HarperCollins Keeps Humming Along

With the considerable help of HarperCollins’s acquisition of Thomas Nelson in 2012 and Harlequin last year, revenue in the three-fiscal-year period ended June 30, 2015, rose 21.8%, while EBITDA jumped 55.6% at the publisher. The $1.67 billion in revenue generated by HC in the past fiscal year included 11 months of sales from Harlequin, which added $281 million to the publisher’s topline and $32 million to HC’s $221 million in EBITDA. It is no wonder that HC CEO Brian Murray said he feels good about fiscal 2015 and called it a big year; he added that, in general, business “has been pretty strong.”

In addition to the Harlequin purchase, sales in HC’s U.S. general books group were strong across the board, Murray said, led by sales of American Sniper. Sales in the children’s division were down as HC faced the challenge of replacing the $84 million in revenue generated by the Divergent trilogy in fiscal 2014; HC managed to sell 8.4 million Divergent units in fiscal 2015, a solid number but less than half of the 19.3 million units sold in the previous year. Excluding Divergent sales for both fiscal 2014 and ’15, revenue in the children’s book group was up, Murray said. “That’s encouraging,” he said, noting that Suzanne Murphy took over the reins of the group from Susan Katz this spring. The company’s Christian business “took a hit” in the year, according to Murray, due to the bankruptcy of Family Christian, but Murray said HC will continue to trade with the chain now that the company has had its reorganization plan approved. “We’ll give them a chance,” he said.

Murray said he was very happy with how the integration of Harlequin has unfolded. The publisher is on track to benefit from about $20 million in cost savings, most of which will occur in the current fiscal year, parent company News Corp said. Murray was quick to note that while there is still more work to be done in the Harlequin integration, HC is reinvesting in the business, and he pointed to the rebranding of Harlequin offices overseas that will become HarperCollins operations. The goal of the new offices, which opened in Germany last October, is to give commercial authors an international platform, and Murray said he expects to see sales grow outside of the U.S. as a result of the initiative. Seven former Harlequin offices are now operating as HarperCollins, and Murray hopes to rebrand offices in France and Italy before the end of the calendar year.

With the inclusion of Harlequin, digital sales of both e-books and digital audio rose 11% in the year, relative to 2014, and accounted for 22% of consumer revenue. Murray said HC has definitely seen a slowing in e-book sales, but that has been countered by a rise in sales through bricks-and-mortar stores. “It looks like the market has become more stable,” he said. Strong sales of digital audio have also helped offset slower e-book sales.

Murray declined to make any predictions for the current fiscal year, but acknowledged that HC is off to a strong start with the tremendous sales of Go Set a Watchman (print sales of which are double the digital figures). He praised the HC team for doing a great job in positioning the book, and he expects the national conversation about the Harper Lee novel to go on for the rest of the year. In general, though, the results for the year “will be determined by how good our books are,” Murray said.

HarperCollins Results, Fiscal 2013-2015

($ in millions)