Last week Penguin Random House reported that it had a 23.3% increase in profits in 2020 over 2019 on a 4.6% gain in revenue, capping a remarkable year for America’s five biggest trade publishers that report financial results. Despite the disruptions caused by the pandemic, all five had annual increases in both earnings and sales. Higher sales of e-books and digital audiobooks and solid gains of backlist titles helped drive the revenue and profit gains. Online sales also rose in the year, offsetting soft sales through bookstores due to pandemic-induced lockdowns.
According to PRH parent company Bertelsmann, PRH US had a particularly good year and drove the overall gains for the publisher. PRH US accounted for just over 58% of PRH’s total revenue, or roughly $2.59 billion. In 2019, the U.S. represented 56% of PRH revenue (about $2.2 billion).
Worldwide, Bertelsmann said PRH benefited from strong sales of e-books and digital audiobooks, as well as from more online sales. The publisher’s top title was Barack Obama’s A Promised Land, which sold more than 7.3 million copies worldwide across all formats. Distribution sales increased 7% in the year.
PRH worldwide CEO Markus Dohle said that in 2021 the publisher will continue to use many of the strategic approaches it used last year, aligning its resources in sales, marketing, and publicity more “with a marketplace increasingly dependent on the online, e-commerce, and digital channels. Online optimization will help us grow our backlist sales significantly.” He added that PRH will continue to invest in its supply chain, promising that the company “will steadfastly remain a loyal and reliable partner to physical bookstores.”
Lagardère Publishing was the only one of the reporting publishers to post a revenue decline in 2020, but that 0.4% dip was for the company’s worldwide business. In the U.S., sales increased 3.9% from 2019, and Hachette Book Group accounted for 29% of Lagardère’s total revenue, or about $839 million. In the U.S., sales gains were led by Stephenie Meyer’s huge bestseller Midnight Sun, as well as a number of titles connected with the Black Lives Matter movement. HBG also benefited from higher sales of e-books and downloadable audiobooks, as well as the acquisition of 1,000 children’s titles from Disney Publishing Group early in the year.
HarperCollins saw sales in 2020 rise 7.9% over 2019, while profits jumped 33.2%. After a mixed start to the year, HC had a strong finish, with revenue in the final six months of 2020 up 18.3% over the second half of 2019. The big finish was led by what parent company News Corp termed a “historic” fourth quarter. HC revenue increased 23% in the three months ended December 31, and EBITDA (earnings before interest, taxes, depreciation, and amortization) soared 65%. News attributed the increase to trends that had been occurring for much of the final half of the year: strong backlist sales and strong digital sales, which rose 15% in the fourth quarter alone.
Like HarperCollins, Simon & Schuster closed out 2020 on a strong note, with sales up 17% in the final quarter over the last three months of 2019, reaching $252 million. S&S CEO Jonathan Karp said a range of titles performed well in the period. For the full year, all formats had gains over 2019, and total digital sales accounted for 28.5% of S&S’s revenue. The company also had solid sales through mass merchandisers, including Walmart and Target, and sales to Amazon were also up.
Overall, the S&S adult division had a great year, Karp said—especially in nonfiction, where the publisher had one of the year’s biggest bestsellers, Mary J. Trump’s Too Much and Never Enough, and where other Trump-related titles performed well. Sales in the children’s division were flat. International sales were up, led by good results in Canada, the U.K., and Australia.
The Houghton Mifflin Harcourt Books & Media division turned an operating loss in 2019 into a profit last year, with sales up 6.5%. The company attributed the revenue gain largely to licensing agreements, including a new $9.6 million deal for an undisclosed series. HMH’s deal with Netflix earned the publisher $3.4 million last year.
Book sales were relatively flat in the year, HMH said. Sales in both the adult and children’s groups were down from 2019, and the company blamed bookstore closures and delays in releasing certain new frontlist titles.
Prospects for the five companies are decidedly mixed. S&S and HMH Books & Media will all but certainly finish 2021 as part of PRH and HC, respectively. (HC agreed to buy HMH trade last week; see p. 6.) Prior to announcing the deal for HMH, News executives said that, though they expect trends in reading and book buying to remain strong, they are worried about difficult fourth-quarter comparisons. That concern should be lessened with the HMH purchase.
Lagardère executives expressed some caution about the year, explaining it isn’t clear if the opening up of different entertainment venues and restaurants will affect the time people spend reading.