Capped by a blowout fourth quarter, HarperCollins reported that earnings for the fiscal year ended June 30, rose 23% over fiscal 2017, to $244 million. The jump in EBITDA (earnings before interest, taxes, depreciation, and amortization) came on a 7% revenue rise, to $1.76 billion.
The sales gain included $28 million from a sublicensing agreement with Amazon Studios for the J.R.R Tolkien Lord of the Rings trilogy, plus $25 million from the positive impact of foreign currency fluctuations. Excluding foreign currency, sales were up 6% and earnings 22%.
The Tolkien deal was finalized in this fiscal year’s fourth quarter, which helped fuel a 20% increase in revenue over the comparable period last year. It also helped with the 82% jump in earnings ($21 million of the $28 million licensing fee for Tolkien went to HC’s bottom line).
Brian Murray, CEO of HC, said the thing that pleased him the most about the year was that gains did not come from just one or two areas, but from many of the publisher’s various operations. The U.S. general books group “had a great year,” Murray said, while HarperCollins Christian Publishing “continues to power through” with strong sales of both frontlist and backlist titles. Additionally, he noted, HarperCollins UK “had its best year ever.” International sales were solid, and sales of foreign-language titles accounted for about 10% of overall revenue, hitting a target that Murray had set last year.
The strength in HC’s global business has come as the publisher continues to move its overseas operations—many of which were acquired in the Harlequin purchase—away from genre fiction to a broader trade list. The genre fiction that had been sold in kiosks and newspaper stands in Europe “has gone away,” but HC had replaced that business with more commercial trade, Murray said.
HC currently has offices in 18 countries and publishes in 16 languages, but Murray said that HC has no plans to enter new markets in fiscal 2019: “We want to focus on growing the trade business in the areas we are already in.”
Back in the U.S., Murray said the children’s group “did well” and is looking to branch out more in areas like nonfiction and novelty books.
While e-book sales were, Murray said, “flatish” in fiscal 2018, compared to the previous year, print sales “rose quite a bit.” The jump in print sales offset the e-book declines, while downloadable audio had strong gains. HC is working on developing some original audio projects and, noting that the company publishes a number of books by podcasters who often then read their work for the audiobook edition, Murray said HC is looking at “a number of ways to take advantage of the interest in audio.”
Overall in fiscal 2018, HC’s digital sales increased 6% compared to the prior year, driven by the growth in downloadable audio. The e-book and audio digital formats represented 19% of consumer revenue for the year; this marks the same percentage the format represented at the end of fiscal 2017.
Although Murray acknowledged that HC faces some tough financial comparisons in 2019, he expects the publisher to have a good finish to calendar 2018. The Hate U Give was a big seller in fiscal 2018, and Murray expects interest in the book to remain strong this fall when the company releases a tie-in to the movie adaptation set to hit theaters in October.
Magnolia Table by Joanna Gaines was another big HC bestseller last fiscal year, and in November HC will release Gaines' Home Body. Murray expects the latter to be a big holiday bestseller. On the political front, HC has books for both the left and right. It’s recently released The Russia Hoax has been #1 on the PW bestseller list, while The Apprentice: Trump, Russia and the Subversion of American Democracy, by Washington Post national security reporter Greg Miller, is due out October 2.