News
Mixed First Half to 2019
PRH had the strongest start among public trade publishers
T
he first six months of 2019 were something of a
mixed bag for trade publishers whose financial
results are publicly reported.
Penguin Random House had by far the best first
half of 2019, with earnings jumping 33% over the compa-
rable period in 2018, while revenue rose 11.3%. Operating
earnings before interest, taxes, depreciation, and amortiza-
tion (EBITDA) rose from €171 million in the first six months
of 2018, to €227 million, PRH parent company Bertelsmann
reported. Sales were €1.65 billion, up from €1.48 billion.
Acquisitions and hundreds of bestsellers drove the gains.
Three acquisitions in particular affected first-half results, as
detailed by PRH CEO Markus Dohle in a letter to worldwide
employees: the purchases of children’s publisher Little Tiger
Group in London as well as Spanish-language literary
publisher Ediciones Salamandra and Catalan-language
publisher La Campana Llibres, both of which are based in
Barcelona. The company also acquired a 45% stake in
Sourcebooks in late May.
Organic growth was led once again by Michelle Obama’s
Becoming, which sold more than 2.8 million copies across all
PRH companies in the first half of the year. Where the Crawdads
Sing by Delia Owens sold over two million copies in all formats
in the period. A third factor in the sales growth was “high
growth rates in audio formats,” Bertelsmann said. In his letter,
Dohle also noted PRH’s “thriving” distribution business.
Simon & Schuster had a steady performance in the first
half of the year, posting a 4.1% increase in revenue over the
first six months of 2018 and a 6.3% gain in operating earnings.
Higher sales of print books and digital audiobooks drove
revenue and profit gains in the first quarter of 2019 at S&S,
and the same scenario played out for the second quarter,
which ended June 30, 2019.
CEO Carolyn Reidy said sales of digital audiobooks had
not grown quite as fast in the first half of 2019 as they have
in recent years, but she noted that the format remains an
important growth engine. And in the second quarter, S&S
had a rare occurrence—e-book sales were up over the second
period of 2018, something Reidy attributed to the mix of
titles rather than a rebound in e-book sales. Books by
bestselling authors have continued to sell well so far this
year, but Reidy said the biggest challenge faced not only by
S&S but the entire industry is boosting sales of midlist titles.Revenue at HarperCollins fell 5.4% in the first six months
of 2019 compared to last year, and earnings dropped 14.1%.
Much of the decline was due to a down second quarter (or
fourth quarter for HC, which operates on a June 30 fiscal
year). The company was facing a difficult comparison to the
second quarter in calendar 2018 primarily because of the
absence of $28 million of revenue from the Lord of the Rings
trilogy licensing agreement in the prior year, lower sales of
Magnolia Table by Joanna Gaines, and $18 million less in
revenue as a result of adopting the new revenue recognition
standard.
The decline was partially offset by the success of new
releases such as Everything Is F*cked by Mark Manson
and The World’s Worst Teachers by David Walliams. Audio-
book sales were generally strong in the first half of the year,
offsetting soft e-book sales. Overall, sales in the second
quarter were down 14% from a year ago, offsetting a 5.8%
sales increase in the first quarter.
While sales at Hachette Book Group’s parent company,
Lagardère Publishing, increased 4.4% in the first half of 2019,
revenue in the U.S. division fell 1.5%, due, Lagardère said, to8 PUBLISHERS WEEKLY ■ SEPTEMBER 2, 2019
(in millions)
2018 2019 CHANGE
HarperCollins
Total Sales $888.0 $840.0 -5.4%
EBITDA 113.0 97.0 -14.1%
Margin 12.7% 11.5%
Houghton Mifflin Harcourt Books & Media
Total Sales $72.8 $79.9 9.7%
Operating loss (7.6) (9.9) –
Margin – –
Lagardère Pubishing
Total Sales €1,000.0 €1,044.0 4.4%
Recurring EBIT 45.0 36.0 -20.2%
Margin 4.5% 3.4%
Penguin Random House
Total Sales €1,482.0 €1,650.0 11.3%
Operating EBITDA 171.0 227.0 33.0%
Margin 11.5% 13.8%
Simon & Schuster
Total Sales $367.0 $382.0 4.1%
Operating Income $47.0 $50.0 6.3%
Margin 12.8% 13.1%
SOURCES: COMPANY REPORTS, PUBLISHERS WEEKLYOperating Performance,
First Half of 2018–