drop in sales in America offset gains in other countries. The U.S. represented 50.8% of Random House's total sales last year, down from 53% in 2007. Penguin Group USA had just the opposite effect on Penguin Group's total 2008 performance. The U.S. division, estimated to represent about 65% of worldwide Penguin revenue, had strong gains in 2008, helping to drive worldwide revenue ahead by 6.7%.

The two American-owned publishers, HarperCollins and Simon & Schuster, experienced softness at home and abroad in 2008. Harper had a particularly bad second-half stretch last year with revenue falling nearly 16% in the July through December period (although parent company News Corp. operates on a fiscal year ending June 30, HC's revenue is based on results from calendar 2008 for comparison purposes and includes Zondervan). S&S's international markets are less important to its financial performance than its competitors, although it now represents about 15% of sales, up from approximately 13% two years ago. The U.K. is its largest overseas market.

Hachette Book Group remains the anomaly among the top five, with the U.S. and Canadian market representing a relatively small part of Hachette's total worldwide sales, accounting for 22% of overall revenue, a percentage the company has made no secret it would like to increase. With Hachette Book Group posting a 26% increase in revenue in 2008, it was the major driver behind its parent company's 1.4% overall increase in sales, which reached 2.16 billion euros. Unlike the other four publishers, which focus primarily on trade publishing, Hachette's worldwide mix of properties includes trade and educational publishing.

While worldwide sales were down at three of the top five houses, all publishers remained profitable in 2008. Hachette and Penguin both managed to crack the 10% operating margin level in 2008 with Hachette posting a 10.5% margin and Penguin 10.3%.