For Publishers, 2018 Is Off to a Decent Start

The four large publicly traded consumer publishers that recently reported their financial results for the quarter ended March 31 were all able to point to some good financial news.

HarperCollins had the best results, with sales up 6.4% compared to the same quarter last year and profits rising 16.2%. In a conference call discussing results, Susan Panuccio, CFO of HC parent company News Corp, said the sales gains were led by the general and Christian publishing divisions. Backlist titles did particularly well, accounting for 58% of revenue in the quarter, compared to 52% a year ago, Panuccio said. She added that the strong performance of the backlist helped to boost margins.

Another important contributor was downloadable audiobooks. The format had strong gains in the quarter, helping to offset softness in e-book sales and leading to a 5% increase in overall digital sales at HC compared to the prior year. The company said that downloadable audio accounted for about 25% of all digital revenue in the recent period. Digital sales represented 22% of consumer revenue for the quarter—the same percentage the format accounted for in the quarter last year.

Though revenue at Lagardère publishing rose only 0.4% in the first quarter over the same period last year, sales at its U.S. subsidiary, Hachette Book Group, increased 5.4%. HBG CEO Michael Pietsch said the first-quarter gains “came from many places: #1 bestselling books by HBG house authors James Patterson, David Baldacci, Douglas Preston and Lincoln Child, and Brad Meltzer.” He added that backlist hits also had an impact, citing You Are a Badass, Obama: An Intimate Portrait, and Pachinko. Breakout bestsellers such as Russian Roulette and Dear Madam President also contributed to the gains, Pietsch said.

Lagardère said that the companywide publishing group’s revenue was affected by a negative €23 million exchange rate, which was offset by the acquisitions of Brainbow, Bookouture, Jessica Kingsley, and Summerside. The company also noted that e-books’ share of revenue fell again in the quarter, dropping from 10% in the first period of 2017 to 9.1%.

The Houghton Mifflin Harcourt trade group eked out a small sales increase in the first quarter, although its operating loss grew slightly compared to 2017’s losses. In its quarterly SEC filing, HMH attributed the sales rise to “higher licensing income along with print title sales such as the Instant Pot series and Whole30 series.” The greater loss was largely due to a change in the company’s sales mix: last year, HMH sold lots of The Handmaid’s Tale and 1984 e-books, which have higher margins than print editions.

Sales fell slightly at Simon & Schuster in the first quarter, but the company did raise profits by $1 million over the first three months of 2017. CEO Carolyn Reidy said sales of digital audio jumped 43% in the period. S&S raised its output of audio titles by about 15% in 2017, and Reidy expects output to increase another 10% in 2018. The strong performance by digital audio helped to counter slight declines in print and e-book sales. Frontlist sales were a little soft in the period, Reidy said, but backlist sales had solid gains.

Bertelsmann, which owns 75% of the country’s largest trade publisher, Penguin Random House, issued only a brief quarterly update and pointed to a strong PRH bestseller performance in the first quarter. Pearson, which has a 25% stake in PRH, said the publisher was “trading in line with expectations.”

Operating Performance, First quarter, 2017–2018