Children's Features

Scholastic Catapults To Top Slot Among Children's Publishers
Jim Milliot and Diane Roback -- 10/16/00
Harry Potter "spillover effect" spurring sales for other publishers in 2000



Random House's reign as the largest children's book publisher in the country lasted only one year, thanks to a boy named Harry. Led by sales of the first three Harry Potter books, as well as contributions from Pokémon, Dear America, I Spy and Captain Underpants properties, revenues in Scholastic's trade distribution channel jumped 103.5%, to $230 million, for the fiscal year that ended May 31, 2000, and pushed the company from the nation's sixth largest children's book publisher to the number 1 spot. With Scholastic off to a scorching start in fiscal 2001, thanks to the demand for Harry Potter and the Goblet of Fire, it appears likely the company is in good position to retain the top rung in the current year.
The phenomenal success of Scholastic notwithstanding, last year (be it calendar 1999 or fiscal 2000), was a mixed one, with five of PW's top 15 publishers reporting sales declines, while three reported revenue gains of less than 1%. Most of the larger publishers, however, said 2000 is shaping up to be a very good year. "It seems to be a really strong year across the entire industry," observed Lisa Holton, senior v-p and publisher of Disney Global Children's Books. Houghton v-p and publisher Anita Silvey postulated that "the Harry Potter effect" may be helping to drive some of the industry's current success, but she also noted that "institutional and library funding is very solid this year"--an important factor for children's publishers.
Random House is one of the companies expecting a rebound this year. Revenues fell slightly (2.2%) last year, to an estimated $192.7 million for the fiscal year ended June 30, 2000, as the company could not replace the contribution of its extensive Star Wars program in 1998. But RH Children's Books president and publisher Craig Virden reported strong sales for a variety of titles, including The Century for Young People; Newbery winner Bud, Not Buddy in hardcover (and the paperback reprint of The Watsons Go to Birmingham--1963); as well as several series (Magic Tree House and Junie B. Jones titles were ahead as much as 30% in fiscal 99/00, Virden reported). And 2000/2001 sales are shaping up well also, he said, noting, "We're pretty much even with last year"; their big fall title, The Amber Spyglass, is just shipping to stores now.

The addition of the Morrow and Avon children's lines to HarperCollins helped spark a 10.2% gain in HC's children's group, moving the company from fifth to third place among children's publishers. Strong backlist sales, as well as a good response from HC's tie-ins for the Stuart Little movie, helped drive the sales gain for the fiscal year ended June 30, 2000.

The children's group at Penguin Putnam fell two spots (from #2 to #4) in PW's rankings, as sales rose 2.6%, to an estimated $160 million. Penguin Putnam Books for Young Readers president and publisher Doug Whiteman is another executive who said his division is posting healthy gains in 2000 compared to 1999. PP is doing very well with its Caldecott winner Joseph Had a Little Overcoat, as well as its two Newbery Honor titles, Getting Near to Baby and 26 Fairmont Avenue. In addition, the division is benefiting from the increased interest among older children in fantasy due to the spell cast by Potter. "We're having great performances from a large number of our fiction titles," Whiteman said.

Golden Books continued its downward slide in 1999, although its revenue decline of 6.9% was the slowest in several years. Golden said the drop was due in part to lower purchases from mass market retailers such as Wal-Mart, as well as the effort on Golden's part to change its product mix toward more profitable products. One encouraging sign was the strong response to Pokémon titles that the company began distributing late last year.

Golden's competitor in the low-priced children's product segment, Landoll's, had the largest sales decline among the 15 top publishers, with sales falling 22.2%, to an estimated $70 million. Similar to Golden, Landoll's former parent company, Tribune, attributed the decline in part to reduced sales through mass merchandisers. Landoll's is now part of the McGraw-Hill Cos. supplementary division.

Simon & Schuster had a 1.6% sales increase last year, to $126 million. Kristina Peterson, president of the children's publishing division, said those sales were in large part due to strong mass-market media tie-ins, such as Rugrats and Blue's Clues, as well as the relaunch of Eloise. Sales in 2000 will be up, Peterson predicts, as a result of various successes in trade (including the just-published Olivia, already in its fourth printing), as well as mass market (most notably Rugrats in Paris tie-ins).

DK Publishing's children's division had the second largest sales gain last year, with revenues up 29.3%, to an estimated $101.5 million. Although returns of Star Wars books contributed to inventory problems that led to the sale of DK to Pearson earlier this year, the U.S. division did very well with Star Wars titles in the fiscal year that ended June 30, 2000. DK also benefited from the relaunch of some Eyewitness titles, as well as good sales of Barbie and reference works. For the current fiscal year, DK expects sales to receive a boost as it begins releasing titles that had been developed exclusively for the now folded DK Family Learning group. About 28 titles are set to be released next January, with a similar number scheduled to be published in June.

Sales at Disney stayed flat at $85 million in 1999. Tie-ins for two Disney movies, Tarzan and Toy Story 2, performed strongly in book form, as did Hyperion titles Little Bo and The Birchbark House. Holton predicted that numbers will be up significantly in 2000--three Disney films, not two, will come out this year (The Tigger Movie, Dinosaur and 102 Dalmatians), all with tie-in books, and she added that sales of Disney's Storybook Collection, which now has five titles in print, are "unbelievably strong, and growing": 1.2 million copies were sold in 1999, and 1.4 million more are expected to sell by the end of this year.

For Houghton Mifflin, sales of $32.6 million were nearly flat with 1998, though Silvey noted that 1998 had been a spectacular year for the division, thanks to David Macaulay's The New Way Things Work, and she was pleased that "we were able to maintain sales in 1999 without a big new book." For 2000, she believes sales will be up 15%-20%, helped by several hardcovers, including the just-shipping Building Big).

Harcourt's 11.9% sales gain, to $30 million, moved the company ahead two places on PW's ranking, to number 11. The children's division, which publishes about 175 titles annually, continues to focus on picture books.

Little, Brown's decline of 16.7% was in large part due to what publisher John Keller called "the diminishing curve" of Marc Brown's Arthur books, which were white-hot in 1998 thanks to the PBS television show, but declined last year. "It's very hard to make up those numbers unless you have a big hit," Keller said. LB's 1999 sales of $28.5 million will improve in 2000, Keller said, pointing to this month's publication of LIFE: Our Century in Pictures for Young People (165,000 copies of this $25.95 hardcover have been printed so far).

Holtzbrinck's revenues of $23 million reflect results from Farrar, Straus & Giroux's and Henry Holt's children's divisions, which together generated an estimated $22 million in revenue last year. Approximately $1 million came from St. Martin's and Tor young adult titles.

Sales at Candlewick rose only 0.9% last year, but the company is projecting that sales for 2000 will top $23 million. Sales for Candlewick's Maisy titles are up about 47% over last year, and the company is also expecting strong sales from a gift set of The Christmas Miracle of Jonathan Toomey. A strong fall list, led by Some Things Are Scary and Fairy Tales, a collection illustrated by Jane Ray, is expected to contribute to this year's improved performance.

Results at Tommy Nelson fell 4.8%, to $21 million, due mainly to high returns from its Prince of Egypt initiative. The company is looking for better results in fiscal 2001, fueled in part by new releases from its venture with Thomas Kinkade and new works from Max Lucado.

Excluding Holtzbrinck (for which 1998 numbers were not available), total revenues from this year's top children's publishers rose 9.7%, a gain that was given a large boost by Scholastic's outstanding performance. And although the sales increase last year was slower than the 11.1% increase posted in 1998, publishers are looking for double-digit gains once again this year; indeed, children's sales through the first eight months of 2000 were up 27%.