The speculation about what will become of Simon & Schuster when the merger of its parent company, Viacom, with CBS is completed has overshadowed the fact that what was once known as the S&S consumer division has successfully made the transition from a division that shared services with the educational and professional publishing groups, which were sold to Pearson nearly one year ago, to a standalone unit.
During the last year, "we have literally recreated our non-creative infrastructure," Jack Romanos, president of S&S, told PW. Although S&S still shares its computer system with Pearson, for all other intents and purposes, "we are virtually a standalone company," Romanos noted. Romanos is extremely proud that S&S managed to separate itself from its former affiliated companies with a minimum of disruption to the publishing process. "We tried to do the uncoupling without burdening the publishing side," Romanos said, explaining that the administrative and operations people "did a yeoman's job in a difficult situation. They are the unsung her s."
The proof of S&S's successful transition can be found in the numbers: the company is on track toward what could be a record year. Through the first nine months of 1999, sales were up 11% to $430.7 million and operating income was ahead 36% to $30.5 million. "We're in a hot phase," Romanos said, with nearly all groups running ahead of last year's sales pace. The strongest gains are coming from the children's group, Scribner, Free Press and adult trade.
The major change on the editorial side over the last year has been the restructuring of Pocket Books (News, Sept. 27). Romanos explained that the restructuring was necessary because Pocket "is much more than a mass market paperback publisher now. We've expanded the format choices to include trade paperback, hardcover and young adult publishing." The other formats had been treated as an extension of the mass market programs, but as they matured it became clear a different structure was required. "You can't do hardcover and trade paperback publishing using mass market techniques," Romanos said. "You need different people as well."
Romanos thinks that the mass market paperback marketplace has stabilized after the upheaval in its distribution channels in recent years. "We refocused our mass market publishing to meet the realities of the market," Romanos said. It's Romanos's view that the format has largely "left the bookstores and returned to its roots" in such non-bookstore outlets as mass merchandisers. In addition to publishing fewer titles and sharpening its focus, Pocket has adapted to the new mass market environment by publishing "oversized" mass market editions. "With an aging reader base, readability is becoming a real issue. As people's eyesight becomes worse, many won't read mass market books," Romanos said.
While S&S d s not plan to enter the large-print area and will continue to license those rights to other publishers, it has begun several initiatives to stimulate growth. The company has added more distribution clients over the last few months and is considering adding a few more. Pocket has launched the Pocket Pulse imprint for the young adult market, and Sarah Ban Breathnach's Simple Abundance Press line is being developed under Scribner, with the first titles due December 2000. The newest initiative is a reference unit that has been formed by the trade division. Under the direction of Bill Rosen, the new unit will work to better exploit well-known brand titles such as Joy of Cooking, for which S&S is developing spinoffs, and the forthcoming Harvard Medical School Family Health Guide. Romanos also said he feels the S&S list is "better balanced since we've increased our fiction output."
Romanos is confident that with nearly $600 million in revenues, S&S can compete with its larger rivals, although he acknowledged that the company faces "a challenge to make up for loss of scale by both revenue growth and cost improvements." Romanos thinks cost savings can still be found in reducing returns and by keeping author advances under control. Profitability should also be improved by more use of technology: on-demand publishing, e-books and e-commerce. To make the most of electronic opportunities, S&S digitizes all new titles and is in the process of digitizing its 20,000-title active backlist.
Romanos estimated that about 5% of S&S's total sales are now being generated through online booksellers. Sales to superstores have also increased, as have sales to mass merchandisers. Romanos believes the independent bookselling sector is now holding its own.
Although the recent mergers in the trade segment have created companies that are now much larger than S&S, Romanos said, "It remains to be seen what being a $1-billion publisher gets you. Size d sn't matter in the development of content." Romanos emphasized that S&S's structure is flexible enough to accommodate the needs of different authors, but that the company "still has plenty of muscle" in the marketplace
