In a presentation that was part of Credit Suisse’s 23rd annual communications conference, HarperCollins CEO Brian Murray said he sees no signs of consumer book spending slowing down in 2021—nor does he see the trend toward greater consolidation of the publishing industry cooling.
HC has enjoyed exceptional sales growth over the last 12 months, and spending is up in the 17 countries where the publisher operates, Murray said, observing that it appears interest in reading is undergoing a renaissance. He said that consumer research conducted by HC has found that book buying should remain strong for the rest of the year, speculating that book purchasing has reached a new level.
Murray said that to meet that demand, HC has been very aggressive in buying new books to ensure that the publisher “gets its share of the larger pie.” Over the last nine months or so, HC has also upped its title output, Murray said.
Covid-19 “scrambled” the purchasing pattern of consumers with e-book sales jumping early on, but while print sales have bounced back even as e-book sales have cooled somewhat, Murray still expects sales of e-books and digital audio to grow. He put the digital to print sales breakdown for HC at roughly 75% print to 25% digital, and said that, while he expects digital sales to continue to increase, he doesn’t know where the format ratio will eventually settle.
Murray said he found it very encouraging that, despite the challenges posed by the pandemic, consumers were able to find books through different channels, noting that this points to the strength and resiliency of the book industry. Two trends that have been very prominent during the pandemic—higher digital sales and more sales through online retailers—also bode well for HC’s ability to become more profitable, Murray said.
Another way HC can become more profitable is to get bigger, and Murray mentioned several times that “scale matters” in publishing in terms of a company’s ability to compete with tech platforms as well as to reinvest in the business. He said he is “highly confident” that HC will be able to realize the $20 million in cost savings from the purchase of the Houghton Mifflin Harcourt trade operation. He told the conference that, in making acquisitions, HC places a value on the costs it can take out of the business rather than just adding sales, though Murray added that he expects sales of HMH titles to increase as part of HC, particularly abroad. Murray is extremely excited about the upcoming Amazon Prime production of Lord of the Rings, which he believes will drive strong sales of LotR–related titles, which are now published by HC following the HMH purchase. (He acknowledged that he doesn’t know when the Amazon series will be released).
Asked by the Credit Suisse host what happened in HC’s bid for Simon & Schuster, Murray said that while HC has been, and will continue to be, aggressive in making deals, it follows a disciplined approach. “Someone else paid a lot of money” for S&S, Murray said, adding that it remains to be seen if the deal will be closed. He said that he has no idea if the government will approve the transaction, and only observed that a combination of S&S with Penguin Random House will give the company a high market share in certain content areas.
Murray closed the session by saying that all signs point to more consolidation in the industry, noting: “we hope to be active in that regard.”
