While the jury is still out on whether "bigger is better," mergers have nevertheless become an ever-present reality of the business world. Publishing is no exception; the most recent is the merger of HarperCollins and Morrow/Avon, a deal that became final on July 12, with initial organizational and staff changes announced last month. The purchase price of the acquisition was reported to be $180 million, and the Hearst book imprints had estimated sales of about $210 million, with children's representing about 22% of total revenues. As part of HarperCollins, children's revenues are likely to be just under 20% of total revenue; combined revenues for the HarperCollins and Hearst children's groups in 1998 were $162 million.
Led by president and publisher Susan Katz, HarperCollins Children's Books will now consist of eight imprints, down from a total of 16 that were operating when HarperCollins and Morrow/Avon were separate entities. Reporting to Katz are four senior vice-presidents and publishers: Susan Hirschman (Greenwillow Books), Joanna Cotler (Joanna Cotler Books), Laura Geringer (Laura Geringer Books) and Kate Morgan Jackson (in charge of HarperCollins hardcover, paperback and novelty imprints).
Jackson's group consists of the following imprints: HarperCollins, HarperFestival, HarperTrophy, Avon and Tempest. Reporting to Jackson are Elise Howard, v-p, director of paperbacks; Mary Alice Moore, v-p, director of brand publishing; and hardcover editorial directors Barbara Lalicki, Robert Warren, Alix Reid and Ph be Yeh.
Among those let go in the reorganization: Jazan Higgins, v-p, director of marketing; Nancy Gallt, v-p, director, subsidiary rights and international rights; Paulette Kaufmann, v-p, editor-in-chief of Mulberry, Beech Tree and Tupelo; Susan Pearson, v-p, editor-in-chief of Lothrop, Lee & Shepard; and Andrea Curley, senior editor, Morrow Junior Books. Closed imprints include Morrow Junior Books, Lothrop Lee & Shepard, Michael di Capua Books, Beech Tree, Mulberry, Tupelo, Avon Flare and Avon Camelot.
Kaylee N. Davis has been named v-p and marketing director to oversee the combined marketing efforts of all imprints. Davis was previously v-p of television brand marketing and publishing at Lancit Media, and prior to that was director of marketing at Golden Books. Virginia Anagnos, director of publicity, will be responsible for publicity of titles published by all imprints.
With the acquisition of Morrow and Avon, HarperCollins will now be the country's third largest children's trade publisher. According to Katz, the group will publish about 500 titles per year, down from a combined 600. Katz said that all books currently under contract with either company would be published. "The plan is to go forward as the pipeline is committed," she said. "The only reason to delay publication would be if a book is not ready."
The HarperCollins children's staff will be relocating to the Morrow offices at 1350 Avenue of the Americas at the end of October. Changes to the structure of the sales force will not be announced until November, Katz said.
Mergers Past and Present
These announcements come on the heels of two other large mergers: Penguin/Putnam in December 1996, and Random House/Bantam Doubleday Dell in June 1998. In each case, the major issues involved in bringing two publishing companies together: editorial overlap, marketing and publicity objectives, viability of backlist, continuity of sales, staffing, locationÃ±have been addressed somewhat differently. We spoke with some key personnel at HarperCollins, Penguin Putnam and Random House to discover the initial concerns and goals upon merging, the cuts made to lists and staff, and the outlook for the future.
At HarperCollins, the first changes that were announced affected editorial, marketing and rights. Katz described the rationale behind these cuts. "Our thought process was: how will our customers be able to get their arms around our list, if we have [so many] imprints? While we respect them all, it is not an efficient way to shape the list, because of the confusion factor." As far as the hardcover imprints, "Morrow, Lothrop and Harper are all broad lists, from picture books through YA novels. To have three very fine imprints with the same mandate seems confusing, when their visions and missions are so similar."
The closing of Morrow Junior Books and Lothrop means that two of the longest-standing imprints in children's books are gone; Morrow Junior Books was formed in 1946, and Lothrop, Lee & Shepard in 1904. Authors published under the Morrow imprint include Beverly Cleary, Steven Kellogg and Diane Stanley; under the Lothrop imprint, David Wisniewski, Jim LaMarche and Ted and Betsy Lewin.
The Michael di Capua imprint, established in 1991 after di Capua left Farrar, Straus & Giroux, published such well-known names as Maurice Sendak, William Steig, Jon Agee, Fred Marcellino, Tor Seidler, Jules Feiffer and Natalie Babbitt. Though di Capua's imprint will be discontinued, Katz said, "We have great respect for Michael and we're working very hard to come to some agreement with him to stay on in some capacity."
In any such merger, according to Random House Children's Books president and publisher Craig Virden, "The goal is to create a business where the whole is greater than the sum of its parts. In merging two groups, a whole bunch of decisions will vary from merger to merger. We were lucky in that there was a remarkable lack of overlap editorially. Just as it happens, we've had to hire some people, actually."
Virden said the merger of the Random/BDD children's divisions, which took place last year, is "still a work in progress." The biggest complication, he noted, is that "we're in two different places. Obviously it would be a help to all be in the same place."
At Penguin Putnam, the first areas to be merged were sales and production, according to Doug Whiteman, president and publisher of Penguin Putnam Children's Books. "We hoped it would be a smooth transition, but I was amazed that the backlist numbers were right on target." Whiteman attributed the continued steady sales to the fact that the sales forces on both sides found they had to share information and cooperate while they learned the lists.
Making the Adjustment
At all of these houses, people both on the decision-making level and below reported discomfort among employees and authors when news of these mergers was announced. While in some cases fears were allayed, in others mistrust seemed to grow as more changes were made.
"It was, of course, difficult for people at first" Whiteman said, "but over time trust was established, where the staff felt they were getting information about the company." He also reported receiving calls from authors and agents worried about how their books would be promoted and whether they would have the same publicists. "Once the marketing [team] was in place, the [authors and agents] were much more satisfied," he said.
A former employee of Penguin Putnam, however, lamented the loss of a close-knit atmosphere. "The mindsets of the two companies are very different," the employee said, "and the atmosphere became more corporate and less collegial. Penguin was a fairly big company that had managed to maintain its small company atmosphere. That was the saddest thing to lose."
Others from Penguin Putnam have reported some positive aspects to the merger. For example, the Putnam & Grosset Group did not have a publicity department dedicated solely to children's books. Also, some years prior to the merger, the company had undergone cutbacks to the lists and staff, as well as a weeding out of the backlist. Individual staff members reported doing the jobs previously held by two or more people. The combined company has offered more stability and resources than were available in the recent past.
Nancy Gallt, whose position at Morrow was terminated, voiced concern over the ratio of books to staff in the reconstructed Harper group, and the potential for overload. "Morrow had a manageable number of books and provided a flexible environment for the staff. There were a reasonably good number of people for the number of titles," she said. Although she said that she will miss the people she worked with, she d sn't regret leaving at this time. "It will never be the same Morrow," she said.
If Gallt's fears are justified, more pitfalls may well turn up. Booksellers, for example, have expressed alarm at the growth of companies, the sizes of lists and number of imprints. And since many independent bookstores no longer see sales reps, and must place orders through telemarketing, they often report they find it even harder to wade through the sheer volume of books and the corporate bureaucracy. Often they feel they do not receive the same level of customer service that was the norm for them before companies merged.
The changes that result from mergers often have a direct impact on authors and agents. Many authors have been left without their editors and publicists, who serve as their advocates inside the house. Midlist authors worry about getting less attention, as houses put more of their resources behind big-name authors. And agents fear there will be even fewer channels for manuscripts, as imprints merge and shut down.
Looking Down the Road
It may take a while, Katz said, but her goal is to see HarperCollins become the country's #1 children's publisher. "There are very distinct segments of the children's market: the independents, the chains, the mass markets, clubs, etc. If you want to be #1 you have to serve every market that's hungry for children's books. They are all very demanding, healthy, hungry markets." Katz plans to review each of the market segments with her staff, and will appoint people to be in charge of each. "If you come up with a profile of what a particular market wants, a vision of what has done well there," she said, "you can knock people's socks off."
In the end, restructuring departments and refining sales and marketing efforts may be much more easily accomplished than restoring confidence among staff members and boosting morale. Adding to the strain of learning new systems and backlists and establishing relationships with new co-workers is resentment about colleagues who were let go, as well as fear about future cuts.
"Morale was initially fine, with a lot of people looking forward to new authors and imprints to work with," stated one former Penguin employee. "That changed fairly quickly, when Lodestar and Cobblehill were eliminated. There have been quite a few more staff losses since I left, and I think everyone is expecting more." (In response, Whiteman said, "We are very comfortable with the structure and staffing level of the Young Readers Group at this time, and are contemplating no significant changes in the foreseeable future.")
A former Harper employee voiced a different concern: "Unfortunately, even though those tracking the bottom line may see profitability go up in the short term, often it comes at the expense of creativity in the long term. Harper used to be known as the top place for training its assistantsÃ±if you started at Harper you could go anywhere. Now there are so many meetings and so much paperwork that most creativity happens after hoursÃ±out of the sight lines of the younger staff. They miss out on what was once the best part of the job."
Clearly, there is little likelihood that those who are critical of mergers will be able to prevent this trend, but the hope is that those involved in children's book publishing will find ways to keep the level of creativity high and maintain their enthusiasm. Then, perhaps, a balance can be struck between the needs of the corporation and the requisites of producing good books.