Big Pubs Have Mixed First Half of 2019

The first six months of 2019 were something of a mixed bag for trade publishers whose financial results are publicly reported.

Penguin Random House had by far the best first half of 2019, with earnings jumping 33% over the comparable period in 2018, while revenue rose 11.3%. Operating earnings before interest, taxes, depreciation, and amortization (EBITDA) rose from €171 million in the first six months of 2018, to €227 million, PRH parent company Bertelsmann reported. Sales were €1.65 billion, up from €1.48 billion.

Acquisitions and hundreds of bestsellers drove the gains. Three acquisitions in particular affected first-half results, as detailed by PRH CEO Markus Dohle in a letter to worldwide employees: the purchases of children’s publisher Little Tiger Group in London as well as Spanish-language literary publisher Ediciones Salamandra and Catalan-language publisher La Campana Llibres, both of which are based in Barcelona. The company also acquired a 45% stake in Sourcebooks in late May.

Organic growth was led once again by Michelle Obama’s Becoming, which sold more than 2.8 million copies across all PRH companies in the first half of the year. Where the Crawdads Sing by Delia Owens sold over two million copies in all formats in the period. A third factor in the sales growth was “high growth rates in audio formats,” Bertelsmann said. In his letter, Dohle also noted PRH’s “thriving” distribution business.

Simon & Schuster had a steady performance in the first half of the year, posting a 4.1% increase in revenue over the first six months of 2018 and a 6.3% gain in operating earnings. Higher sales of print books and digital audiobooks drove revenue and profit gains in the first quarter of 2019 at S&S, and the same scenario played out for the second quarter, which ended June 30, 2019.

CEO Carolyn Reidy said sales of digital audiobooks had not grown quite as fast in the first half of 2019 as they have in recent years, but she noted that the format remains an important growth engine. And in the second quarter, S&S had a rare occurrence—e-book sales were up over the second period of 2018, something Reidy attributed to the mix of titles rather than a rebound in e-book sales. Books by bestselling authors have continued to sell well so far this year, but Reidy said the biggest challenge faced not only by S&S but the entire industry is boosting sales of midlist titles.

Revenue at HarperCollins fell 5.4% in the first six months of 2019 compared to last year, and earnings dropped 14.1%. Much of the decline was due to a down second quarter (or fourth quarter for HC, which operates on a June 30 fiscal year). The company was facing a difficult comparison to the second quarter in calendar 2018 primarily because of the absence of $28 million of revenue from the Lord of the Rings trilogy licensing agreement in the prior year, lower sales of Magnolia Table by Joanna Gaines, and $18 million less in revenue as a result of adopting the new revenue recognition standard.

The decline was partially offset by the success of new releases such as Everything Is F*cked by Mark Manson and The World’s Worst Teachers by David Walliams. Audiobook sales were generally strong in the first half of the year, offsetting soft e-book sales. Overall, sales in the second quarter were down 14% from a year ago, offsetting a 5.8% sales increase in the first quarter.

While sales at Hachette Book Group’s parent company, Lagardère Publishing, increased 4.4% in the first half of 2019, revenue in the U.S. division fell 1.5%, due, Lagardère said, to difficult comparisons to 2018, which had a strong early list led by The President Is Missing. Digital audiobook sales at HBG had a “solid advance” in the first six months, Lagardère noted. HBG CEO Michael Pietsch pointed out that while sales were down, profits rose at HBG, driven by a number of new bestsellers, including the first #1 bestseller for Elin Hilderbrand, The Summer of ’69. Backlist sales were led by You Are a Badass by Jen Sincero.

While a licensing deal signed last year contributed to a revenue decline at HC in the first six month of 2019, just the opposite happened at Houghton Mifflin Harcourt Books & Media. Sales in the group rose $7.1 million (9.7%) over the first half of 2018, primarily from $7.7 million of licensing revenue driven by the Carmen Sandiego series on Netflix. Print sales were down in the period, due to strong sales last year of the Instant Pot and Whole 30 series.

Operating Performance, First Half of 2018–2019

(in millions)