HarperCollins profits plummet

HarperCollins suffered a massive decline in profits over the past 12 months, according to financial results posted yesterday by parent company NewsCorp. Operating income for the year plummeted to $17 million from $160 million in 2008, a decline of 89%. For the three months ending June 30, the company posted a loss of $1 million, compared to operating profits of $28 million for the same period last year. Revenue for the year was down by 18% to $1.14 billion; quarterly revenue was down by 21% compared to the same period last year, from $350 million to $278 million.

The financial results do not break out the performance of the company’s international branches, but HarperCollins CEO David Kent told Q&Q that for the year ending June “we finished just where we wanted to, and we’re very pleased with the company’s performance.”

The company release cited a weak retail market as the reason for the overall decline, but reported solid sales in the last quarter for Act Like a Lady, Think Like a Man by Steve Harvey, Sooner or Later by Debbie Macomber, and L.A. Candy by Lauren Conrad. HarperCollins U.S. shuttered its Collins division earlier in the year, incurring one-time costs totalling $33 million, Publishers Weekly reports.

Overall, NewsCorp reported a full-year adjusted operating income of $3.6 billion, a $1.7 billion decline from the previous year. Total revenue for the year was $30 billion, down 8% from the $33 billion posted in fiscal 2008. CEO Rupert Murdoch stated in the release that “[t]he 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.”

Recession woes for Borders UK and Bertelsmann

There are more signs this week that the beleaguered book-selling chain Borders UK could be up for sale. On Thursday, The Independent reported that owner Luke Johnson has hired a corporate finance firm to seek out new “funding opportunities” for the 51-store chain.

The bookseller, which operates the Borders and Book etc fascias, has hired Clearwater Corporate Finance to run any sale, although a sales memorandum has not yet been sent out. The appointment is the clearest signal yet that the Channel 4 chairman Mr Johnson – whose private equity house Risk Capital Partners acquired Borders UK for £20m in 2007 – is poised to offload the struggling bookseller. Market sources said that Borders UK, which is believed to be loss-making, could be sold for a nominal sum.

Borders UK declined to comment on speculation that it would be put up for sale, but a spokeswoman confirmed it had appointed an adviser to “seek out funding opportunities”. She added: “We will be keeping our staff and suppliers fully appraised of this activity.”

In other recession-related news, Bertelsmann, the company that owns Random House, has denied speculation that it plans to cut as many as 10,000 jobs across its various divisions, though CEO Hartmut Ostrowski has allowed that the company is preparing for “the largest cost cutting program in [Bertelsmann's] history” to cope with the global economic slowdown.

BookMarks: More bad news from HarperCollins

• HarperCollins in the U.S. has laid off two executives and announced the scuttling of its four-year-old Collins division. In more bad news, the company revealed today that it’s also closing the shortlived Bowen Press.
• BookExpo America adopts a shorter schedule and announces it will stay in New York City through 2012.
• Architectural onomatopoeia: Two library facades designed to look like bookshelves.
• The Los Angeles Times on the digital libraries of the future.

Rough quarter for HarperCollins

HarperCollins is recording a huge drop in revenue for the three months ending Dec. 31, and the company’s finances look to be shaping up for a dismal fiscal year.

From Publishers Weekly:

Revenue at HarperCollins dropped 25% in the key quarter ended December 31, falling to $305 million from $406 million in the comparable quarter in 2007. Operating income plunged 66%, falling to $23 million from $67 million. This is HC’s second consecutive weak quarter and at the midpoint of its fiscal year earnings are down 75%, to $26 million, with revenue off 16%, to $620 million. In a release, parent company News Corp. attributed the poor performance to a weak retail environment and difficult comparisons to a strong showing in the fourth quarter of 2007. The bankruptcy by the U.K. distributor EUK also contributed to the earnings decline.

There’s no word on what ramifications the drop will have at HarperCollins, which announced a wage freeze for all employees in December. The company also recently offered buy-outs to U.S. employees over the age of 55, but according to the PW story no one at the company is saying how many people have accepted the deal.

HarperCollins offers voluntary retirement package to U.S. employees

Of all the cost-saving measures announced by major U.S. publishers in past weeks, those at HarperCollins have until now been relatively mild. However, this morning, the company presented a voluntary retirement package to its U.S. employees, raising the possibility of future layoffs. According to Publishers Lunch, the offer applies only to employees over the age of 55 who have been with the company for more than five years, and for now does not affect Canadian workers:

Noting that the company “has never done anything like this before,” [company spokesperson Erin] Crum would not indicate a target number of job reductions. She says “we’re encouraging people to respond as quickly as possible,” adding that “we hope to hear if people are interested by February 3.”

Asked about the possibility of layoffs in addition to the retirement package … Crum simply said that “given the uncertainty, every option to contain our costs is being looked at.”

Barnes & Noble announces layoffs

The downturn in the U.S. publishing industry is spilling over into the retail sector. After dismal holiday sales, which dipped by 5.2% in the nine-week run-up to Christmas, the beleaguered U.S. retailer Barnes & Noble has laid off 100 employees at its corporate headquarters in New York – a 4% reduction in staff. According to The New York Times, CEO Stephen Riggio said in a statement that this “was the first time in the company’s history that it had cut jobs.”

Elsewhere in the blogosphere, Galleycat is reporting that an unnamed U.S. literary agency is cutting the royalties it pays to agents by 2%. While the company is blaming the move on delayed payments from publishers, some staffers are grumbling that management is simply using the recession to squeeze its employees. From Galleycat:

All this started because the literary agency claimed it needed those extra two percentage points from the royalties to meet its operating expenses— because it accused publishers of taking advantage of the industry’s recent descent into chaos to delay the payment of royalties. But the agent on the inside told us that wasn’t necessarily so: “We haven’t really noticed a slow-down in payments from publishers. At least not any slower than usual.”

Günter Grass steps into the ring for his HMH editor

One of the most surprising casualties of last month’s  carnage-strewn “Black Wednesday” was legendary 79-year-old editor Drenka Willen, who was coolly laid off from Houghton Mifflin Harcourt after nearly 30 years with the firm (as reported by The New York Observer). It appears, however, that the company’s embattled CEO Tony Lucki has sheepishly asked the editor of such Nobel laureates as José Saramago and Wislawa Szymborska to return to work, after receiving an angry letter from Günter Grass, another author from Willen’s pedigreed stable.

Commenting on the about-face, the Los Angeles Times book blog Jacket Copy takes solace in this apparent victory of editorial integrity over the exigencies of the bottom line:

The author-editor relationship is the molten core of book publishing. Authors often show their loyalty by switching publishing houses when their editors move. In an age where the bottom line is so often the almighty dollar, it’s good to hear that some writers have a trump card to play.

Paying writers not to write

What do you call 500 lawyers at the bottom of the ocean? An excellent start. Okay, that’s an old joke, but it’s indicative of a feeling in the general populace that folks in the legal profession are overpaid blowhards.

Lawyers tend to resent jokes like that. Imagine the horror a writer must feel to discover that practitioners of Chaucer’s “crafte so longe to lerne” aren’t immune to the same kind of ribbing. At least, that’s the impression one gets from reading Paul Greenberg’s recent New York Times piece entitled “Bail Out the Writers!” Greenberg, having been told a “depressing” joke by his daughter, the punchline of which acknowledges the meagre incomes most writers can expect to recoup from their prose, launches into an impassioned cri de coeur based on his discovery of “a national problem of respect where being a writer has become so widely associated with being a loser that we have become the stuff of common jokes.”

Actually, the piece is a humorous screed in the mode of Swift’s “A Modest Proposal,” but, like Swift, Greenberg conceals a serious point beneath the ironic veil. He suggests that in a world in which Ann Beattie must compete with a self-published author named Ann Rothrock Beattie, there may be a problem of overcapacity in written output. His solution is for the government to buy out half the writers currently pumping out books at the rate of two years’ average annual income, or $72,000 U.S.

Paying writers not to write sounds ridiculous, but it actually addresses a key problem that has been plaguing North American publishing for some time now (and that is coming into dramatic relief thanks to the recent economic downturn). It may be anathema to say it – and this Quillblogger is well aware of the hackles that are likely to be raised by those who have long benefitted from publishers’ profligacy – but perhaps it’s time to recognize that people are acutally publishing too much.

Bookmarks: Economic downturn edition

• Canada’s Sun Media is cutting 600 jobs in Ontario, Quebec, Western Canada — about 10 percent of the workforce (CBCnews.ca)
• Amazon U.K. employees are being forced to work seven days a week; they are given penalty points for taking sick days, and face dismissal after accumulating six penalty points (the U.K. Times)
• The total number of layoffs since Nov. 1, 2008, at America’s 500 largest public companies is 178,961, according to the Forbes Layoff Tracker (Forbes.com)

The bad news continues for U.S. publishers

Black Wednesday saw three of the largest U.S. publishers announce massive layoffs and restructuring, and it seems there will be no end to these types of changes as the economy continues to spiral downward.

Macmillan, which publishes authors like Thomas Friedman and Janet Evanovich, is cutting 64 jobs — just under four percent of its work force.

From the Associated Press:

“Going forward we are tightening our belts in response to the current recession, but we are also reorganizing and rethinking our business to position ourselves for the long term,” Macmillan CEO John Sargent wrote in a company memo, a copy of which was obtained Monday by The Associated Press.

In a move he said the publisher had been looking into for months, Macmillan will combine its seven children’s companies into a single division, the Macmillan Children’s Publishing Group, effective Jan. 1. Macmillan also plans reductions through a “centralized business and production group for its adult and children’s publishing companies,” according to the memo.

The Associated Press also reports that Macmillan’s presence at BookExpo America will be reduced, while the use of digital technology will increase in an effort to cut costs.