As book publishing transitions from a largely print-based industry to one that produces both print and digital content, many publishers are restructuring their operations. Those reorganizations are usually accompanied by layoffs that are not widely reported. In an effort to gauge the impact of these changes on the publishing workforce, PW looked at the SEC filings of the few publicly traded houses. Although there is reliable information on only three publishers, the documents show that while those companies have paid out millions in severance, in many cases they have replaced jobs that were eliminated with new positions to take into account the shifting demands of the industry.
Of the three publishers we examined, John Wiley has undergone the most extensive re-engineering, moving from a publisher of educational, professional, and trade works to a company whose stated mission is to be a “global provider of content-enabled solutions with a focus on digital products and services.” Wiley began the restructuring process in fiscal 2013, during which it recorded $19.7 million in severance charges; it paid out another $25.9 million in severance in fiscal 2014, according to its 10-K filing for the year ended April 30. As part of the reorganization, Wiley sold off much of its consumer publishing assets, acquired companies in different fields, and outsourced a number of functions. The reorganization, which is now largely completed, was designed to align Wiley’s business with new market realities and, in the process, save millions of dollars. According to the company’s 10-K, the restructuring saved $46 million in costs in fiscal 2014.
As Wiley realigned its business, it went from having 5,400 full-time-equivalent positions in April 2013 (a figure that includes 390 employees from newly acquired companies) to 5,100 a year later (including 150 from recent acquisitions). Sales declined only modestly during the year, and, with the layoffs, resulted in improved employee productivity: sales per employee rose from $326,000 in fiscal 2013 to about $348,000 in fiscal 2014.
Houghton Mifflin Harcourt is another large, publicly traded publisher that has seen extensive changes in recent years. According to its 10-K filing, HMH took severance charges of $10 million in 2013, following charges of $9.4 million in 2012, when it underwent a monthlong stay in Chapter 11. Nevertheless, HMH added 240 people in 2013, though more cuts may be coming. In its recent filing for the second quarter of 2014, the company reported severance payments of $5.3 million in the six months ended June 30. In addition, HMH recorded a charge of $3.6 million to reflect severance it expects to pay out over the next 12 months. The company had about 3,540 employees (including 240 overseas) at the end of 2013, and its sales per employee rose by $5,000 over their 2012 level.
Scholastic has a history of taking different approaches to improving operating efficiencies. In December 2012, for instance, it instituted a hiring freeze for fiscal 2013 as part of its effort to bring costs down by $30 million that year, and it ended up taking severance charges of $13.4 million in fiscal 2013. In fiscal 2014, the company recorded a severance expense of $11.3 million, which includes $10.8 million related to cost-reduction initiatives, “as the company continues to focus on efficiency initiatives,” Scholastic said in its 10-K. Even with its efforts to hold down costs, the publisher’s head count grew in fiscal 2014: its domestic workforce held steady at 7,500, but the number of overseas employees rose to 2,200, up 100 from the previous year. With an increase in revenue, sales per employee increased slightly in fiscal 2014.
While few publishers currently operate as independent publicly traded companies, others are part of larger firms that file results with the SEC. Simon & Schuster parent company CBS noted in its 10-K that restructuring charges of $1 million at S&S in 2013 primarily reflect severance costs, and that restructuring charges of $3 million in 2012 largely reflect costs associated with combining several imprints when the company overhauled its adult trade operations. The filing does not breakout the number of employees at S&S.
Publishers aren’t the only companies in the industry that are restructuring during this time of transition. Barnes & Noble quickly built up a large Nook team to develop digital reading devices. In April 2013, the Nook segment had 750 employees, a number that fell to 480 by April 2014, following B&N’s decision to dramatically scale back its involvement in hardware. On the retail side, according to B&N’s annual report, the company’s trade division had 28,000 full- and part-timers in April 2014—the same level as the previous year. The college division shed 200 employees in fiscal 2014, dropping to 5,100. And Books-A-Million reported that the number of part-time workers it employed held steady at 3,100 in 2012 and 2013, while its full-time workforce was cut by 100, to 2,300 last year.
The Employee Equation
|Houghton Mifflin Harcourt|
|Serevance Charges |
|Sales per Employee||$394,000||$389,000|
|Serevance Charges |
|Sales per Employee||$188,000||$187,000|
|Serevance Charges |
|Sales per Employee||$348,000||$326,000|
*For fiscal 2014 and 2013