America’s largest publicly held trade publishers were already facing challenges before the new coronavirus hit. Penguin Random House was the only one of the five companies to post an increase in sales and earnings in the U.S. last year compared to 2018, though Hachette Book Group had a profit improvement despite a 1% decline in revenue.
PRH’s worldwide operations had a 6.2% increase in revenue over 2018, and EBITDA (earnings before interest, taxes, depreciation, and amortization) increased 6.3%, to €561 million. Acquisitions, organic growth, and favorable exchange rates all contributed to the record year at PRH, parent company Bertelsmann reported.
In the U.S., which accounted for just over 56% of total PRH sales (about $2.2 billion at current exchange rates), gains were led by Where the Crawdads Sing, which sold more than four million copies across all formats, while Educated and Becoming each sold more than two million copies. In children’s books, Dr. Seuss titles sold more than 10 million copies. Bertelsmann also cited audiobooks as a growth driver, not only in the U.S. but in most of its markets. (PRH’s results were good enough in the U.S. that CEO Madeline McIntosh approved a onetime payment of $856 for all employees not entitled to a bonus.)
PRH was the last of the major trade publishers to release results, and CEO Markus Dohle said in a letter to employees that the coronavirus pandemic “has shaken our book community to its core.” He noted that though PRH has built a strong foundation, “it is inevitable that we will have to endure some impact on our business this year.”
Revenue at HarperCollins fell 6.4% in 2019, and profits declined 22%. The publisher (which operates on a fiscal year that ends June 30) posted good results in the first quarter of calendar 2019, but sales declined throughout the rest of the year as the company faced difficult comparisons with 2018.
Among the revenue in 2018 that did not recur in 2019 was $28 million from a sublicensing agreement for the Lord of the Rings trilogy. And there were several big hits in 2018: two Joanna Gaines titles, as well as Girl, Wash Your Face; The Hate U Give; and The Subtle Art of Not Giving a F*ck. The decline was partially offset in 2019 by the success of The Pioneer Woman Cooks: The New Frontier and The Beast of Buckingham Palace. Digital audio posted solid gains in the year, offsetting soft e-book sales.
The 1% sales decline at HBG was due to unfavorable comparisons with 2018, when the company benefitted from strong sales of The President Is Missing and Every Breath, according to HBG parent company Lagardère. HBG CEO Michael Pietsch said the publisher’s profit growth was due to solid performances in its adult and children’s publishing divisions, a 28% increase at Hachette Audio, and “continued focus on efficiency.”
The overall sales increase for Lagardère Publishing last year was led by a 10.3% increase in Spain and Latin America and a 6.3% rise in France. With strong sales in other parts of the world, the U.S. and Canada accounted for 28% of Lagardère Publishing’s revenue (about $734 million at current exchange rates), down from 29% in 2018.
The decline in sales and earnings at Simon & Schuster was due in part to a weak fourth quarter, when revenue dropped 29% compared to the final period of 2018. S&S CEO Carolyn Reidy had been concerned about difficult comparisons to 2018, when Fear by Bob Woodward was a big holiday seller, and her concerns were justified.
Bright spots for the year included digital audio, where sales rose 15% over 2018, and e-book sales, which increased for the first time in at least three years, up 1%, Reidy told PW. Overall, digital sales in 2019 increased 7%, but the gain was not enough to offset a drop in print sales.
Sales in the S&S children’s group were up in 2019, but adult group revenue fell compared to 2018. International sales were solid, Reidy said, especially in Canada and Australia, which both had double-digit increases in profits.
Just as it was at S&S, a soft fourth quarter was a significant factor in dropping revenue at Houghton Mifflin Harcourt Books & Media by 9.9% in 2019. HMH blamed the sales decline in the year mainly on a drop in licensing income: in 2018, HMH received $16 million from licensing 1984 and Animal Farm. HMH said that an increase in sales in the Little Blue Truck series and solid sales for Maybe You Should Talk to Someone last year were offset by strong sales performances in 2018 of Instant Pot Miracle and the Whole30 series.