With the e-book market showing no signs of returning to robust growth, two of HarperCollins’s main priorities in fiscal 2018 are global expansion and broadening its distribution base in North America, HC’s CEO Brian Murray told PW after the release of the publisher’s financial results for the fiscal year ended June 30, 2017. In the just-concluded year, EBITDA (earnings before interest, taxes, depreciation, and amortization) was $199 million, 7.5% higher than in fiscal 2016, despite a decline of $10 million in sales. Several factors impacted HC’s sales performance: there was one fewer week in the fiscal 2017 than in fiscal 2016, which cost $19 million, and the company suffered from the negative impact of currency fluctuations.
Murray said he was “thrilled” with fiscal 2017 from both a publishing and financial standpoint and that the continued decline in e-books isn’t a major concern at the moment. He noted that, in the North American market, gains in print book sales and digital audio made up for the drop in e-book sales and that HC’s print frontlist and backlist sales were almost strong enough to match the revenue generated in fiscal 2016 by Go Set a Watchman. Among the company’s top-selling titles in the year were Hillbilly Elegy by J.D. Vance, The Magnolia Story by Chip and Joanna Gaines, and Jesus Calling and Jesus Always by Sarah Young.
That several of HC’s biggest sellers were books aimed at middle America was no accident, Murray said. With offices in Grand Rapids, Mich. (Zondervan); Nashville (Nelson); and San Francisco (HarperOne), HC has long had lots of editors outside of New York City who have different perspectives about what is of interest to middle America; Murray thinks this strategy is all the more important given the results of the recent presidential election. He pointed out that HarperCollins Christian Publishing had a great year despite the collapse of Family Christian Stores and was able to broaden its distribution into new accounts and expand its business with existing ones, such as Barnes & Noble.
The expansion of HC’s global footprint also added to sales last year. Murray said that between now and the end of the calendar year foreign-language sales will represent about 10% of the company’s total revenue, up from less than 1% when HC bought Harlequin in 2014. Sales of foreign-language titles rose by double digits last year, and Murray anticipates more of the same in fiscal 2018. Among the tactics that have worked to grow sales are offering foreign-language tie-in editions to popular movies and shows on streaming services such as Netflix and continuing to add more commercial authors in overseas markets. Murray said HC continues to look for strategic acquisitions to give its international businesses more scale.
Sales of digital audio had big gains in fiscal 2017 (up 47%, according to News Corp)), Murray said, helping to offset another year of e-book declines, and total digital revenue was about flat with 2016, accounting for 19% of consumer sales. (In a conference call, News CEO Robert Thomson pointed to the success of Mark Manson, whose The Subtle Art of Not Giving F*ck, has audio sales of over 470,000 and print of over 490,000, as "showing the power of savvy self-help books and of the audios genre.")
Given the soft e-book market and a trade market that is generally flat, Murray said finding new avenues of distribution is a priority. In addition to helping independent bookstores grow, Murray said HC has been working to open accounts with retail chains other than bookstores. And he expressed his desire again to see booksellers experiment with new ways to sell books, indicating HC would support any efforts to introduce more innovation and creativity into bookselling.
Editor's note: This article has been updated to include remarks by News CEO Robert Thomson.
