Harlequin is a romance and women’s fiction publisher owned by the Torstar Corporation, a media and publishing company. Imprints include Harlequin MIRA, Harlequin HQN, Harlequin LUNA, Harlequin Nonfiction, Harlequin TEEN, Harlequin Kimani Press and Carina Press. Publishing operations are divided into two divisions: North America and Overseas. In 2011, Harlequin published books in 33 languages in 102 international markets.

Analysis & Key Developments

Although revenue and earnings were down for 2013, Harlequin was still a major contributor to Torstar’s bottom line.

Harlequin posted lower annual results for the fourth consecutive year. In fiscal 2013, Harlequin’s total revenues were 398 million CAD, down 29 million CAD or 6.7% from 2012. EBITDA accounted for 56 million CAD, declining 21 million CAD. The decline was due to revenue drops in both Harlequin’s North America and Overseas operations. In North America, the decrease in revenue was due to declines in the retail print and direct-to-consumer channels. Harlequin blamed e-book discounts on other publishers’ bestsellers.

Overseas, growth in digital was not sufficient to offset print declines. Revenues were also affected by ongoing economic challenges in Europe.

Ownership, Mergers & Acquisition, Internal Organization
In May 2014, News Corp. announced it will acquire Harlequin Enterprises from Torstar for 455 million CAD (or about 415 million USD). Harlequin will become a division of HarperCollins but will remain headquartered in Toronto. The deal is expected to be closed by the end of September, pending approval by regulatory bodies in both US and Canada, as well as Torstar shareholders. Harper's strategy is clear in their announcement: It "will extend HarperCollins' global platform, particularly in Europe and Asia Pacific, helping to fuel its international growth strategy. The deal will complement HarperCollins' current business by expanding a key content vertical. It will also accelerate the digital evolution of both companies."

2013 was marked the departure of Donna Hayes, Harlequin’s Publisher and Chief Executive Officer. After 28 years, Hayes decided to retire. She was replaced by veteran Harlequin executive Craig Swinwood, who took over in December 2013. He started his career 26 years ago at Harlequin.

Global digital revenues were 24.1% of total revenue in 2013, up from 20.7% in 2012.

Bestselling Authors & Titles
Sixty-one Harlequin titles reached The New York Times bestseller lists for a total of 195 weeks, including four books that reached #1. Harlequin’s J. J. Virgin’s The Virgin Diet was a top nonfiction seller.

Earlier Developments

Torstar underwent a period of consolidation and integration in 2012, though “Harlequin remained at the forefront of the digital transformation as romance readers enthusiastically adopted e-book reading,” according to CEO David Holland. The decline in corporate revenues from last year’s 1.55 billion CAD to 1.49 billion CAD reflects the “challenging conditions in the newspaper industry during the year, a rapidly changing book publishing environment and continued soft economic conditions”, according to Holland.

Harlequin reported EBITDA worth 77 million CAD, down 9 million CAD including the decline of 2m from the impact of foreign exchange. Revenue was down 6% to 426 million CAD, excluding the impact of foreign exchange, due to slow growth in digital sales. Torstar’s net borrowings went down slightly to 149 million CAD.

While digital growth slowed, Torstar said that declines in print sales also began to slow in the second quarter of the year in North America, a “trend that continued for the balance of the year.”

Ownership, Mergers & Acquisition, Internal Organization
Harlequin announced a partnership in December 2012 with Cosmopolitan magazine for a new e-book series. Since May 2013, Harlequin releases two original Cosmo Red Hot Reads each month.

In 2012, 5% of Harlequin’s revenues were derived from Canada, 48% from the U.S., and 47% from all other markets (the largest of which were Japan, Germany, the U.K., Australia, Nordic and France). Overseas revenues were down 5.3 million CAD due to a negative impact of economic conditions in Europe. Retail print and direct-to-consumer revenue declines eclipsed digital growth.

Global digital revenues represented 20.7% of total revenue in 2012, up from 15.5% in 2011. In the U.S. market, over 80% of Harlequin’s 2012 digital sales were with two online retailers. As Harlequin has been digitizing its backlist for a number of years, the publisher now has more than 18,000 digital titles available for sale in North America.

Harlequin expanded its digital-only Carina Press imprint in the UK, seeking authors from the UK and Ireland as well as from markets such as India and South Africa.

Bestselling Authors & Titles
In 2012, 49 titles made it on The New York Times bestseller lists.

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