PW: Rough times for big publishers

[fjtorres]

Last week, PUBLISHERS WEEKLY dropped this nice summary of BPH finances:

http://www.publishersweekly.com/pw/b...ublishers.html

They call these rough times for the big publishers.

January–June Financial results, 2015–2016 ($ in millions)

2015 2016 Change
HarperCollins
Sales. $792.0 $791.0 -0.1%
EDITDA $89.0 $86.0 -3.3%
Margin 11.2% 10.9%

Houghton Mifflin Harcourt Trade
Sales. $71.2 $70.2 -1.4%
Adjusted EDITDA ($0.7) ($3.4) –

Lagardere
Sales. €968.0 €970.0 0.3%
EDITDA €36.0 €36.0 0%
Margin 3.7% 3.7% –

Penguin Random House
Sales. €1,697.0 €1,516.0 -10.7%
EDITDA €207.0 €185.0 -10.6%
Margin 13.9% 10.0% –

Simon & Schuster
Sales. $344.0 $332.0 -3.5%
Operating profit $37.0 $39.0 5.4%
Margin 10.7% 11.7% –

(The EDITDA thing is probably a PW typo and they probably meant EBITDA. Still, it lends itself to a joke or three so I'm not fixing it.)

Rough times or not, those are some pretty profitable companies. But, apparently, 10% profit margin isn't enough for the randy penguin.

In this week’s KKR column,

http://kriswrites.com/2016/09/07/bus...sdealbreakers/

she shares this insider nugget:

“Besides, traditional book publishers are actively cutting their book lines right now. They’re drowning. The numbers I recently heard from Random Penguin/Randy Penguin/whatever they’re calling themselves just in the past month are this: They’re cutting their titles from 900 to 250.

“Think there’s room for your book in those 250 slots? Um, no. Writers I know who have been cut this past year include a large number of New York Times bestsellers. Only those writers weren’t mega bestsellers.

“That 250 is for Big Guns and people who “write” novelty books, like the Kardashians.”

A two thirds cut in the US (fiction?) front list is pretty drastic.
Cutting that deep probably means staff cuts.

Back around 2009/10 there was a similar purge where the BPHs cut most (all?) authors selling less than 30,000 copies. It could be they are either raising the bar or, more likely, culling to the same standard again. And since being a “bestseller” these days takes much lower sales, the culling is digging into what was previously considered to be a sign of success.

It'll be interesting to see what the ripples look like. Will those 650 titles show up at a different tradpub? Fail to hit the market? Show up as small press/indie?

And what of the other BPHs? Will they cut back too?

Not sure the times are that rough but they sure are curious.

[DiapDealer]

I'm not sure I can believe the 900 to 250 title cut. Time will tell, I guess.

[fjtorres]

Originally Posted by DiapDealer

I'm not sure I can believe the 900 to 250 title cut. Time will tell, I guess.

I agree.
That's why this is in discussion, not news.

But KKR has a track record, is plugged in, and this *has* happened before in publishing. Plus the randy penguin puts out over 15,000 titles a year. Cutting 650 isn't that big in their scheme of things other than (apparently) all coming from the same category.

More, a lot of mega mergers do end up like this, with the combined company producing the same or less than the bigger of the two pre-merger units. (Sometimes they end up the size of the smaller of the two.)

A classic example is the early 90's merger of HP and Apollo Computer as HP tried to catch SUN for domination in UNIX Workstations. At the time, HP was 2 and Apollo 3 and combined they outsold Sun. SUN CEO MacNeally, a pretty big ass himself, publicly approved of the deal. "This is great. Now I only have one competitor to worry about instead of two." He predicted SUN would be back at number one before HP sorted out the merger. He was right. More, IBM actually snuck into number two for a while with their first gen RS6000s.

Buying market share fails more often than not.
In this case, one of the stated goals of the merger was to gain added efficiencies through consolidation. And less staff usually goes hand in hand with less titles.

That's why I'm curious to see what the others do.
Is this solely a result of the merger or a reaction to the new normal?

[disconnected]

I wouldn't expect the remaining 250 to include many that I want to read. My genre of choice is mysteries, leaning more towards cozy than thriller. Already that end of the spectrum has become mostly witches, paranormal cats, and business-owning twenty-somethings that act more like pre-teens.

Thank goodness for back, back, backlist ebooks. I'm reading more Golden Age than current books now.

[Cinisajoy]

Did they actually cut them or did the authors say no to the terms?

[fjtorres]

Originally Posted by Cinisajoy

Did they actually cut them or did the authors say no to the terms?

They were cut.

In the followup comments she says she knows 50, all cut.
The numbers quote comes from 5 different authors who don't know each other, quoting different editors all of which threw out the same number.
Maybe the editors are lying to pass the buck on cutting the authors but whatever the number a lot of apparently successful authors are out on the street.

For now it's just gossip.
But behind the gossip, something is going on.