HarperCollins posted a 6% rise in earnings in the fiscal year ended June 30, 2019, despite a small (0.2%) dip in revenue compared to fiscal 2018, parent company News Corp reported. EBITDA (earnings before interest, taxes, depreciation, and amortization) was $253 million in fiscal 2019, up from $239 million a year ago, while revenue was $1.75 billion, compared to $1.76 in fiscal 2018.
HC faced a host of challenges in trying to match last year’s results, which included $28 million in licensing revenue from the Lord of the Rings trilogy, the $27 million negative impact from foreign currency fluctuations, and $65 million worth of lower revenues as a result of the adoption of the new revenue recognition standard. HC CEO Brian Murray said that, excluding the currency and accounting factors, HC's revenue were "up substantially" in the year. In a conference call with analysts discussing the year end results, News Corp executives said the publisher had outperformed expectations.
Murray said HC was able to overcome the $28 million in licensing revenue from the Tolkien deal by strong performances by four authors, Rachel Hollis, Joanna Gaines, Mark Manson, and, in the U.K., David Walliams. Over all, Murray said, all major divisions in both the U.S. and U.K. saw sales rise in fiscal 2019 over 2018.
Among the contributors was another solid year from HarperCollins Christian Publishing (HCCP), which continues to expand into news areas; Murray pointed to this week's announcement of Harper Horizon, which will become an imprint of HCCP's unit HarperCollins Focus, in illustrating that expansion. The new imprint will focus on such topics as patriotism, family-values, hard work, wisdom, and inspiration. Murray noted that HC continues to have great success with books that touch "heartland values," something he attributed in part to the diverse locations of its editors, who work in offices not only in New York but in Grand Rapids, Nashville, and San Francisco as well.
Looking beyond the U.S., Murray said the company's international business also did well in fiscal 2019. U.S. authors such as Karin Slaughter, Daniel Silva, and Don Winslow have become bestsellers in a number of countries. Moreover, the former Harlequin offices located in a number of overseas markets have all been repositioned as HarperCollins offices, and the mix of sales, which had been almost entirely based on genre sales, is now almost 50% genre and 50% trade.
On the digital front, downloadable audiobooks grew by 40% over fiscal 2018, and Murray said HC continues to sign new distribution contracts to expand the reach of its digital audio titles; it is also, he added, looking at mining more backlist titles to put into audio. E-book sales continued to shrink modestly last year and overall, while digital sales rose 7% and accounted for 20% of consumer revenue in the fiscal year.
Murray indicated that HC is poised for more growth. He noted that the News Corp executives love what HC is doing and, in fact, keep urging him to expand. That expansion will take the form of not only organic growth, Murray said, but possible acquisitions.