Publishers' operating profits plunge
Recent results from two big international publishing companies show that the recession is hurting quite badly. Sales fell 2.5% at Simon & Schuster (S & S) and operating income was just $6.1.m (£3.65m), down from $14.6m (£8.75m) a year ago. HarperCollins' worldwide business operating income - effectively its profit - has collapsed from $160m (£96m) to $17m (£10m) over the last year, its most recent financial results reveal.
Both companies attributed this to the recession, but Simon and Schuster also thought that shifts in foreign exchange had also had a major effect. Publisher' Weekly has just analysed publishers' results and concluded that the two factors affecting the outcome were Stephenie Meyer's sales and currency fluctuations.
Thus Lagardere was 20.4% up at the half-way mark because of Meyer's huge continuing international sales, S & S was 2.5% down and HarperCollins was down a massive 20.5%. Harlequin Mills and Boon seems to be surviving the recession quite nicely at 8.7% up, so perhaps romance is what readers are buying to provide escapism when times are hard.
It's noteworthy that Simon & Schuster took a $2.2m (£1.32m) hit because of their redundancies. CEO Carolyn Reidy said: 'Even though we had nice sales, a lot of it is the mix of more frontlist and less backlist'. She added: 'The market is surprising us on a daily basis. The good news is it's not consistently down; the bad news is it's not consistently up.' Among the house's continuing authors: 'half of them are down 10 to 20 percent, but others are up 10 to 30 percent'. The worst may be over though as: 'it looked to us like consumers are finally going back to bookstores' and 'it does give us hope that perhaps what has been a very dismal first half of the year will turn out to be better going forward'.
Rupert Murdoch, CEO of HarperCollins' parent company News Corporation, said: 'The past year has been the most difficult in recent history, and our 2009 financial performance clearly reflects the weak economic environment that we confronted throughout the year. We streamlined all our businesses and continue to do so, at the same time adjusting to the revolutionary changes taking place throughout the media industry.'
Against this background, publishers will continue to be cautious and further staff cuts are not ruled out. Another popular way of cutting costs has been to trim the publishing programme, although most publishers have, thankfully, done this by moving titles forward, rather than by cancelling them outright. Advances are down and it's definitely a bad time to be late with delivering a contracted book. Even so, whichever way you look at it, this is not a good time in publishing, any more than it is in most other industries.