Total sales at Simon & Schuster slipped 1% in 2011, to $787 million, but adjusted operating income jumped 31% to $85 million. The main factor behind both lower revenue and higher earnings was the increased sales of e-books, which parent company CBS noted, are more profitable than the sale of print books, which fell in the year. The absence of a provision for Borders also helped to boost earnings in 2011. S&S also took $2 million in restructuring charges in 2011 and 2010.
S&S’s fourth quarter followed a similar track as the full year—a 1% decline in sales but a large increase in earnings. Sales of digital content increased 83% in the final quarter and represented approximately 18% of total revenue in the period. Bestselling titles in the fourth quarter included Steve Jobs by Walter Isaacson and 11/22/63 by Stephen King.
Adjusted OIBDA (operating income before depreciation and amortization) rose 28% for the full year, to $92 million, and S&S CEO Carolyn Reidy said that while sales in the company's domestic operations fell slightly adjusted OIBDA jumped 46%. The biggest gain in the U.S. came in the company's audio division which was driven by higher demand for digital downloads. Altogether digital sales accounted for 17% of all S&S revenue last year. Sales in the publisher's international operations rose almost 9% helped by the opening of a new India office where business was ahead of plan, Reidy said.
With new #1 bestsellers The End of Illness by David B. Agus, Ameritopia by conservative radio host Mark. R. Levin, and Kill Shot by Vince Flynn, the new year has gotten off to a strong start at S&S despite the fact that the increase in e-book sales in January wasn't as dramatic as in January 2011 and Reidy said she doubts that e-book sales will post the same type of huge sales increases in 2012 that they did last year. "One thing Christmas showed us," Reidy said, "is that there is a devoted market for physical books." Reidy believes that for the top selling authors the combination of print and digital unit sales maybe a bit higher than in than in the past, but that sales of paperbacks, both mass market and trade, "are accerating into e." Overall, Reidy said the industry seems to be settling down a bit, with a new balance between print and digital. "We've made adjustments" to the new realities, she noted.
With the closing of Borders now firmly in the past, Reidty said the overall market seems to be solidify. "The market," she said, "feels solid. It feels good."
Asked about Bookish, Reidy said she expects the site to be up and running this spring, hopefully before BEA. S&S is one of three backers of the project along with Penguin and Hachette.