Mixed Signals From Three Publishers

First-quarter reports from three of the largest U.S. trade houses gave mixed messages about the state of book publishing at the start of 2015. Sales rose at HarperCollins and Houghton Mifflin Harcourt trade division, but fell at Simon & Schuster, compared to the first quarter of 2014. Revenue at HC, however, fell 5% if sales from Harlequin—which HC bought last summer—are excluded. The same pattern held true for HC’s bottom line; there a 5.7% increase in overall EBITDA would instead have been an 8% decline if earning from Harlequin were not included. In any case, HC’s results were hurt by comparisons to last year’s strong sales of Divergent. The decline in sales of the young adult series not only negatively affected total revenue, but they were also a factor in the 3% decline in e-book sales in the quarter. HC did benefit from the robust performance of Chris Kyle’s autobiography, American Sniper, but parent company News Corp noted that the stronger sales of nonfiction titles—which generally do not sell as well in the e-book format as fiction titles do—was another factor in declining e-book sales. E-books accounted for 22% of HC consumer revenue in the quarter.

Digital sales were the bright spot for S&S, with both e-book sales and sales of digital audiobooks up in the quarter, CEO Carolyn Reidy said, noting that sales of digital audio were particularly strong. The gain in digital sales was offset by lower print sales in the period, resulting in a 5.2% decline in total revenue. Lower costs, however, led to a 9% increase in EBITDA. Digital sales accounted for 31% of total S&S revenue in the quarter. Reidy attributed the variation in the sales performance of print and digital partially to product mix, noting that in last year’s first quarter S&S was still doing well, with print editions of titles tied to the Duck Dynasty franchise.

The 6% increase in HMH’s sales helped cut its losses in the period. The company attributed its improved quarter to strong backlist sales of books by J.R.R. Tolkien and Lois Lowry, as well as the continued success of both What if? and the Newbery Medal–winning children’s book The Crossover. In addition, HMH’s culinary line had a strong start to the year with the release of The Whole 30, The Real Paleo Diet Cookbook, and Cake My Day.

First-Quarter Results, 2014 v. 2015

($ in millions)