After three months of negotiations and two weeks after announcing plans to resume labor negotiations, HarperCollins has reached a tentative agreement with its employee union, Local 2110 of the United Auto Workers.

In a February 9 announcement, the union said that the agreement calls for unspecified increases to minimum salaries, which currently start at $45,000. The new deal also includes a one-time, $1,500 lump sum bonus to be paid to employees from the union's bargaining unit once the contract is ratified. The contract will extend through December 31, 2025.

The deal, facilitated by commissioner Todd Austin of the Federal Mediation and Conciliation Service, was met with celebratory well wishes from New York City comptroller Brad Lander and several authors and literary agents.

“Huge congrats to @hcpunion after more than 9 weeks on the picket line! Really admire your guts & solidarity,” wrote Lander. Literary agent Molly O’ Neill added, “Bravo! Now you all deserve a nap!!”

Sales, Earnings Down in Q2

News of the tentative agreement came shortly after HC parent company News Corp. released financial results for the quarter ended December 31, 2022. The company reported that earnings tumbled 52% at HC, falling to $51 million, from $107 million in the comparable quarter a year ago. Sales dropped 14%, to $531 million.

News Corp. attributed the revenue decline to slowing consumer demand for books, difficult comparisons to a strong frontlist performance a year ago, and “some logistical constraints at Amazon.” In the first quarter of the 2023 fiscal year, HC attributed the decline in sales and earnings largely to a steep drop in orders from Amazon, and in a conference call, News Corp. executives said the negative impact of Amazon on second quarter sales was less than in the first quarter. Sales were down in both print and digital formats.

In addition to lower sales, News attributed the plunge in profits primarily to “ongoing supply chain, inventory, and inflationary pressures on manufacturing, freight, and distribution costs.” A change in the product mix also depressed earnings, with the share of e-book sales falling in the second quarter as that of the the less-profitable print books rose.

With financial results also down in the first quarter, in the first six months of fiscal 2023, profits declined 53%, to $90 million, and sales fell 12%, to $1.02 billion.

Last month, HC began implementing a program to cut its North American workforce by 5% by the end of the fiscal year ending June 30. In a conference call announcing results, News Corp. CEO Robert Thomson said News is making a 5% workforce cut in all its businesses, which will result in the elimination of about 1,250 positions. In remarks about HC’s declining results, Thomson said that, “under the prevailing circumstances, it is absolutely necessary to confront the cost base as we seek to bolster long-term profitability in the post-pandemic marketplace.”

CFO Susan Panuccio told analysts that News is “optimistic” about some of HC’s new releases. She said while the new titles “should help with the performance in the second half,” she warned that “near-term industry trading conditions have remained challenged.”

In a letter to HC employees, CEO Brian Murray explained that the poor results were not the result of bad publishing, “but rather a perfect storm of headwinds in the financial role HarperCollins plays in the global publishing industry.”

He elaborated on the information News Corp. had provided about results, noting that, after a spike in sales for most of the pandemic, consumer spending has started to decline, but that the higher costs that HC incurred to meet the higher demand continue to remain high, due in part to high inflation. While HC and its vendors have been trying to overcome the impact of inflation, Murray wrote that “some of these inflationary costs appear to be here to stay, and it will take more time for our business to adjust.”

As HC works to cut expenses, Murray told employees, "we are working to exhaust all other cost savings opportunities before resorting to additional workforce reductions.”