First quarter financial reports from five major trade publishers showed that the sales momentum that built up through last year has carried over into 2021, while companies’ year-over-year sales comparisons also benefitted from the slump in late March 2020.
Two of the publishers that reported results could be doing so for the last time. Simon & Schuster might see its acquisition by Bertelsmann/Penguin Random House completed before results for the second quarter are released. And the sale of Houghton Mifflin Harcourt’s trade division to HarperCollins is still expected to be completed by June 30.
HMH Books & Media posted sales of $42.7 million in the first quarter, a 12% jump over the same period last year, and its pretax loss was cut to $2.9 million, from $7.7 million. HMH had nothing else to say about the trade division other than that the company will enter into a “transition services agreement” with HC to perform certain support functions for a period of up to 12 months. While HMH still awaits the completion of the sale, it has already closed its New York City office.
For its part, HC saw profits jump 45% in the first quarter, with a 19% increase in revenue, compared to the first three months of 2020. Sales rose to $490 million, while EBITDA (earnings before interest, depreciation, and amortization) hit $80 million. Susan Panuccio, CFO of HC parent company News Corp, said the sales increase was driven by solid gains in the general trade and children’s divisions in the U.S. and increases in the U.K., and in its foreign-language categories. Backlist was the big driver of the gains, accounting for 62% of sales in the quarter, Panuccio said. In terms of format, digital sales jumped 38%, with e-book sales up 38% and digital audiobooks rising 42%.
Neither Bertelsmann nor ViacomCBS offered anything new about when the purchase of S&S may be completed. In a brief financial update, Bertelsmann said PRH was one of several of its divisions to post double-digit organic growth in the first quarter over the same period in 2020.
S&S, now classified as a discontinued operation by parent company ViacomCBS, saw sales increase 8.8% over the first quarter of 2020, to $185 million, and operating income increased to $27 million, from $15 million. CEO Jonathan Karp said the strongest gains came in the publisher’s international division, where revenue was up 21%. In the U.S., sales were up in both the adult and children’s divisions, boosted by a number of frontlist hits as well as continuing strong backlist sales. Total digital sales rose 8% in the quarter, and print book sales had a healthy increase, Karp noted. The digital increase was driven by audio, where sales increased 17%. E-book sales were about flat.
When the sale of S&S is completed, Lagardère’s Hachette Book Group will become the third-largest trade publisher in the U.S. In the first quarter, HBG’s sales rose 9.1% over the first quarter of last year. HBG CEO Michael Pietsch said the increase was driven by strong hardcover sales of both adult and children’s/YA titles, and he noted that HBG’s distribution business had double-digit gains.
Total sales for the Lagardère Publishing division rose 11.6% in the first quarter, to €509 million. In addition to the sales increase in the U.S., revenue was up in France and the U.K., offsetting declines in Spain and Latin America. Though the company said digital formats did well in the quarter, e-books accounted for 9% of total revenue in the first quarter of 2021, down from 9.7% in the first quarter of 2020. Downloadable audiobooks’ share of revenue fell to 4.6%, compared to 5.9% one year earlier.
Executives at both News Corp and Lagardère remained cautious about expectations for the rest of 2021, as more of the economy reopens and consumers have more ways to spend their time and money besides reading. Though industry trends are favorable, Panuccio said, “we continue to monitor closely the sustainability of recent consumer spending patterns, such as the increasing free time for consumers to read and the increase in the average number of books purchased.”